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UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-K [X] Commission file number 1-10746 JONES APPAREL GROUP, INC. Registrant's telephone number, including area code: (212)
642-3860 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value New York Stock Exchange, Inc. Securities registered pursuant to Section 12(g) of the
Act: None Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. [X] Yes [ ] No Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act. [ ] Yes [X] No 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. [X] Yes
[ ] No Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X] Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). [
] Yes [ ] No Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ] Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). [ ] Yes [X] No
The aggregate market value of the voting and non-voting common equity
held by non-affiliates as of the last business day of the registrant's most
recently completed second fiscal quarter, based on the closing price of the
registrant's common stock as reported on the New York Stock Exchange composite
tape on July 4, 2009, was approximately $832,272,057. As of February 15,
2010, 87,191,271 shares of the registrant's common stock were outstanding. TABLE OF CONTENTS
DOCUMENTS INCORPORATED BY REFERENCE The documents incorporated by reference into this Form
10-K and the Parts hereof into which such documents are incorporated are listed
below: Document
- 2 - DEFINITIONS As used in this Report, unless the
context requires otherwise, "our," "us" and "we" means Jones Apparel Group, Inc.
and consolidated subsidiaries, "Jones USA" means Jones Apparel Group USA, Inc.,
"Nine West Group" means Nine West Group Inc., "Nine West" means Nine West
Footwear Corporation, "Victoria" means Victoria + Co Ltd., "McNaughton" means
McNaughton Apparel Group, Inc., "Kasper" means Kasper, Ltd., "Maxwell" means
Maxwell Shoe Company Inc., "Barneys" means Barneys New York, Inc., "Sun" means
Sun Apparel, Inc., "GRI" means GRI Group Limited, "Polo" means Polo Ralph Lauren
Corporation, "FASB" means the Financial Accounting Standards Board, "SFAS" means
Statement of Financial Accounting Standards, "ASC" means the "FASB Accounting
Standards CodificationTM", "ASU" means "Accounting Standards Update" and "SEC"
means the United States Securities and Exchange Commission. 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: - 3 - 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. WEBSITE ACCESS TO COMPANY REPORTS Copies of our filings
under the Securities Exchange Act of 1934 (including annual reports on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all
amendments to these reports) are available free of charge on our investor
relations website at www.jonesapparel.com on the same day they are
electronically filed with the SEC. - 3 - PART I ITEM 1. BUSINESS General
We are a leading designer, marketer and wholesaler of branded apparel,
footwear and accessories. We also market directly to consumers through our
chain of specialty retail and value-based stores and through our e-commerce web
sites. Our nationally recognized brands include Jones New York, Nine West,
Anne Klein, Gloria Vanderbilt, Kasper, Bandolino, Easy Spirit, Evan-Picone,
l.e.i., Energie, Enzo Angiolini, Joan & David, Mootsies Tootsies, Sam & Libby,
Napier, Judith Jack, Albert Nipon and Le Suit. We also market
costume jewelry under the Givenchy brand licensed from Givenchy
Corporation, women's footwear under the Dockers(R)
and Dockers(R) Women brands and infants', toddlers' and boys'
footwear (excluding girls' footwear) under the Dockers(R) and
Dockers(R) Premium brands, licensed from Levi Strauss & Co.,
apparel and accessories under the Rachel Roy brand licensed from Rachel Roy IP Company,
LLC (a limited liability company in which we own a fifty percent interest) and Jessica
Simpson jeanswear licensed from VCJS, LLC.
Each brand is differentiated by its own distinctive styling, pricing strategy,
distribution channel and target consumer. We contract for the manufacture of
our products through a worldwide network of quality manufacturers. We have
capitalized on our nationally known brand names by entering into various
licenses for several of our trademarks, including Jones New York, Anne Klein
New York, Nine West, Gloria Vanderbilt, l.e.i. and Evan-Picone, with
select manufacturers of women's and men's products which we do not manufacture.
For more than 30 years, we have built a reputation for excellence in product
quality and value, and in operational execution. Recent Developments On February 4, 2010, we announced
that we had acquired Moda Nicola International, LLC ("MNI"), owner of the Robert
Rodriguez Collection, a privately held designer, marketer and wholesaler of
women's contemporary eveningwear and sportswear. MNI generated net revenues of
approximately $17 million for the year ended December 31, 2009. Operating Segments Our operations are comprised of
five revenue-generating segments: wholesale better apparel, wholesale jeanswear,
wholesale footwear and accessories, retail and licensing. 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. Segment revenues are generated from the sale of apparel, footwear
and accessories through wholesale channels, our own retail locations and several
e-commerce web sites that we operate and, for licensing, as a percentage of
revenues for items sold by our licensees under our trademarks. See "Business
Segment and Geographic Area Information" in the Notes to Consolidated Financial
Statements. Wholesale Better Apparel Our brands cover a broad array of
categories for the women's markets. Within those brands, various product
classifications include career and casual sportswear, jeanswear, dresses, suits,
and a combination of all components termed lifestyle collection. Career and
casual sportswear are marketed as individual items or groups of skirts, pants,
shorts, jackets, blouses, sweaters and related accessories which, while sold as
separates, are coordinated as to styles, color schemes and fabrics, and are
designed to be worn together. New collections are introduced in the four
principal selling seasons - Spring, Summer, Fall and Holiday. Each season is
comprised of a series of individual items or groups which have systematically
spaced shipment dates to ensure a fresh flow of goods to the retail floor. In
addition, certain brands offer key item styles, which are less seasonal in
nature, on a replenishment basis (which ship generally within three to five days
from receipt of order). The following table summarizes
selected aspects of the products sold under both our brands and licensed brands: - 5 - Wholesale Jeanswear Our brands cover a broad array of
categories for the women's, juniors and girls markets. Within those brands, our
product classifications include jeanswear, casual sportswear and dresses, with a
focus on fit, fabric and finish. Jeanswear and casual sportswear are designed
and marketed as individual items of jeans, skirts, pants, shorts, jackets,
casual tops, sweaters and related accessories which, while sold as separates,
can be combined with each other and with certain of our wholesale better
products into groups termed "lifestyle collection" that are designed to be worn
together. New collections are introduced in the four principal selling seasons -
Spring, Summer, Fall and Holiday. Each season is comprised of a series of
individual items or groups which have scheduled shipment dates to ensure a fresh
flow of goods to the retail floor. In addition, certain brands offer key item
styles, which are less seasonal in nature, on a replenishment basis (which ship
generally within five days from receipt of order). The following table summarizes
selected aspects of the products sold under our brands: - 6 - In January 2010, we entered into a
sub-license agreement with VCJS LLC ("VCJS") to design, develop, produce and
distribute in the United States, Mexico and Canada Jessica Simpson
jeanswear under the Jessica Simpson (signature) trademark which VCJS
licenses from With You, Inc. ("WYI"). For more information, see "Licensed
Brands." In addition to the products sold
under these brands, we provide design and manufacturing resources to certain
retailers to develop moderately-priced product lines to be sold under private
labels. Wholesale Footwear and Accessories Our wholesale footwear and
accessories operations include the sale of both brand name and private label
footwear, handbags, small leather goods and costume, semi-precious, sterling
silver, and marcasite jewelry. The following table summarizes selected aspects
of the products sold under both our brands and licensed brands: Footwear Category
- 7 - Category
Retail We market apparel, footwear and
accessories directly to consumers through our specialty retail stores operating
in malls and urban retail centers, our various value-based ("outlet") stores
located in major retail locations, and on several e-commerce web sites that we
operate. We constantly evaluate both the opportunities for new locations and the
results of underperforming locations for possible modifications or closures. We began 2009 with 1,017 retail
locations and had a net decrease of 79 locations to end the year with 938
locations. During 2009, we decided to close approximately 265 underperforming
retail locations by the end of 2010, of which 99 closed during the year. The
majority of the locations identified for closing are mall-based specialty retail
stores, allowing us to focus more on our outlet stores. Specialty Retail Stores. At
December 31, 2009, we operated a total of 321 specialty retail stores. These
stores sell either footwear and accessories or apparel (or a combination of
these products) primarily under their respective brand names. Our Nine West,
Easy Spirit, Bandolino and AK Anne Klein retail stores offer
selections of exclusive products not marketed to our wholesale customers. Our
multibranded ShoeWoo specialty stores offer selections from many of our
brand names. Specialty retail stores may also sell products licensed by us,
including belts, legwear, outerwear, watches and sunglasses. The following table summarizes
selected aspects of our specialty retail stores at December 31, 2009. Of these
stores, 317 are located within the United States and its territories and four
are located in Canada. - 8 - Outlet Stores. At December
31, 2009, we operated a total of 617 outlet stores. Our shoe stores focus on
breadth of product line, as well as value pricing, and offer a distribution
channel for our residual inventories. The majority of the shoe stores'
merchandise consists of new production of current and proven prior season's
styles, with the remainder of the merchandise consisting of discontinued styles
from our specialty retail footwear stores and wholesale divisions. The apparel
stores focus on breadth of product line and value pricing. In addition to our
brand name merchandise, these stores also sell merchandise produced by our
licensees. The following table summarizes
selected aspects of our outlet stores at December 31, 2009. Of these stores, 584
are located within the United States and its territories and 33 are located in
Canada. Store Internet. At December 31,
2009, we operated e-commerce web sites at www.jny.com, www.ninewest.com,
www.easyspirit.com, www.bandolino.com, www.anneklein.com and www.rachelroy.com.
Through these web sites, we market either footwear and accessories, apparel or a
combination of these products, primarily under their respective brand names. The
selection of products is substantially consistent with the product offerings in
our corresponding retail store concepts. Our e-commerce systems allow us to
fulfill customer orders from inventory at our retail store locations if the
items are not available at our distribution center. Licensed Brands We have an exclusive license to
produce, market and distribute costume jewelry in the United States, Canada,
Mexico and Japan under the Givenchy trademark pursuant to an agreement with
Givenchy, which expires on December 31, 2011. The agreement requires us to pay a
percentage of net sales against guaranteed minimum royalty and advertising
payments as set forth in the agreement. - 9 - We have an exclusive license to
produce and sell women's footwear under the Dockers(R) and
Dockers(R) Women trademarks in the United States (including its
territories and possessions) pursuant to an agreement with Levi Strauss & Co.
The agreement, which expires on December 31, 2011, requires us to pay a
percentage of net sales against guaranteed minimum royalty and advertising
payments as set forth in the agreement. In early 2009, we signed a similar
agreement with Levi Strauss & Co., which gives us an exclusive license to
produce and sell infants', toddlers' and boys' footwear (excluding girls'
footwear) under the Dockers(R) and Dockers(R)
Premium trademarks in the United States (including its territories and
possessions). This agreement also expires on December 31, 2011. We have an exclusive license with
New Balance Athletic Shoe, Inc. and its affiliate New Balance Licensing, LLC
(together, "New Balance") to create and distribute, in the United States and
certain other countries, a fashion-lifestyle footwear collection label that
brings together New Balance's innovative performance and materials technology
with Nine West's fashion styling. The agreement, which expires on December 31,
2010, requires us to pay a percentage of net sales as set forth in the
agreement. Manufacturing and production for the collection is split between the
companies: New Balance is responsible for the innovative material direction,
casual and athletic footwear styling and insole technology while Nine West is
responsible for fashion footwear, soft-tech styling and color. This effort is
supported by an integrated marketing campaign, including public relations,
events, and a combination of digital and traditional media. We have an exclusive, worldwide
license with Rachel Roy IP Company, LLC, a limited liability company in which we
own a fifty percent interest, to create, market, and distribute women's apparel,
footwear, handbags, small leather goods and costume jewelry under the Rachel
Roy, Rachel Roy New York, and RR & Design trademarks and variations
and derivatives thereof including Rachel Roy Signature and Rachel
Rachel Roy. The agreement, which remains in force as long as we remain in
business and continue to exploit the rights granted to us thereunder, requires
us to pay a percentage of net sales as royalty payments as set forth in the
agreement. In January 2010, we entered into a
sub-license agreement with VCJS to design, develop, produce and
distribute in the United States, Mexico and Canada Jessica Simpson
jeanswear under the Jessica Simpson (signature) trademark which VCJS
licenses from WYI. The agreement, which expires on December
31, 2014 (October 15, 2014 if the master license between WYI and VCJS is not
renewed), requires us to pay a percentage of net sales against guaranteed
minimum royalty and pooled marketing fee payments as set forth in the agreement.
The agreement contains renewal options under certain conditions through December
31, 2023. Design Our apparel product lines have
design teams that are responsible for the creation, development and coordination
of the product group offerings within each line. We believe our design staff is
recognized for its distinctive styling of garments and its ability to update
fashion classics with contemporary trends. Our apparel designers travel
throughout the world for fabrics and colors, and stay continuously abreast of
the latest fashion trends. In addition, we actively monitor the retail sales of
our products to determine and react to changes in consumer trends. For most sportswear lines, we will
develop several groups in a season. A group typically consists of an assortment
of skirts, pants, jeans, shorts, jackets, blouses, sweaters, t-shirts and
various accessories. We believe that we are able to reduce design risks because
we often will not have started cutting fabrics until we are within the first few
weeks of a major selling season. Since different styles within a group often use
the same fabric, we can redistribute styles and, in some cases, colors, to fit
current market demand. We also have a key item replenishment program for certain
lines which consists of core products that reflect little variation from season
to season. Our footwear and accessories
product lines are developed by a combination of our own design teams and
third-party designers, which independently interpret global lifestyle, clothing,
footwear and accessories trends. To research and confirm such trends, the teams
travel extensively in Asia, Europe and major American markets, conduct extensive
market research on retailer and consumer preferences, and - 10 - subscribe to fashion and color information services. Each team presents
styles that maintain each brand's distinct personality. Samples are refined and
then produced. After the samples are evaluated, lines are modified further for
presentation at each season's shoe shows and accessory markets. Our jewelry brands are developed
by separate design teams. Each team presents styles that maintain each brand's
distinct personality. A prototype is developed for each new product where
appropriate. Most prototypes are produced by our contractors based on technical
drawings that we supply. These prototypes are reviewed by our product
development team, who negotiate costs with the contractors. After samples are
evaluated and cost estimates are received, the lines are modified as needed for
presentation for each selling season. In accordance with standard
industry practices for licensed products, we have the right to approve the
concepts and designs of all products produced and distributed by our licensees.
Similarly, Givenchy and Levi Strauss & Co. also provide design services to us
for our licensed products and have the right to approve our designs for the
Givenchy and Dockers(R) product lines,
respectively. Under the New Balance license, we have the right to approve the
concepts, designs, prototypes, samples and packaging materials produced by New
Balance, and New Balance has similar rights to approve the concepts, designs,
prototypes, samples and packaging materials produced by us. Manufacturing and Quality Control Apparel Apparel sold by us is produced in
accordance with our design, specification and production schedules through an
extensive network of independent factories located throughout the world,
primarily in Asia, with additional denim production located in the Middle East
and Africa. Nearly all our apparel products were manufactured outside North
America during 2009. Our apparel products are manufactured according to plans
prepared each year which reflect prior years' experience, current fashion
trends, economic conditions and management estimates of a line's performance.
We believe that outsourcing our
products allows us to maximize production flexibility, while avoiding
significant capital expenditures, work-in-process inventory build-ups and costs
of managing a larger production work force. Our fashion designers, production
staff and quality control personnel closely examine garments manufactured by
contractors to ensure that they meet our high standards. Our comprehensive quality control
program is designed to ensure that raw materials and finished goods meet our
exacting standards. Fabrics and trims for garments manufactured are inspected by
either independent inspection services or by our contractors upon receipt in
their warehouses, and most production is inspected by our quality control
personnel during the manufacturing process. Our quality control program includes
inspection of both prototypes of each garment prior to cutting by the
contractors and a sampling of production garments upon receipt at our warehouse
facilities to ensure compliance with our specifications. Our foreign manufacturers'
operations are primarily monitored by our personnel located in Hong Kong and the
Middle East, buying agents located in other countries and independent
contractors and inspection services. Finished goods are generally shipped to our
warehouses for final inspection and distribution. In addition, our apparel products
are tested to ensure compliance with applicable consumer product safety laws and
regulations. For our sportswear business, we
occasionally supply the raw materials to our manufacturers. Otherwise, the raw
materials are purchased directly by the manufacturer in accordance with our
specifications. Raw materials, which are in most instances made and/or colored
especially for us, consist principally of piece goods and yarn and are purchased
by us from a number of domestic and foreign textile mills and converters. - 11 - Our primary raw material in our
jeanswear business is denim, which is primarily purchased from leading mills
located in the Pacific Rim and sub-continent. Denim purchase commitments and
prices are negotiated on a quarterly or semi-annual basis. We perform our own
extensive testing of denim, cotton twill and other fabrics to ensure consistency
and durability. We do not have long-term
arrangements with any of our suppliers. We have experienced little difficulty in
satisfying our raw material requirements and consider our sources of supply
adequate. Our products have historically been purchased from foreign
manufacturers in pre-set United States dollar prices. To date, we generally have
not been materially adversely affected by fluctuations in exchange rates.
However, a substantial decline of the United States dollar against major world
currencies, coupled with higher labor costs being experienced by some of our
foreign manufacturers, primarily in China, could cause our manufacturing costs
to rise. We believe our extensive
experience in logistics and production management underlies our success in
coordinating with contractors who manufacture different garments included within
the same product group. We also contract for the production of a portion of our
products through a network of foreign agents. We have had long-term mutually
satisfactory business relationships with many of our contractors and agents but
do not have long-term written agreements with any of them. Footwear and Accessories To provide a steady source of
inventory, we rely on long-standing relationships with manufacturers in Asia. We
work through independent buying agents for footwear and jewelry and our own
offices for handbags and small leather goods. While we worked through our own
offices for jewelry during most of 2009, we have made the decision to work
through an independent buying agent for our jewelry business in the future. We
do not have formal purchase agreements with any of our manufacturers. Allocation
of production among our manufacturing resources is determined based upon a
number of factors, including manufacturing capabilities, delivery requirements
and pricing. During 2009, nearly all our
footwear products were manufactured by independent footwear manufacturers
located in Asia (primarily China). Our handbags and small leather goods are
sourced through our own buying office in China, which utilizes independent third
party manufacturers also located primarily in China. Our products have
historically been purchased in pre-set United States dollar prices. To date, we
generally have not been materially adversely affected by fluctuations in
exchange rates. However, a substantial decline of the United States dollar
against major world currencies, coupled with higher labor costs being
experienced by some of our foreign manufacturers, primarily in China, could
cause our manufacturing costs to rise. For footwear, quality control
reviews are done on-site in the factories by our third-party buying agents
primarily to ensure that material and component qualities and fit of the product
are in accordance with our specifications. For handbags and small leather goods,
quality control reviews are done on-site in the factories by our own
locally-based inspection technicians. In conjunction with our change to a buying
agent for our jewelry products, quality control reviews of our jewelry products
are now done on-site in the factories by our third-party buying agent. Our
quality control program includes approval of prototypes, as well as approval of
final production samples to ensure they meet our high standards. In addition,
our footwear and accessories products are tested for compliance with applicable
consumer product safety laws and regulations, including California Proposition
65. We believe that our relationships
with our Chinese manufacturers provide us with a responsive and adequate source
of supply of our products. We also believe that purchasing a significant
percentage of our products through independent third-party manufacturers in
China allows us to maximize production flexibility while limiting our capital
expenditures, work-in-process inventory and costs of managing a larger
production work force. Because of sophisticated footwear manufacturing
techniques, individual production lines can be quickly changed from one style to
another, and production of certain styles can be completed in as few as four
hours, from uncut leather to boxed footwear. - 12 - We place our projected orders for
each season's styles with our manufacturers prior to the time we have received
all of our customers' orders. Because of our close working relationships with
our third party manufacturers (which allow for flexible production schedules and
production of large quantities of footwear within a short period of time), many
of our orders are finalized only after we have received orders from a majority
of our customers. As a result, we are better able to meet sudden demands for
particular designs, more quickly exploit market trends as they occur, reduce
inventory risk and more efficiently fill reorders booked during a particular
season. We believe that the quality and
cost of products manufactured by our suppliers provide us with the ability to
remain competitive. We have historically experienced little difficulty in
satisfying finished goods requirements, and we consider our source of supplies
adequate. During 2009, our jewelry products
were manufactured primarily by independently-owned jewelry manufacturers in
Asia. Sourcing the majority of our products from third-party manufacturers
enables us to better control costs and avoid significant capital expenditures,
work in process inventory, and costs of managing a larger production workforce.
Our products have historically been purchased from Asian manufacturers in
pre-set United States dollar prices. To date, we generally have not been
materially adversely affected by fluctuations in exchange rates. However, a
substantial decline of the United States dollar against major world currencies,
coupled with higher labor costs being experienced by some of our foreign
manufacturers, primarily in China, could cause our manufacturing costs to rise.
Forecasts for basic jewelry
products are produced on a rolling 12-week basis and are adjusted based on point
of sale information from retailers. Manufacturing of fashion jewelry products is
based on marketing forecasts and sales plans; actual orders are received several
weeks after such forecasts are produced. During 2009, we discontinued our
jewelry manufacturing operations in Rhode Island. This operation was used to
satisfy demand for products manufactured domestically (such as cosmetic
containers) and to provide samples, prototypes and small quantities of test
merchandise. We have either discontinued or outsourced these functions, and this
action will not have a material adverse effect on our jewelry business. Imports and Import Restrictions Our transactions with our foreign
manufacturers and suppliers are subject to the risks of doing business abroad.
Imports into the United States are affected by, among other things, the cost of
transportation and the imposition of import duties and restrictions. The United
States, China and other countries in which our products are manufactured may,
from time to time, impose new quotas, duties, tariffs or other restrictions, or
adjust presently prevailing quotas, duty or tariff levels, which could affect
our operations and our ability to import products at current or increased
levels. We cannot predict the likelihood or frequency of any such events
occurring. On January 1, 2005, the World
Trade Organization's 148 member nations lifted all quotas on apparel and
textiles. As a result, all textiles and textile apparel manufactured in a member
nation and exported after January 1, 2005 are no longer subject to quota
restrictions. A special safeguard provision that had provided the U.S. with an
additional four years beyond January 1, 2005 to apply quotas on Chinese imports
of textiles expired on December 31, 2008. The lifting of quotas and expiration
of safeguard provisions allows retailers, apparel firms and others to import
unlimited quantities of apparel and textile items from China, India and other
low-cost countries, which could lead to lower production costs, allow us to
improve the quality of our products for a given cost, or allow us to concentrate
production in the most efficient markets. However, litigation and political
activity have been initiated by interested parties seeking to re-impose quotas.
In addition, if the prices of the imported goods can be shown to be less than
those offered by domestic producers for the same items, the U.S. International
Trade Commission may recommend that anti-dumping duties be imposed on those
goods. As a result, we are unable to predict the long-term effects of the
lifting of quota restrictions and related events on our results of operations. - 13 - Our imported products are also
subject to United States customs duties and, in the ordinary course of business,
we are from time to time subject to claims by the United States Customs Service
for duties and other charges. We monitor duty, tariff and
quota-related developments and continually seek to minimize our potential
exposure in these areas through, among other measures, geographical
diversification of our manufacturing sources, the maintenance of overseas
offices and shifts of production among countries and manufacturers. Because our foreign manufacturers
are located at significant geographic distances from us, we are generally
required to allow greater lead time for foreign orders, which reduces our
manufacturing flexibility. Foreign imports are also affected by the high cost of
transportation into the United States and the effects of fluctuations in the
value of the dollar against foreign currencies in certain countries. In addition to the factors
outlined above, our future import operations may be adversely affected by
political instability resulting in the disruption of trade from exporting
countries and restrictions on the transfer of funds. Marketing Our ten largest customer groups,
principally department stores, accounted for approximately 60% of gross revenues
in 2009. Macy's, Inc. ("Macy's"), our largest customer in 2009, accounted for
21% of our 2009 gross revenues. We believe that several
significant trends are occurring in the women's apparel, footwear and
accessories industry. We believe a trend exists among our major customers to
expand the differentiation of their offerings and to achieve strategic
advantages over competitors by devoting more resources to the development of
exclusive products - whether products that the retailer designs (private labels)
or exclusive brands produced for the retailer by national brand manufacturers.
Retailers are placing more emphasis on developing their brand images and
building strong images for their private label merchandise. Exclusive brands, as
the term implies, are only available from a specific retailer, and thus
customers loyal to these brands can only find them in the stores of that
retailer. We have responded to this trend by leveraging our design, production
and marketing capabilities to develop and provide private label products for
certain customers and products under certain of our brands to select customers,
such as providing l.e.i. products exclusively to Wal-Mart Stores Inc.
("Walmart"), Rachel Rachel Roy products exclusively to Macy's and,
beginning in 2010, GLO products exclusively to Kmart Corporation
("Kmart"). While the private label lines compete directly with our product lines
and may receive more prominent positioning on the retail floor by department
stores, creating more competition, we believe that national brands are often
preferred by the consumer. Furthermore, we believe a trend
exists among our major customers to concentrate purchasing among a narrowing
group of vendors. In the future, retailers may have financial problems or
continue to consolidate, undergo restructurings or reorganizations, or realign
their affiliations, any of which could increase the concentration of our
customers. We attempt to minimize our credit risk from our concentration of
customers by closely monitoring accounts receivable balances and shipping levels
and the ongoing financial performance and credit status of our customers. We also believe that consumers
will continue to increase their purchasing of apparel, footwear and accessories
through e-commerce web sites. Through our e-commerce web sites, we market either
footwear and accessories, apparel or a combination of these products, primarily
under their respective brand names. The selection of products is substantially
consistent with the product offerings in our corresponding retail store
concepts. Our e-commerce systems allow us to fulfill customer orders from
inventory at our retail store locations if the items are not available at our
distribution center. We believe retail demand for our
apparel products is enhanced by our ability to provide our retail accounts and
consumers with knowledgeable sales support. In this regard, we have an
established program to place retail sales specialists in many major department
stores for many of our brands, - 14 - including Jones New York, Jones New York Sport, Jones New York Signature,
Kasper and Anne Klein. These individuals have been trained by us to
support the sale of our products by educating other store personnel and
consumers about our products and by coordinating our marketing activities with
those of the stores. In addition, the retail sales specialists provide us with
firsthand information concerning consumer reactions to our products. In
addition, we have a program of designated sales personnel in which a store
agrees to designate certain sales personnel who will devote a substantial
portion of their time to selling our products in return for certain benefits.
Sportswear products are marketed
to department stores and specialty retailing customers during "market weeks,"
which are generally four to six months in advance of the corresponding industry
selling seasons. While we typically will allocate a six-week period to market a
sportswear line, most major orders are written within the first three weeks of
any market period. We introduce new collections of
footwear six times per year and showcase our footwear collections at
industry-wide shoe shows, held quarterly in New York City and semi-annually
in Las Vegas. We introduce new handbag and small leather goods collections at
market shows that occur five times each year in New York City. Jewelry products
are marketed in New York City showrooms through individual customer appointments
and at five industry-wide market shows each year. Retailers visit our showrooms
at these times to view various product lines and merchandise. We market our footwear, handbag
and small leather goods businesses with certain department stores and specialty
retail stores by bringing our retail and sales planning expertise to those
retailers. Under this program, members of branded division management who have
extensive retail backgrounds work with the retailer to create a "focus area" or
"concept shop" within the store that displays the full collection of a single
brand in one area. These individuals assist the department and specialty retail
stores by: providing advice about appropriate product assortment and product
flow; making recommendations about when a product should be re-ordered;
providing sales guidance, including the training of store personnel; and
developing advertising programs with the retailer to promote sales of our
products. In addition, our sales force and field merchandising associates for
footwear, handbags and small leather goods recommend how to display our
products, assist with merchandising displays and educate store personnel about
us and our products. The goal of this approach is to promote high retail sell-throughs
of our products. With this approach, customers are encouraged to devote greater
selling space to our products, and we are better able to assess consumer
preferences, the future ordering needs of our customers, and inventory
requirements. We work closely with our wholesale
jewelry customers to create long-term sales programs, which include choosing
among our diverse product lines and implementing sales programs at the store
level. A team of sales representatives and sales managers monitors product
performance against plan and are responsible for inventory management, using
point-of-sale information to respond to shifts in consumer preferences.
Management uses this information to adjust product mix and inventory
requirements. In addition, field merchandising associates recommend how to
display our products, assist with merchandising displays and educate store
personnel about us and our products. Retailers are also provided with customized
displays and store-level merchandising designed to maximize sales and inventory
turnover. By providing retailers with in-store product management, we establish
close relationships with retailers, allowing us to maximize product sales and
increase floor space allocated to our product lines. We have also placed retail
sales specialists in major department stores to support the sale of our
Napier, Nine West, Givenchy and Judith Jack jewelry products. Advertising and Promotion We employ a cooperative
advertising program for our branded products, whereby we share the cost of
certain wholesale customers' advertising and promotional expenses in newspapers,
magazines and other media up to either a preset maximum percentage of the
customer's purchases or an agreed-upon rate of contribution. An important part
of the marketing program includes prominent displays of our products in
wholesale customers' fashion catalogs as well as in-store shop displays. - 15 - We have national advertising
campaigns for the following brands: Since 2007, "Style Guy" Lloyd
Boston has been the exclusive spokesperson for our Jones New York brand.
In this role, Mr. Boston writes merchandising manuals for Jones New York,
Jones New York Signature and Jones New York Sport, hosts 20 Jones
New York special events through the year in different department stores,
hosts Macy's training on behalf of Jones New York, delivers reports on
style trends for seasonal coordinator meetings and serves as the face of the
brand at www.jny.com. Mr. Boston, who is a style editor on NBC's Today Show and
has appeared as a guest on many other television shows, including Oprah, The
View and CNN American Morning, hosts Closet Cases on Fine Living Network, which
is sponsored by Jones New York. During 2009, we used several
special programs to promote new product lines. We promoted the launch of our
initial Rachel Rachel Roy collection in Macy's for Fall 2009 using a mix
of social, digital, public relations, co-op and event marketing tactics,
including our first pop-up store as well as a documentary shot by Douglas Keaves
for Voguetv.com. We also promoted the launch of our Nine West Vintage America
Collection of shoe, denim, handbag and belt products for Fall 2009 with a
dedicated campaign which included the Vintage America Voices Contest, a national
talent search to discover new singer/songwriter talent spearheaded by brand
ambassador and singer/songwriter Miranda Lee Richards Given the strong recognition and
brand loyalty already afforded our brands, we believe these campaigns will serve
to further enhance and broaden our customer base. Our in-house creative services
departments oversee the conception, production and execution of virtually all
aspects of these activities. We also believe that our retail network promotes
brand name recognition and supports the merchandising of complete lines by, and
the marketing efforts of, our wholesale customers. Backlog We had unfilled customer orders of
approximately $1.1 billion at December 31, 2009 and $1.0 billion at December 31,
2008. These amounts include both confirmed and unconfirmed orders which we
believe, based on industry practice and past experience, will be largely
confirmed. The amount of unfilled orders at a particular time is affected by a
number of factors, including the mix of product, the timing of the receipt and
processing of customer orders and scheduling of the manufacture and shipping of
the product, which in some instances is dependent on the desires of the
customer. Backlog is also affected by a continuing trend among customers to
reduce the lead time on their orders. Due to these factors, a comparison of
unfilled orders from period to period is not necessarily meaningful and may not
be indicative of eventual actual shipments. Licensing of Company Brands We have entered into various
license agreements under which independent licensees either manufacture, market
and sell certain products under our trademarks in accordance with designs
furnished or approved by us or distribute our products in certain countries
where we do not do business. These licenses, the terms of which (not including
renewals) expire at various dates through 2014, typically provide for the
payment to us of a percentage of the licensee's net sales of the licensed
products against guaranteed minimum royalty payments, which typically increase
over the term of the agreement. The following table sets forth
information with respect to select aspects of our licensing business: - 16 - - 17 - - 18 - Investment in GRI On June 20, 2008, we acquired a
10% equity interest in GRI, an international accessories and apparel brand
management and retail-distribution network, for $20.2 million. On June 24, 2009,
we increased our equity interest to 25% for an additional $15.2 million. The
selling shareholders of GRI are entitled to receive an additional cash payment
equaling 60% of the amount of GRI's fiscal year 2011 net income that exceeds a
certain threshold. GRI, which (including its franchisees) operates approximately
800 points of sale in 12 Asian countries, is the exclusive licensee of several
of our brands in Asia, including Nine West, Anne Klein New York, AK Anne
Klein, Easy Spirit, Enzo Angiolini and Joan & David. GRI also
distributes other women's apparel, shoes and accessory brands. - 19 - Trademarks We utilize a variety of trademarks
which we own, including Jones New York, Jones New York Signature, Jones New
York Sport, Jones New York Jeans, Jones Wear, Evan-Picone, Erika, Energie, Nine
West, Easy Spirit, Enzo Angiolini, Bandolino, Nine & Company, Westies,
Pappagallo, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith Jack,
Gloria Vanderbilt, GLO, l.e.i., Anne Klein, Anne Klein New York, AK Anne Klein,
Kasper, Le Suit, Grane, Boutique 9 and Jeanstar. We have registered
or applied for registration for these and other trademarks for use on a variety
of items of apparel, footwear, accessories and/or related products and, in some
cases, for retail store services, in the United States and certain other
countries. The expiration dates of the United States trademark registrations for
our material registered trademarks are as follows, with our other registered
foreign and domestic trademarks expiring at various dates through 2025. Certain
brands such as Jones New York are sold under several related trademarks;
in these instances, the range of expiration dates is provided. All marks are
subject to renewal in the ordinary course of business if no third party
successfully challenges such registrations and, in the case of domestic and
certain foreign registrations, applicable use and related filing requirements
for the goods and services covered by such registrations have been met. We carefully monitor trademark
expiration dates to provide uninterrupted registration of our material
trademarks. We also license the Givenchy, Dockers(R), Dockers(R)
Women, Dockers(R) Premium, Rachel Roy, Rachel Roy New York, Rachel
Rachel Roy, Rachel Roy Signature and Jessica Simpson jeanswear
trademarks (see "Licensed Brands" above). We also hold numerous patents
expiring at various dates through 2025 (subject to payment of annuities and/or
periodic maintenance fees) and have additional patent applications pending in
the United States Patent and Trademark Office. We regard our trademarks and
other proprietary rights as valuable assets which are critical in the marketing
of our products. We vigorously monitor and protect our trademarks and patents
against infringement and dilution where legally feasible and appropriate. Employees At December 31, 2009, we had
approximately 6,525 full-time employees. This total includes approximately 2,460
in quality control, production, design and distribution positions, approximately
1,870 in administrative, sales, clerical and office positions and approximately
2,195 in our retail stores. We also employ approximately 5,010 part-time
employees, of which approximately 4,925 work in our retail stores. Approximately 70 of our employees
located in Vaughan, Ontario are members of the Laundry and Linen Drivers and
Industrial Workers Union, which has a collective bargaining agreement with us
expiring on March 31, 2012. Approximately 30 of our employees located in New
York, New York are members of UNITE HERE, which has a collective bargaining
agreement that expires on May 31, 2010. Approximately 180 of our employees
located in Socorro, Texas are members of UNITE HERE, which has a collective
bargaining agreement that expires on October 31, 2012. We consider our relations
with our employees to be satisfactory. - 20 - Corporate Responsibility Programs Factory Monitoring Although there are no perfect
monitoring systems, we are constantly improving our program in order to address
compliance issues that we encounter. In August 2006, we instituted a scorecard
system to assign risk levels objectively based on audit results. The scorecard
concept is a data-driven process with the underlying premise that not all
violations should be treated equally, and that some findings are more serious
and not as easily corrected as others. By comparing audit results, the scorecard
system allows us to evaluate and determine where monitoring is needed most. Over
time, audit scores reflect the compliance status of a factory, making it a
useful tool for internal production divisions to benchmark their factories,
vendors and agents when making sourcing decisions. To facilitate factories'
understanding of our expectations and compliance requirements, we have in place
the Jones Corporate Compliance Guidebook, a comprehensive guide to our
compliance standards. The purpose of the guidebook is to provide suppliers with
a detailed, informative and easy-to-follow reference of our expectations in the
areas that we monitor. The Guidebook includes country-specific supplements,
which contain an overview of the legal requirements unique to a country. To
date, we have made the guidebook and supplements available in three languages -
English, Chinese and Vietnamese. Beyond Monitoring The basic goal of our "beyond
monitoring" programs is to increase factories' abilities to establish a
sustainable management system. We are moving to a model of partnering with
suppliers to achieve sustainable compliance through proactive solutions. We have
come to understand that factories must embed ethical business practices based on
strong management systems into all of their business operations. Our beyond monitoring programs
focus on providing factories with the tools and knowledge to take responsibility
for their social compliance practices. From our experience, the process is
complicated and challenges factories' standard business practices. Recognizing
this, we have taken the approach of dividing the programs into three phases:
knowledge transfer, knowledge absorption and knowledge implementation. Together,
these phases create a continuous process of feedback, reinforcement and
improvement. Since 2007, we have facilitated
numerous training programs which include human resource management, health and
safety, and managing employment relations. In 2009, we conducted 27 training
sessions which were attended by 179 suppliers. In 2009, we introduced a
Compliance Newsletter in China for our sourcing partners. The newsletter
includes corporate social responsibility ("CSR") topics in focus, updates of
laws and regulations and our monitoring program, as well as capacity-building
events information. The quarterly newsletter serves as a supplementary
communication channel with our suppliers. Ultimately, we believe that if we can
help - 21 - factories to build effective management systems, we can facilitate and
empower factories to create sustainable solutions. Our compliance specialists work
closely with factories producing our products to develop and implement
sustainable management systems for labor. By working with the factories
one-on-one, we have seen marked improvements in many of our factories, in areas
such as wages and benefits, health and safety, employees' understanding of their
rights under the local labor laws and communication between management and
workers. Additionally, we have established
strong relationships with local and U.S. government officials, the International
Labour Organization ("ILO") and other multilateral institutions,
non-governmental organizations ("NGOs") and trade union representatives. These
relationships promote ongoing dialog and enable us to address issues proactively
as they arise in the field. Internal Alignment Engagement with Other Interested Parties At the factory level, we hold
ongoing and regular one-on-one meetings with our key suppliers in-country as
well as in our corporate offices. Periodically we convene vendor summits in
major sourcing countries to bring together a wide variety of partners and
provide them with both updates to our programs and opportunities for exchanging
ideas and concerns. These meetings give participants a forum for working
together to identify challenges and opportunities in the countries in which they
operate, as well as to complete case studies based on real-life situations we
have encountered through our monitoring program. Invitees to these summits may
also include agents, trade unions, NGOs and local and U.S. government officials.
Individual meetings in country with interested stakeholders also occur outside
of the vendor summits. Ongoing communications with local constituents makes it
possible for us to stay informed and anticipate potential problems before they
occur We have been actively involved in
the ILO's Better Work program, along with other recognized international brands.
The program provides a platform for brand cooperation and benefits our suppliers
by reducing their number of audits, which allows them to focus more of their
time toward sustainable improvements. The Better Work program combines
independent factory assessments with advisory and training services to support
practical improvements in factories. We are currently involved with the Better
Work program in Cambodia and Jordan. By supporting Better Work, we are committed
to accepting ILO monitoring reports and have stopped auditing factories in
Cambodia and Jordan that have chosen to participate in Better Work. We continue to engage with Africa
Now, an international development organization tackling poverty in Africa by
helping small-scale producers and promoting ethical trade, to build its social
auditing programs in Africa. The proceeds that Africa Now receives from
conducting social audits for brands, including ours, provides support for its
programs, such as capacity building and developing new social - 22 - audit teams in countries not currently serviced. The goal of all of these
efforts is to facilitate improvements in the labor conditions throughout our
supply chain. Philanthropy and Community Involvement In May 2005, we launched a
charitable cause initiative, including the establishment of Jones New York In
The Classroom, Inc., a not-for-profit corporation, with an initial grant from us
of $1 million and a commitment of our continued support. Jones New York In The
Classroom is dedicated to improving the quality of education in America and
inspiring others, both individuals and corporations, to do the same through
support of teachers and vital teacher-based programs in America's schools. It is
focused on four areas of support for teachers: recruitment, retention,
professional development and recognition and support. Our commitment since the launch in
2005 has also included support for events to raise public awareness of Jones New
York In The Classroom and its goals for teachers and education, as well as
initiatives to encourage our employees to participate in volunteer opportunities
and fundraising for Jones New York In The Classroom, and the other non-profit
organizations it supports. Our corporate employees have the opportunity to
volunteer up to three hours of paid time off each month in educational
facilities in their local communities. Each of our business locations is
encouraged to raise or budget funds to adopt a classroom to help with daily
classroom needs through Adopt-A-Classroom. Additional activities of Jones New
York In The Classroom can be found at www.jnyintheclassroom.org. Our Hong Kong office initiated the
first community service initiative by our overseas affiliates by organizing and
hosting a carnival in the lowest-income neighborhood in Hong Kong to benefit the
community. In addition to the localized
community efforts, we took part in a number of national and industry-sponsored
fundraising events. These efforts included either monetary or product donations
to the American Heart Association, Breast Cancer Research Foundation, Dress for
Success, Fashion Footwear Charitable Foundation, Fashion Footwear Association of
New York (FFANY) Shoes on Sale, Ovarian Cancer Research Fund, St. Jude's
Children's Research Hospital and Two Ten Footwear Foundation. On a global level, we donated
product to various charitable organizations world-wide. These organizations
include: Gifts In Kind International, Samaritan's Feet, Soles for Souls, and the
Susie Reizod Foundation, all of which donate shoes to community charities,
children, or the indigent in the United States and abroad. The Greening of Jones Apparel Group Working with Esty Environmental
Partners, we recently performed our first Greenhouse Gas Inventory to understand
our climate change impact. We examined the emissions associated with facilities
we control. We analyzed CO2 and fugitive refrigerant hydrofluorocarbon (HFCs)
emissions. The inventory accounted for all the fuel and electricity directly
consumed by our business (Scope 1 and 2 emissions), sometimes relying on
estimates and model extrapolations for calculation. Whenever possible, we
followed the internationally-recognized Greenhouse Gas Protocol (GHG Protocol). - 23 - In addition to segmenting the
footprint into electricity and direct fuel use, we broke down our Scope 1 and 2
footprints into relevant categories of emissions sources (retail stores,
distribution centers and offices/other facilities) to better understand our
emissions profile and identify reduction opportunities. We inventoried GHG emissions from
a number of Scope 3 emissions sources, including third-party logistics. We
calculated all logistics footprints by including emissions from multiple
greenhouse gases: CO2, CH4, and N2O. The inventory accounted for all inbound and
outbound logistics, sometimes relying on estimates and model extrapolations for
calculation. For logistics emissions calculations, we used the U.S. EPA Climate
Leaders' Greenhouse Gas Module for Commuting, Business Travel, and Product
Transport. With the goal of better
understanding our products and their impacts, we are beginning to assess the
carbon, water and toxics impact of our products across various stages of their
life cycle. At both the Company and divisional levels, we are looking at raw
materials production, product manufacturing, product logistics, retail sales,
and consumer use and care. Energy Reduction in the Distribution Centers and Retail Locations Reduce the Use During 2008 and 2009 we installed
filtered-water water coolers in all distribution centers and office locations in
our U.S. locations. Further, in 2009 we installed hand dryers in all our U.S.
apparel distribution facilities. Packaging Initiatives In April 2009, our Better brands
apparel division began converting the paper stock supply for their hangtags to
stock from forests certified by the Forest Stewardship Council. At year end, the
conversion is complete across all our Better brands. The hangtags are printed
with soy-based or water-based inks. Effective December 2008, Easy
Spirit and Bandolino shoe boxes are being made with 100% recycled
materials, joining the Sam & Libby brand, which has always used 100%
recycled content. Together these brands account for approximately eight million
shoe boxes per year. All other footwear brands use shoe boxes that are
approximately 50% recycled content. Beginning in mid-November 2009,
Nine West specialty retail stores began offering customers the option to
forego bags in favor of an innovation in shoebox design, a built-in carrying
strap. The test program began with Nine West Vintage America Collection
shoeboxes and will expand to the Nine West boot and bootie boxes in 2010. The
updated shoeboxes are a one-piece construction covered by a fold- - 24 - over lid. The sides run the full length of the box, and the top folds outside
the bottom. The folded assembly precludes the need for glue. Recycling There are certain risks and
uncertainties that could cause actual results and events to differ materially
from those anticipated. Risks and uncertainties that could adversely affect us
include, without limitation, the following factors. 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 confidence, wages and unemployment, housing prices,
consumer debt, interest rates, fuel and energy costs, taxation and political
conditions. A continuation or worsening of the current downturn in the economy
may affect consumer purchases of our products and adversely impact our growth
and profitability. The current state of the
economy and the tightening of commercial credit markets may impair our ability
to obtain capital on favorable terms. We rely on our revolving credit
facilities for backing the issuance of trade letters of credit and other supply
chain purposes, and also from time to time for cash borrowings for working
capital and general corporate purposes. Our current $650 million revolving
credit facility matures on May 13, 2012. The loss of the use of this facility or
the inability to replace this facility when it expires could materially impair
our ability to purchase product from our network of independent foreign
manufacturers. In addition, considering the uncertainties of the present
economic environment, it is possible, in general, that one or more committed
lenders would not meet its obligations to lend to borrowers and there is no
assurance we would be able to replace any such lender. 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 do
not 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 - 25 - locations where value is perceived to be higher. In response, our strategy
involves adding new distribution channels, increasing investment in our core
brands by focusing on design, quality and value, remodeling our retail locations
and implementing 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 loss of or a significant
reduction of business with any of our largest customers would have a material
adverse effect on us. Our ten largest customer groups,
principally department stores, accounted for approximately 60% of revenues in
2009. Macy's, Inc. accounted for approximately 21% of our 2009 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 would 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 large customer, would 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 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. Apparel, footwear and accessories
companies face competition on many fronts, including the following: 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. - 26 - We also provide design and
manufacturing resources to several of our wholesale customers to develop product
lines to be sold under their own private labels. These and other private label
lines compete directly with our product lines and may receive more prominent
positioning on the retail floor by department stores. While this creates more
competition, we believe that national brands are often preferred by the
consumer. 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. 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 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 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. 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. The extent of our foreign
operations and contract manufacturing may adversely affect our domestic
business. Nearly all of our products are
manufactured outside of North America. The following may adversely affect
foreign operations: As a result of our foreign
operations, our domestic business is subject to the following risks: - 27 - 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, leather and synthetics. 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. Difficulties in implementing
new computer systems and software could impact our ability to design, produce
and ship our products on a timely basis. We continually improve and upgrade
our computer systems and software and 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 to new software could
impact our ability to design, produce and ship our products on a timely basis.
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. Any inability to identify
acquisition candidates (or to integrate acquired businesses successfully) could
have a material effect on our future growth. A significant part of our
historical growth has depended on our ability to identify acquisition candidates
and, in a competitive environment for such acquisitions, acquire such businesses
on reasonable financial and other terms. Difficulties in integrating the
organizations and operations of any acquired businesses into our existing
organization and operations could have a material adverse effect on us and could
damage our reputation. ITEM 1B. UNRESOLVED STAFF
COMMENTS Not applicable. - 28 - ITEM 2. PROPERTIES The general location, use and approximate size of our
principal properties are set forth below: _________________ We sublease a 234,000 square foot
office building in White Plains, New York to an independent company. This
sublease ends on February 28, 2012, and the sublessee may vacate the property at
the end of the sublease. Our lease of the building runs until February 1, 2022.
We also sublease certain office
space totaling 43,200 square feet in New York, New York to several independent
companies. We lease approximately 715,250
square feet of warehouse facilities in Goose Creek, South Carolina which are
currently not in service. We sublease 301,350 square feet of these facilities to
an independent company. Our retail stores are leased
pursuant to long-term leases, typically five to seven years for apparel and
footwear outlet stores and ten years for footwear and accessories and apparel
specialty stores. Certain leases allow us to terminate our obligations after a
predetermined period (generally one to three years) in the event that a
particular location does not achieve specified sales volume, and some leases
have options to renew. Many leases include clauses that provide for contingent
payments based on sales volumes, and many leases contain escalation clauses for
increases in operating costs and real estate taxes. We believe that our existing
facilities are well maintained, in good operating condition and that our
existing and planned facilities will be adequate for our operations for the
foreseeable future. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. - 29 - EXECUTIVE OFFICERS OF THE REGISTRANT Our executive officers are as follows: Mr. Card was named Chief Executive
Officer on July 12, 2007. Mr. Card was also our President from July 12, 2007 to
February 7, 2010. Prior to July 12, 2007, Mr. Card had been our Chief Operating
Officer since March 2002. He had also been appointed Chief Financial Officer in
March 2007, a position he previously held from 1990 to March 2006. Mr. Dickson was named President
and Chief Executive Officer - Branded Businesses on February 8, 2010. Prior to
joining us, Mr. Dickson served as General Manager and Senior Vice President,
Barbie at Mattel, Inc. from September 2008 to February 2010, as Senior Vice
President, Marketing, Media & Entertainment Worldwide, Mattel Brands from August
2005 to September 2008 and as Senior Vice President, Mattel Brands Consumer
Products from May 2003 to August 2005. Mr. Kimmel founded the Jones
Apparel Division of W.R. Grace & Co. in 1970. Mr. Kimmel has served as our
Chairman since 1975 and as Chief Executive Officer from 1975 to May 2002. Mr. Dansky has been our General
Counsel since 1996 and our Secretary since January 2001. He was elected an
Executive Vice President in March 2002. Mr. McClain became our Chief
Financial Officer on July 16, 2007. Prior to joining us, Mr. McClain served as
Chief Accounting Officer of Avis Budget Group, Inc. (formerly Cendant
Corporation), a position he assumed in July 2006. From 1999 to July 2006, Mr.
McClain served as Senior Vice President, Finance and Corporate Controller for
Cendant Corporation. Mr. Cohen was named Chief
Executive Officer - Wholesale Footwear and Accessories in April 2006 and also
assumed responsibility for Company-owned retail footwear and apparel in April
2007. He served as President - Wholesale Footwear and Accessories from January
2006 until April 2006. He was the Group President of the Energie and
l.e.i. Divisions from May 2004 to January 2006 and President of the
Energie Division from July 2001 until May 2004. Mr. Cade was named Executive Vice
President, Chief Accounting Officer and Controller on December 17, 2007. Prior
to joining us, Mr. Cade served as Senior Vice President, Chief Accounting
Officer and Controller of Realogy Corporation (formerly Cendant Corporation), a
position he assumed in August 2006. From June 2004 through July 2006, Mr. Cade
served as Vice President, Corporate Finance, of Cendant Corporation. - 30 - PART II ITEM 5. MARKET FOR REGISTRANT'S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Our common stock is traded on the
New York Stock Exchange under the symbol "JNY." The above figures set forth, for
the periods indicated, the high and low sale prices per share of our common
stock as reported on the New York Stock Exchange Composite Tape. The last
reported sale price per share of our common stock on February 12, 2010 was $16.00,
and on that date there were 576 holders of record of our common stock. However,
many shares are held in "street name;" therefore, the number of holders of
record may not represent the actual number of shareholders. Annual CEO Certification The Annual CEO Certification
required by Section 303A.12(a) of the New York Stock Exchange Listed Company
Manual was submitted to the New York Stock Exchange on May 27, 2009. Issuer Purchases of Equity Securities We did not repurchase any of our
common shares during the fiscal quarter ended December 31, 2009. Comparative Performance The SEC requires us to present a
chart comparing the cumulative total stockholder return on our common stock with
the cumulative total stockholder return of (i) a broad equity market index and
(ii) a published industry index or peer group. The following chart compares the
performance of our common stock with that of the S&P 500 Composite Index and the
S&P 500 Apparel, Accessories & Luxury Goods Index, assuming an investment of
$100 on December 31, 2004 in each of our common stock, the stocks comprising the
S&P 500 Composite Index and the stocks comprising the S&P 500 Apparel,
Accessories & Luxury Goods Index and the reinvestment of dividends. - 31 -
- 32 - ITEM 6. SELECTED FINANCIAL DATA The following financial
information is qualified by reference to, and should be read in conjunction
with, our Consolidated Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained elsewhere in this Report. The selected consolidated financial
information presented below is derived from our audited Consolidated Financial
Statements for each of the five years in the period ended December 31, 2009. On
September 6, 2007, we sold Barneys. The results of operations of Barneys have
been reported as discontinued operations for all periods presented. (All amounts in millions except per share data) - 33 - - 34 - ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion provides
information and analysis of our results of operations from 2007 through 2009,
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 specialty retail and factory outlet stores and several e-commerce
web sites. In addition, we license the use of several of our brand names to
select manufacturers and distributors of women's, men's and children's apparel
and accessories worldwide. Since the beginning of 2009, the
following significant events took place: Trends The current economic environment
has resulted in lower consumer confidence and lower retail sales. This trend may
lead to further reduced consumer spending, which could affect our net sales and
our future profitability. Therefore, we have taken aggressive cost reduction
actions to address the uncertainty posed by the current economic conditions and
to protect our future profitability. We have recently completed a major
initiative to simplify our distribution systems. Today, we have three primary - 35 - distribution systems (compared to seven at the end of 2006), eight
distribution centers plus five third-party logistics locations (compared to 14
distribution centers and two third-party logistics locations at the end of 2006)
and two customer service locations (compared to seven at the end of 2006). These
reductions and the continuing implementation of SAP as our enterprise resource planning
system have resulted in reducing annual costs by approximately $85 million
between 2005 and 2009. At the same time, we have been able to improve product
assortment in each channel and reduce the lead time necessary to respond to
shifts in consumer behavior. We intend to seek additional opportunities to
reduce distribution and operational costs while further improving the speed to
market of our products. For further information, see "Accrued Restructuring
Costs" in Notes to Consolidated Financial Statements. We believe that several
significant trends are occurring in the women's apparel, footwear and
accessories industry. We believe a trend exists among our major customers to
expand the differentiation of their offerings and to achieve strategic
advantages over competitors by devoting more resources to the development of
exclusive products - whether products that the retailer designs under brands
that it owns (private labels) or products produced exclusively for the retailer
by national brand manufacturers. Retailers are placing more emphasis on
developing their brand images and building strong images for their private label
merchandise. Exclusive brands, as the term implies, are only available from a
specific retailer, and thus customers loyal to these brands can only find them
in the stores of that retailer. We have responded to this trend by leveraging
our design, production and marketing capabilities to develop and provide private
label products for certain customers and products under certain of our brands to
select customers, such as providing l.e.i. products exclusively to
Walmart, Rachel Rachel Roy products exclusively to Macy's and, beginning
in 2010, GLO products exclusively to Kmart. While the private label lines
compete directly with our product lines and may receive more prominent
positioning on the retail floor by department stores, creating more competition,
we believe that national brands are often preferred by the consumer. Furthermore, we believe a trend
exists among our major customers to concentrate purchasing among a narrowing
group of vendors. In the future, retailers may have financial problems or
continue to consolidate, undergo restructurings or reorganizations, or realign
their affiliations, any of which could increase the concentration of our
customers. We attempt to minimize our credit risk from our concentration of
customers by closely monitoring accounts receivable balances and shipping levels
and the ongoing financial performance and credit status of our customers. We also believe that consumers
will continue to increase their purchasing of apparel, footwear and accessories
through e-commerce web sites. During 2008, we launched www.jny.com and upgraded
our existing sites, www.ninewest.com, www.easyspirit.com and www.bandolino.com,
and in 2009 we launched www.anneklein.com and www.rachelroy.com. Through these
web sites, we market either footwear and accessories, apparel or a combination
of these products, primarily under their respective brand names. The selection
of products is substantially consistent with the product offerings in our
corresponding retail store concepts. Our e-commerce systems allow us to fulfill
customer orders from inventory at our retail store locations if the items are
not available at our distribution center. On January 1, 2005, the World
Trade Organization's 148 member nations lifted all quotas on apparel and
textiles. As a result, all textiles and textile apparel manufactured in a member
nation and exported after January 1, 2005 are no longer subject to quota
restrictions. A special safeguard provision that had provided the U.S. with an
additional four years beyond January 1, 2005 to apply quotas on Chinese imports
of textiles expired on December 31, 2008. The lifting of quotas and expiration
of safeguard provisions allows retailers, apparel firms and others to import
unlimited quantities of apparel and textile items from China, India and other
low-cost countries, which could lead to lower production costs, allow us to
improve the quality of our products for a given cost, or allow us to concentrate
production in the most efficient markets. However, litigation and political
activity have been initiated by interested parties seeking to re-impose quotas.
In addition, if the prices of the imported goods can be shown to be less than
those offered by domestic producers for the same items, the U.S. International
Trade Commission may recommend that anti-dumping duties be imposed on those
goods. As a result, we are unable to predict the long-term effects of the
lifting of quota restrictions and related events on our results of operations.
- 36 - Retail store closings We began 2009 with 1,017 retail locations. During 2009, we decided to close
approximately 265 underperforming retail locations by the end of 2010, of which
99 closed during the year. We accrued $4.6 million of termination benefits and associated employee costs for
approximately 1,220 employees, including both store employees and administrative
support personnel. In connection with our decision to close these stores, we
reviewed the associated long-term assets for impairments. As a result of this
review, we recorded $23.2 million of impairment losses on leasehold improvements
and furniture and fixtures located in the stores to be closed. These costs are
reported as selling, general and administrative ("SG&A") expenses in the retail
segment. Investment in GRI On June 20, 2008, we acquired a
10% equity interest in GRI, an international accessories and apparel brand
management and retail-distribution network, for $20.2 million. On June 24, 2009,
we increased our equity interest to 25% for an additional $15.2 million. The
selling shareholders of GRI are entitled to receive an additional cash payment
equaling 60% of the amount of GRI's fiscal year 2011 net income that exceeds a
certain threshold. GRI, which (including its franchisees) operates approximately
800 points of sale in 12 Asian countries, is the exclusive licensee of several
of our brands in Asia, including Nine West, Anne Klein New York, AK Anne
Klein, Easy Spirit, Enzo Angiolini and Joan & David. GRI also
distributes other women's apparel, shoes and accessory brands. On April 23, 2009, we converted
$10.0 million of outstanding GRI accounts receivable to a three-year
interest-bearing convertible note. GRI has the option, during the 90-day period
that begins when the audited financial statements for the GRI fiscal year ending
January 31, 2011 become available (or such shorter period that ends on the
maturity date of the note), to convert the note into common shares of GRI at a
conversion rate based on the greater of eight times the net income of GRI for
such fiscal year, or an appraised value determined as of that date. Sale of Barneys On September 6, 2007, we completed
the sale of Barneys to an affiliate of Istithmar PJSC. We received $937.4
million of cash (net of working capital adjustments) and paid an aggregate of
$54.6 million in cash for bonuses for key Barneys employees, compensation for
restricted stock held by certain employees of Barneys that was forfeited upon
the completion of the sale and other fees and costs related to the sale. The
results of operations of Barneys for all prior periods have been reported as
discontinued operations. As a result of the capital gain
generated by the sale of Barneys, we reversed a $107.7 million deferred tax
valuation allowance previously created from capital loss carryforwards that we
had not expected to be able to utilize. The reversal of the tax valuation
allowance has been recorded in income from continuing operations in 2007. Goodwill and Other Intangible Assets Goodwill represents the excess of
the purchase price and related costs over the value assigned to net tangible and
identifiable intangible assets of businesses acquired and accounted for under
the purchase method. Accounting rules require that we test at least annually for
possible goodwill impairment. We perform our test in the fourth fiscal quarter
of each year using a discounted cash flow analysis that requires that certain
assumptions and estimates be made regarding industry economic factors and future
profitability and cash flows. As a result of the 2007 impairment analysis, we
determined that the remaining goodwill balance existing in our wholesale
jeanswear segment was impaired as a result of decreases in projected revenues,
profitability and cash flows for certain brands. Accordingly, we recorded an
impairment charge of $78.0 million. As a result of the 2008 impairment analysis,
we determined that the goodwill balance existing in our wholesale footwear and
accessories segment was impaired as a result of decreases in projected revenues,
profitability and cash flows for this segment. Accordingly, we recorded an
impairment charge of $813.2 million. As a result of the 2009 impairment
analysis, we determined that the goodwill balance existing in our retail segment
was impaired as a result - 37 - of decreases in projected revenues, profitability and cash flows for the
segment. Accordingly, we recorded an impairment charge of $120.6 million. Our continued strategic
operational reviews and efforts to improve profitability and the continued trend
of our moderate and jeanswear customers towards differentiated product offerings
led us to make the strategic decision to exit some of our moderate apparel
product lines during 2007. The moderate product lines we exited have not been
classified as discontinued operations as they do not meet the criteria for
discontinued operations. As a result of the loss of these projected revenues and
cash flows, we recorded impairments for our Norton McNaughton and
Erika trademarks of $80.5 million. We perform our annual impairment
test for trademarks during the fourth fiscal quarter of the year. As a result of
the 2009, 2008 and 2007 impairment analyses, we recorded trademark impairment
charges of $28.7 million, $25.2 million and $7.5 million, respectively, as a
result of decreases in projected revenues and cash flows for certain brands. All
trademark impairment charges are reported as SG&A expenses in the licensing,
other and eliminations segment. Critical Accounting Policies Several of our accounting policies
involve significant or complex judgements and uncertainties and require us to
make certain critical accounting estimates. We consider an accounting estimate
to be critical if it requires us to make assumptions about matters that were
highly uncertain at the time the estimate was made. The estimates with the
greatest potential effect on our results of operations and financial position
include the collectibility of accounts receivable, the recovery value of
obsolete or overstocked inventory and the fair values of both our goodwill and
intangible assets with indefinite lives. These estimates affect all our
reportable segments. 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 test our goodwill and our
intangible assets with indefinite lives for impairment on an annual basis
(during our fourth fiscal quarter) and between annual tests if an event occurs
or circumstances change that would more likely than not reduce the fair value of
an asset below its carrying value. We recorded goodwill impairments of $120.6
million, $813.2 million and $78.0 million in 2009, 2008 and 2007, respectively.
We recorded trademark impairments of $28.7 million, $25.2 million and $88.0
million in 2009, 2008 and 2007, respectively. For more information, see
"Goodwill and Other Intangible Assets" in Notes to Consolidated Financial
Statements. We test both our goodwill and our
trademarks for impairment by utilizing discounted cash flow models to estimate
their fair values. These cash flow models involve several assumptions. Changes
in our assumptions could materially impact our fair value estimates. Assumptions
critical to our fair value estimates are: (i) discount rates used to derive the
present value factors used in determining the fair value of the reporting units
and trademarks; (ii) royalty rates used in our trade mark valuations; (iii)
projected average revenue growth rates used in the reporting unit and trademark
models; and (iv) projected long-term growth rates used in the derivation of
terminal year values. These and other assumptions are impacted by economic
conditions and expectations of management and will change in the future based on
period-specific facts and circumstances. Based on our latest annual testing, the
following table shows the range of assumptions we used to derive our fair value
estimates and the hypothetical additional impairment charge for goodwill and
trademarks resulting from a one percentage point unfavorable change in each of
our fair value assumptions (dollar amounts in millions). - 38 - The impairment charges resulting
from the goodwill impairment testing in 2009 were primarily the result of lower
projected revenues, profitability and cash flows of our retail business and an
increase in the discount rate. The impairment charges resulting from the
trademark impairment testing in 2009 were primarily from decreases in projected
revenues, profitability and cash flows for certain apparel, footwear and costume
jewelry product lines and an increase in the discount rate. We increased our
discount rate from the 11.5% used in 2008 to 12.9% in 2009, which reflects the
changes in our cost of capital and other factors. At December 31, 2009, we had $40.1
million of goodwill remaining, which has been assigned to the wholesale better
apparel segment. We also had $547.2 million of indefinite-lived trademarks
remaining. Should the economic conditions and trends (such as reduced consumer
spending) prevailing at December 31, 2009 continue to deteriorate throughout
2010 and beyond, the fair values of certain trademarks could become impaired. We
do not believe the remaining goodwill will be impaired in the foreseeable future
as the fair value of the wholesale better apparel segment at December 31, 2009
significantly exceeded the segment's carrying value. Other than the assumptions used in
the impairment testing of our goodwill and trademarks, we have not made any
material changes to any of our critical accounting estimates in the last three
years. Our senior management has discussed the development and selection of our
critical accounting estimates with the Audit Committee of our Board of
Directors. In addition, there are other items within our financial statements
that require estimation, but are not deemed critical as defined above. Changes
in estimates used in these and other items could have a material impact on our
financial statements. Results of Operations Statements of Operations Stated in Dollars and as a Percentage of Total Revenues Percentage totals may not agree due to rounding. - 39 - 2009 Compared with 2008 Revenues. Total
revenues for 2009 were $3.3 billion, compared with $3.6 billion for 2008, a
decrease of 8.0%. Revenues by segment were as follows: Wholesale better apparel revenues
decreased $175.9 million. Revenues decreased primarily due to reduced shipments
of our Anne Klein, Jones New York Sport, Jones New York, Kasper and
Jones New York Suit products, primarily resulting from decreased consumer
spending as a result of the general economic downturn, and due to reduced
shipments of Nine West products, primarily resulting from decreased
consumer spending and from the discontinuance of the Nine West sportswear
line due to the performance of these products at retail. These decreases were
offset by increased shipments of our Evan-Picone suit and dress products
as a result of the performance of these products at retail, increases in our
private label suit businesses and initial shipments of our Rachel Rachel Roy
product line. Wholesale jeanswear revenues
increased $32.4 million. Revenues increased primarily due to increased shipments
of our l.e.i. products to Walmart, increased shipments of private-label
products due to expansion of private-label programs with several major
customers, and increased shipments of our Evan-Picone product line,
primarily due to the performance of this product line at retail. These increases
were partially offset by reduced shipments of our Energie product line,
primarily as a result of the general economic downturn and the performance of
these products at retail, and a $57.9 million reduction of shipments of product
lines that we are discontinuing or restructuring due to low long-term growth
potential (including Jeanstar, Erika, Behold and Grane Girl).
Wholesale footwear and accessories
revenues decreased $98.7 million. We experienced a $41.1 million reduction in
sales in our international business, primarily due to the global economic
conditions in Asia, Canada, Mexico, Turkey, Central America and the bankruptcy
of our former United Kingdom licensee. We also experienced decreased orders for
our Anne Klein footwear product line and our handbag and accessories
products primarily due to decreased consumer spending as a result of the general
economic downturn. Orders for footwear and handbag products were negatively
impacted by $8.2 million as the result of the bankruptcy of several major
customers in 2008, including Goody's Family Clothing, Inc. ("Goody's"), Mervyn's
LLC ("Mervyn's"), Gottschalks Inc. ("Gottschalks") and Boscov's, Inc.
("Boscov's"). Retail revenues decreased $40.9
million, primarily due to a 4.3% decline in comparable store sales ($28.9
million) resulting from decreased consumer spending relating to current economic
conditions, with the balance related to operating fewer stores in the current
period. Comparable stores are those 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. An
8.0% decrease in comparable store sales for our footwear stores ($34.3 million)
and a 6.3% decrease in comparable store sales for our apparel stores ($13.3
million) were partially offset by a 60.6% increase in our comparable e-commerce
business ($18.7 million). We began 2009 with 1,017 retail locations and had a
net decrease of 79 locations to end the year with 938 locations. Licensing and other revenues
decreased $5.9 million, primarily due to reduced sales volume of our licensees. - 40 - Gross Profit Margin.
The gross profit margin increased to 34.4% in 2009 compared with 32.5% in 2008.
Wholesale better apparel gross
profit margins were 34.2% and 31.3% for 2009 and 2008, respectively. The
increase was primarily due to better inventory management, the product mix and
lower sales to off-price retailers in the current period. Wholesale jeanswear gross profit
margins were 24.7% and 21.9% for 2009 and 2008, respectively. The increase is
primarily due to better inventory management, lower levels of off-price sales
and the mix of products shipped in the current period, costs in the prior period
related to the repositioning of l.e.i. as an exclusive brand for Walmart
and the discontinuance of certain other product lines. Wholesale footwear and accessories
gross profit margins were 26.2% and 25.2% for 2009 and 2008, respectively. The
increase was primarily due to lower levels of discounting and better inventory
management in our footwear business, reduced sales in our lower-margin
international business and lower buying agency commissions, partially offset by
higher overhead unit costs due to lower volume in our costume jewelry business.
Retail gross profit margins were
50.4% and 49.6% for 2009 and 2008, respectively. The increase was primarily the
result of a reduction in promotional activity in our stores due to better
inventory management. Selling, General and
Administrative Expenses. SG&A expenses were approximately $1.0 billion
in 2009 and $1.1 billion in 2008. Wholesale better apparel SG&A
expenses decreased $17.9 million, primarily due to a $7.8 million decrease in
distribution costs due to a lower volume of shipments, a $4.5 million reduction
in marketing and advertising costs, a $3.1 million reduction in salaries and
benefits from headcount reductions, a $2.6 million decrease in postage costs, a
$1.3 million reduction in our provision for doubtful accounts related to
bankruptcies of several major customers in the prior period, a $1.2 million
reduction in occupancy costs and $0.4 million of other net cost savings, offset
by $3.0 million of administrative support cost increases. Wholesale jeanswear SG&A expenses
decreased $16.7 million, primarily due to an $8.6 million decrease in salary and
benefit costs due to headcount reductions, a $7.1 million decrease in our
provision for doubtful accounts due to the bankruptcies of several customers in
the prior period, a $4.6 million decrease in occupancy costs due to the closing
of certain facilities, a $2.5 million decrease in depreciation and amortization
expenses (due to accelerated depreciation in the prior period relating to
discontinued brands) and a $1.2 million reduction in travel and entertainment
costs, offset by $3.1 million of higher distribution costs due to higher unit
shipments, $3.1 million of net restructuring costs and $1.1 million of other
cost increases in the current period. Wholesale footwear and accessories
SG&A expenses decreased $27.5 million, primarily due to a $9.1 million decrease
in salary and benefit costs due to headcount reductions, a $5.5 million decrease
in advertising costs, a $3.5 million decrease in outside sales force costs, a
$3.0 million decrease in distribution costs, a $2.7 million reduction in
professional fees, a $2.1 million decrease in product development costs, a $1.6
million decrease in travel costs, a $1.2 million decrease in postage costs and
$5.5 million of other cost reductions. These decreases were offset by $3.9
million of costs related to the bankruptcy of our United Kingdom footwear
licensee, a net $1.4 million increase in restructuring and severance costs,
primarily related to our wholesale jewelry business, and $1.4 million in loss
accruals related to certain leased property in the current period. Retail SG&A expenses increased
$2.6 million, primarily due to $28.1 million additional severance costs and
asset impairments in the current period, primarily related to the closing of
approximately 265 stores through the end of 2010, and a $3.2 million increase in
consulting costs, offset by an $8.0 million reduction in depreciation expense, a
$7.8 million decrease in salaries and benefits and a $3.4 million - 41 - decrease in occupancy costs due to operating fewer stores in the current
period, a $8.1 million reduction in administrative support costs, and $1.4
million of other cost reductions. SG&A expenses for licensing, other
and eliminations decreased $1.2 million, primarily due to a $3.5 million effect
of changes in the exchange rate between the U.S. Dollar and the Canadian Dollar
related to foreign tax planning strategies and a $2.4 million decrease in
professional fees and outside services, partially offset by a $3.6 million
increase in salaries and benefits and $1.1 million of other net cost increases.
Impairment Losses. As a
result of our annual trademark impairment analyses, we recorded trademark
impairment charges of $28.7 million and $25.2 million in 2009 and 2008,
respectively, as a result of decreases in projected revenues for certain brands.
As a result of our annual goodwill impairment analyses, we recorded $120.6
million in 2009 as a result of lower projected revenues and profitability of our
retail businesses and an increase in the discount rate, and we recorded $813.2
million in 2008 as a result of decreases in projected revenues and profitability
for certain footwear and accessory brands. For more information, see "Goodwill
and Other Intangible Assets" in Notes to Consolidated Financial Statements. Operating Loss. The
resulting operating loss for 2009 was $12.1 million, compared with a loss of
$731.4 million for 2008, due to the factors described above. Net Interest Expense.
Net interest expense was $52.8 million in 2009, compared with $41.6 million in
2008. The increase was the result of: a $4.4 million write-off of deferred
financing fees upon the termination of our prior revolving credit facility,
compared with $1.1 million of similar charges from modifications to our credit
facilities in 2008; lower interest income on our invested cash balances due to
overall lower invested balances and lower interest rates in the current period;
and higher amortization of deferred financing fees related to the amendment to
our prior revolving credit facility on January 5, 2009 and our new secured
revolving credit facility, partially offset by lower interest expense related to
the 4.250% Senior Notes due 2009 (the "2009 Notes") we repurchased in May 2009.
Income Taxes. The
effective income tax rate benefit on continuing operations was (23.1%) and 0.8%
for 2009 and 2008, respectively. Excluding the effects of the goodwill and
trademark impairments, the effective income tax rates on continuing operations
were 35.0% and 33.2% for 2009 and 2008, respectively. The increase is due
primarily to a lesser impact of the foreign income tax differential relative to
pre-tax income in the current period than in the prior period, offset by a
change in the deferred tax balance related to fixed assets. Net Loss and Loss Per Share.
Net loss was $86.3 million in 2009, compared with $765.4 million in
2008. Diluted loss per share for 2009 was $1.02, compared with $9.04 for 2008,
on 1.4% fewer shares outstanding. 2008 Compared with 2007 Revenues. Total
revenues for 2008 were $3.6 billion, compared with $3.8 billion for 2007, a
decrease of 6.0%. Revenues by segment were as follows: Wholesale better apparel revenues
did not materially change from 2007 to 2008. Shipments of our Jones New York
Signature product line increased, due to both increased customer orders
based on the - 42 - performance of this brand at retail and initial shipments of our new casual
line of products, and shipments of our Joneswear and Anne Klein product lines also
increased, due to increased customer orders based on the performance of these
brands at retail. These increases were offset by decreased shipments of our
Jones New York, Nine West and specialty market product lines, due to
decreased orders from our customers based on the performance of these brands at
retail. Wholesale jeanswear revenues
decreased $188.5 million. Lower shipments of our Rena Rowan, Nine & Co.,
Evan-Picone, Bandolino, Pappagallo and Erika moderate product lines,
which were discontinued or repositioned in the market in 2007, reduced sales by
approximately $238.8 million. Initial shipments of our l.e.i. brand for
juniors, junior plus and girls to Walmart under an exclusive retailing agreement
and initial sales of the relaunched Erika, Pappagallo and Evan-Picone
product lines during 2008 were partially offset by planned reductions of our
GLO product line to focus on the l.e.i. brand and lower shipments of
our Energie product line, due to decreased orders from our customers
based on the performance of the brand at retail. Wholesale footwear and accessories
revenues decreased $17.5 million. Lower sales of our Nine West and
Anne Klein footwear products, primarily related to planned lower sales to
value chain retailers and a shift in the market away from dress shoes towards
casual shoes, were partially offset by (i) increased shipments in our
international businesses due to continued expansion by our licensees who
purchase product from us; (ii) increased shipments of our Nine West and
Nine & Co. handbag product lines, due to increased orders from our
customers based on the performance of these brands at retail; and (iii) initial
shipments of our AK Anne Klein handbag line. Retail revenues decreased $23.5
million, primarily due to a 4.3% decline in comparable store sales ($30.1
million) resulting from decreased consumer spending relating to current economic
conditions. Comparable stores are those 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. A 2.9% decrease in comparable store sales for our footwear stores ($12.9
million) and a 12.4% decrease in comparable store sales for our apparel stores
($28.5 million) were partially offset by a 57.5% increase in our e-commerce
business ($11.3 million) and $18.1 million in sales from new store openings. We
began 2008 with 1,034 retail locations and had a net decrease of 17 locations
during the year to end the period with 1,017 locations. Revenues for 2008 and 2007 include
$0.6 million and $1.0 million, respectively, in the licensing and other segment
of service fees charged to Barneys under a short-term transition services
agreement entered into with Barneys at the time of the sale of Barneys. These
revenues were based on contractual monthly fees as set forth in the agreement.
The agreement ended in May 2008. Revenues for 2007 include $1.2
million of service fees charged to Polo under a short-term transition service
agreement entered into with Polo at the time of the sale of the Polo Jeans
Company business. These revenues were based on contractual monthly and
per-unit fees as set forth in the agreement. Of this amount, $1.0 million was
recorded in the wholesale better apparel segment and $0.2 million was recorded
in the wholesale jeanswear segment. The agreement ended in March 2007. Gross Profit Margin.
The gross profit margin increased to 32.5% in 2008, compared with 32.2% in
2007. Wholesale better apparel gross
profit margins were 31.3% and 32.4% for 2008 and 2007, respectively. The
decrease was due to higher levels of sales to off-price retailers in our suit
and dress product lines in 2008. Wholesale jeanswear gross profit
margins were 21.9% and 18.6% for 2008 and 2007, respectively. The increase is
primarily due to the negative impact in the prior period of high levels of
vendor allowances to clear inventory for the lower-margin moderate brands we had
planned to exit or sell, the negative impact in the prior period of excess
production capacity in the Mexican operations that we sold in May 2008, and
lower levels of air shipments in 2008. - 43 - Wholesale footwear and accessories
gross profit margins were 25.2% and 28.2% for 2008 and 2007, respectively. The
decrease was due to higher levels of sales to off-price retailers to liquidate
excess inventory, higher levels of vendor allowances to clear inventory at the
retail level, growth in our lower-margin international business and increased
production costs in China and other Pacific Rim countries in 2008. Retail gross profit margins were
49.6% and 48.4% for 2008 and 2007, respectively. The increase was primarily the
result of lower levels of excess footwear inventory liquidation in the current
period, as the prior period included the liquidation of inventory related to the
closing of all of our Stein Mart retail locations. Selling, General and
Administrative Expenses. SG&A expenses were approximately $1.1 billion
in both 2008 and 2007. Wholesale better apparel SG&A
expenses decreased $14.1 million, primarily from $8.8 million of cost savings
realized in 2008 by discontinuing the Anne Klein designer line, a $2.1
million reduction in marketing expenses in 2008 and $5.9 million of expenses
relating to the closing of our Bristol, Pennsylvania warehouse which were
recorded in 2007. These decreases were partially offset by $1.5 million of
incremental bad debt expense related to the bankruptcy filing of Boscov's and
$1.2 million of other net cost increases. Wholesale jeanswear SG&A expenses
decreased $33.4 million from net cost savings of $36.4 resulting primarily from
the exit from some of our moderate apparel product lines during 2007 and a $12.8
million reduction in restructuring costs. These cost savings were partially
offset by a $7.1 million increase in administrative support costs, $1.9 million
of advertising costs related to the launch of l.e.i. at Walmart and $6.8 million
of incremental bad debt expense related to the bankruptcy filings of Goody's,
Mervyn's, Gottschalks and Boscov's. Wholesale footwear and accessories
SG&A expenses increased $20.1 million, primarily due to a $5.5 million increase
in advertising costs, a $5.2 million increase in administrative support costs, a
$4.0 million increase in salary, bonus and employee benefit costs (including
pension costs), a $2.8 million increase in severance costs, a $2.3 million
increase in sales and use taxes due to a tax audit settlement, a $1.1 million
increase in distribution costs and $1.0 million of incremental bad debt expense
related to the Goody's and Boscov's bankruptcy filings in 2008, offset by a $1.1
million reduction in consulting fees as compared with 2007 and $0.7 million of
other net cost reductions. Retail SG&A expenses increased
$8.2 million, primarily due to a $3.9 million increase in administrative support
costs, a $3.8 million increase in depreciation expense and other occupancy
costs, a $2.9 million increase in Canadian retail store operating costs and a
$1.5 million write-off of computer software in 2008, partially offset by a $3.9
million reduction in professional fees, severance costs and employee benefits as
compared with 2007. SG&A expenses for the licensing,
other and eliminations segment decreased $12.4 million, primarily due to amounts
recorded in 2007 relating to the termination of two former executive officers.
Impairment Losses.
As a result of our annual goodwill impairment analyses, we recorded goodwill
impairments of $813.2 million in 2008 as a result of decreases in projected
revenues and profitability for certain footwear and accessory brands and $78.0
million in 2007 as a result of decreases in projected revenues and profitability
for certain moderate apparel brands. As a result of our annual trademark
impairment analyses, we recorded trademark impairment charges of $25.2 million
and $7.5 million in 2008 and 2007, respectively, as a result of decreases in
projected revenues for certain brands. We also recorded trademark impairment
charges of $80.5 million in 2007 as a result of our decision to discontinue or
significantly reduce the scale of certain brands. For more information, see
"Goodwill and Other Intangible Assets" in Notes to Consolidated Financial
Statements. Operating Loss. The
resulting operating loss from continuing operations for 2008 was $731.4 million,
compared with $27.0 million for 2007, due to the factors described above. - 44 - Net Interest Expense.
Net interest expense from continuing operations was $41.6 million in 2008,
compared with $47.8 million in 2007. The decrease was primarily the result of no
outstanding borrowings under our credit facilities and higher interest income
from higher cash balances during 2008, partially offset by $1.1 million of
deferred financing costs in 2008 related to modifications of our credit
facilities. Income Taxes. The
effective income tax rate benefit on continuing operations was 0.8% and 178.4%
for 2008 and 2007, respectively. Excluding the effects of the goodwill and
trademark impairments, the effective income tax rate on continuing operations
was 33.2% for 2008. Excluding the effects of the reversal of deferred tax
valuation allowances related to the sale of Barneys ($107.7 million) and the
goodwill impairment, the effective tax rate on continuing operations was 17.0%
for 2007. The increase was due primarily to a lesser impact of the foreign
income tax differential relative to pre-tax income in the current period than in
the prior period. Discontinued Operations.
Income from discontinued operations for 2008 includes a $0.9 million adjustment
to the after-tax gain on the sale of Barneys. Income from discontinued
operations for 2007 includes a $254.2 million after-tax gain on the sale of
Barneys and $11.0 million of net income from the operation of Barneys prior to
the sale (see "Discontinued Operations" in Notes to Consolidated Financial
Statements). Net (Loss) Income and (Loss)
Income Per Share. Net loss was $(765.4) million in 2008, compared with
net income of $311.1 million in 2007, which included the $254.2 million gain on
the sale of Barneys. Diluted loss per share for 2008 was $(9.04), compared with
earnings per share of $3.03 for 2007, on 18.2% fewer shares outstanding. Liquidity and Capital Resources Our principal capital requirements
have been for working capital needs, capital expenditures, dividend payments,
acquisition funding 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 December 31, 2009, total cash and cash equivalents were $333.4 million, a
decrease of $4.9 million from the $338.3 million reported as of December 31,
2008. We currently fund our operations
primarily through cash generated by operating activities, and rely on our
revolving credit facility for the issuance of trade letters of credit for the
purchases of inventory and for cash borrowings for general corporate purposes as
needed. Cash flows from operating
activities of continuing operations provided $349.0 million, $175.5 million and
$119.5 million in 2009, 2008 and 2007, respectively. Net cash provided by operating
activities increased $173.5 million from 2008 to 2009, primarily from changes in
working capital. The primary changes in components of working capital were to
accounts receivable, inventory and accounts payable. The change in accounts
receivable was due to the lower volume of sales in the current period and the
timing of cash collections. The change in inventory was due to better inventory
management, the timing of inventory receipts and the liquidation of discontinued
product lines. The change in accounts payable was due to the timing of inventory
payments and lower expense levels in the current period. Net cash provided by operating
activities increased $56.0 million from 2007 to 2008, primarily from the tax
effects of the Barneys sale in 2007 and federal and state tax refunds received
during 2008, offset by lower income from continuing operations in 2008 before
non-cash impairment charges. The primary changes in components of working
capital were to accounts receivable and accounts payable. The change in accounts
receivable was primarily the result of an increase in receivables from our
international and jeanswear businesses due to increased sales and the timing of
shipments during 2008. The change in accounts payable was primarily the result
of the timing of inventory payments and the effects of the sale of the Polo
Jeans Company business in 2007. - 45 - Cash flows from investing
activities of continuing operations used $45.2 million and $84.4 million and
provided $758.0 million in 2009, 2008 and 2007, respectively. Net cash used in investing
activities in 2009 funded capital expenditures, primarily for computer
systems, and the acquisition of an additional 15% interest in GRI. Net cash
used in investing activities in 2008 funded capital expenditures, largely in our
retail segment, and the acquisition of our initial 10% interest in GRI. In 2007,
net cash provided by investing activities was primarily due to net cash received
from the sale of Barneys. Capital expenditures, which amounted to $30.0 million
in 2009, are expected to be approximately $45 to $50 million for 2010, primarily
for retail store remodeling and computer systems. Although many of the
anticipated expenditures for 2010 are discretionary, we believe they are
necessary to maintain consistent operating levels. We expect to fund the
expenditures from cash generated by operations. Cash flows from financing
activities of continuing operations used $310.3 million in 2009, primarily for
the repurchase of our 2009 Notes and associated costs and consent fees, costs
related to our new secured revolving credit agreement, and the payment of
dividends to our common shareholders. Cash flows from financing
activities of continuing operations used $51.4 million in 2008, primarily for
the payment of dividends to our common shareholders. Cash flows from financing
activities of continuing operations used $666.4 million in 2007, primarily to
repurchase our common stock and repay $100.0 million of net borrowings under our
Senior Credit Facilities. On April 1, 2009, we commenced a
cash tender offer to purchase any and all of our outstanding 2009 Notes, as well
as a consent solicitation to amend the indenture governing our outstanding 2009
Notes, our 5.125% Senior Notes due 2014 and our 6.125% Senior Notes due 2034
(collectively, the "Notes"). The purpose of the consent solicitation was to
receive the consent of holders of at least a majority in principal amount of the
Notes outstanding for proposed amendments to the Indenture to provide for a
carveout to the lien covenant, for liens incurred in connection with the new
senior secured credit facility described above. We received the required
consents on April 15, 2009; consequently, the Amendments became operative upon
payment of the consent fee to each validly consenting holder of the Notes, and
are binding on all holders, including non-consenting holders of Notes. The
consideration for each $1,000 principal amount of 2009 Notes validly tendered
and not withdrawn pursuant to the tender offer was $980, and the consent fee for
each $1,000 principal amount of Notes with respect to which holders validly
delivered and did not revoke their consent pursuant to the consent solicitation
was $20. Under the tender offer, we
repurchased a total of $242.5 million of our outstanding 2009 Notes for a
payment of $237.7 million, and we paid $12.9 million in consent fees to holders
of the Notes and $1.8 million of related costs, resulting in a loss on debt
extinguishment of $1.5 million. Of the consent fees paid, a net $7.1 million
relates to the remaining outstanding Notes and will be amortized over the life
of the remaining related Notes as additional interest expense. We repurchased no common stock
during 2009. As of December 31, 2009, $304.1 million of Board authorized
repurchases was still available. We may make additional share repurchases in the
future depending on, among other things, market conditions and our financial
condition, although any such repurchases will be subject to limitations under
our current revolving credit agreement. Our Board of Directors has authorized
our common stock repurchases as a tax-effective means to enhance shareholder
value and distribute cash to shareholders and, to a lesser extent, to offset the
impact of dilution resulting from the issuance of employee stock options and
shares of restricted stock. In authorizing share repurchase programs, our Board
of Directors gives careful consideration to both our projected cash flows and
our existing capital resources. On June 10, 2008, we received a
final delivery of 3.2 million shares upon the conclusion of the ASR program. No
cash was required to complete the final delivery of shares. We also received
approximately - 46 - $1.0 million from Goldman as the final settlement of the ASR program, which
was recorded as a reduction of the cost of the shares acquired under the ASR.
Prior to May 2009, we had a
revolving credit agreement with several lending institutions to borrow an
aggregate principal amount of up to $600 million (which was reduced by amendment
from $750 million on January 5, 2009). This agreement could be used for letters
of credit or cash borrowings. In May 2009, we replaced this revolving credit
facility and our C$10.0 million unsecured line of credit in Canada with a new
three-year $650 million secured revolving credit agreement. Under the New Credit
Facility, up to the entire amount of the facility is available for cash
borrowings, with up to $400 million available for trade letters of credit and up
to $50 million for standby letters of credit, and a subfacility available to our
Canadian subsidiaries of up to $25 million for letters of credit and borrowings.
Borrowings under the New Credit Facility may be used to refinance existing
indebtedness and for general corporate purposes in the ordinary course of
business. Such borrowings bear interest either based on the alternate base rate,
as defined in the New Credit Facility, or based on Eurocurrency rates, each with
a margin that depends on the availability remaining under the New Credit
Facility. The New Credit Facility contains customary events of default. Availability under the New Credit
Facility is determined in reference to a borrowing base consisting of a
percentage of eligible inventory, accounts receivable, credit card receivables
and licensee receivables, minus reserves determined by the joint collateral
agents. At December 31, 2009, we had no cash borrowings and $35.5 million of
letters of credit outstanding, and our remaining availability was $360.8
million. If availability under the New Credit Facility falls below a stated
level, we will be required to comply with a minimum fixed charge coverage ratio.
The New Credit Facility also contains affirmative and negative covenants that,
among other things, will limit or restrict our ability to (1) incur
indebtedness, (2) create liens, (3) merge, consolidate, liquidate or dissolve,
(4) make investments (including acquisitions), loans or advances, (5) sell
assets, (6) enter into sale and leaseback transactions, (7) enter into swap
agreements, (8) make certain restricted payments (including dividends and other
payments in respect of capital stock), (9) enter into transactions with
affiliates, (10) enter into restrictive agreements, and (11) amend material
documents. The New Credit Facility is secured by a first priority lien on
substantially all of our personal property. As a result of the amendments to
our prior revolving credit facility on January 5, 2009, Standard & Poor's
downgraded our senior unsecured debt ratings from BB- to B+ on January 6, 2009
and Moody's downgraded our senior unsecured debt ratings from Ba2 to Ba3 on
January 8, 2009. Under the New Credit Facility, our fees and interest rates are
no longer affected by our credit rating, so further changes to our ratings will
not increase our borrowing costs. However, any future downgrades could affect
our ability or cost of obtaining additional funding. Proceeds from the issuance of
common stock to our employees exercising stock options amounted to $0.1 million
and $11.1 million in 2008 and 2007, respectively. No employees exercised stock
options in 2009. We recorded net pension and
postretirement losses of $0.9 million in 2009 to other comprehensive income
resulting primarily from a lowering of the discount rate used to determine
projected pension benefits. We recorded net pension and postretirement losses of
$9.3 million in 2008 to other comprehensive income resulting primarily from the
downturn in the financial markets, which generated lower than expected returns
on our plan assets. We recorded net pension and postretirement liability gains
of $4.5 million to other comprehensive income in 2007 resulting primarily from
the amortization of actuarial gains. Our pension and postretirement plans are
currently underfunded by a total of $19.6 million. As the benefits under our
defined benefit pension plans are frozen with respect to service credits, the
effects on future pension expense are not anticipated to be material to our
results of operations or to our liquidity. We expect to contribute $5.7 million
to our defined benefit plans in 2010. On February 10, 2010, we announced
that our Board of Directors had declared a quarterly cash dividend of $0.05 per
share to all common stockholders of record as of February 26, 2010 for payment
on March 12, 2010. - 47 - Economic Outlook Due to the current and expected
future economic conditions in the United States, we may experience increased
risk related to the collectibility of our accounts receivable, and we may
increase our provision for doubtful accounts in the future should any of our
wholesale customers experience significant financial difficulties. If such
conditions lead to defaults that are individually or cumulatively significant,
we could experience a material adverse impact to our financial condition,
results of operations and/or liquidity. We believe that available cash and
cash equivalents, funds generated by operations and the $650.0 million New
Credit Facility 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. Although there can be no assurance because of these challenging
times for financial institutions, we believe that the participating banks will
be willing and able to loan funds to us in accordance with their legal
obligations under the New Credit Facility. Off-Balance Sheet Arrangements We do not have any off-balance
sheet arrangements within the meaning of SEC Regulation S-K Item 303(a)(4). Contractual Obligations and Contingent Liabilities and Commitments
The following is a summary of our
significant contractual obligations for the periods indicated that existed as of
December 31, 2009, and, except for purchase obligations and other long-term
liabilities, is based on information appearing in the Notes to Consolidated
Financial Statements (amounts in millions). - 48 - New Accounting Standards In April 2009, the FASB issued
FASB Staff Position No. FAS 107-1 and APB 28-1, "Interim Disclosures about Fair
Value of Financial Instruments" (now ASC Subtopic 825-10-65), which requires
disclosures about fair value of financial instruments for interim reporting
periods of publicly traded companies as well as in annual financial statements.
This Staff Position is effective for interim reporting periods ending after June
15, 2009, and its requirements are reflected herein. In April 2009, the FASB issued
FASB Staff Position No. FAS 115-2 and FAS 124-2, "Recognition and Presentation
of Other-Than-Temporary Impairments" (now ASC Subtopic 320-10-65), which amends
the other-than-temporary impairment guidance in U.S. GAAP for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities in
the financial statements. This Staff Position is effective for interim and
annual reporting periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. The adoption of this Staff
Position did not have an effect on our operations.
In May 2009, the FASB issued SFAS No.
165, "Subsequent Events" (now ASC Subtopic 855-10). This standard establishes
principles and requirements for subsequent events, which are events or
transactions that occur after the balance sheet date but before financial
statements are issued or are available to be issued. In particular, this
standard sets forth (a) the period after the balance sheet date during which
management of a reporting entity shall evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (b)
the circumstances under which an entity shall recognize events or transactions
occurring after the balance sheet date in its financial statements, and (c) the
disclosures that an entity shall make about events or transactions that occurred
after the balance sheet date. This standard is effective for interim or annual
financial periods ending after June 15, 2009 and is to be applied prospectively.
The adoption of this standard did not have a material impact on our results of
operations or our financial position. In June 2009, the FASB issued SFAS
No. 166, "Accounting for Transfers of Financial Assets - an amendment of FASB
Statement No. 140" (now part of ASC Topic 860, also issued as ASU No. 2009-16).
The objective of this standard is to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial reports about a transfer of financial assets; the
effects of a transfer on its financial position, financial performance, and cash
flows; and a transferor's continuing involvement in transferred financial
assets. Additionally, on and after the effective date, the concept of a
qualifying special-purpose entity is no longer relevant for accounting purposes.
This standard is effective as of the beginning of each reporting entity's first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period, and for interim and annual reporting
periods thereafter. Earlier application is prohibited. The recognition and
measurement provisions of this standard are to be applied to transfers that
occur on or after the effective date. The adoption of this standard is not
expected to have a material impact on our results of operations or our financial
position. In June 2009, the FASB issued SFAS
No. 167, "Amendments to FASB Interpretation No. 46(R)" (now part of ASC Subtopic
810, also issued as ASU No. 2009-17). This standard amends FASB Interpretation
46(R) to require an enterprise to perform an analysis to determine whether an
enterprise's variable interest or interests give it a controlling financial
interest in a variable interest entity by replacing the quantitative-based risks
and rewards calculation for determining which enterprise, if any, has a
controlling financial interest in a variable interest entity with an approach
focused on identifying which enterprise has the power to direct the activities
of a variable interest entity that most significantly impact the entity's
economic performance and has the obligation to absorb losses of or the right to
receive benefits from the entity. This standard also requires ongoing
reassessments of whether an enterprise is the primary beneficiary of a variable
interest entity. This standard is effective as of the beginning of each
reporting entity's first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period, and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. The adoption of this standard is not expected to have a material
impact on our results of operations or our financial position. - 49 - In June 2009, the FASB issued SFAS
No. 168, "The FASB Accounting Standards CodificationTM and the Hierarchy of
Generally Accepted Accounting Principles - a replacement of FASB Statement No.
162" (now ASC Subtopic 105-10, also issued as ASU No. 2009-01). This standard
establishes the ASC as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in conformity with generally accepted
accounting principles. This standard is effective for financial statements
issued for interim and annual periods ending after September 15, 2009. The
adoption of this standard did not have an impact on our results of operations or
our financial position. In August 2009, the FASB issued
ASU No. 2009-5, "Fair Value Measurements and Disclosures (Topic 820) - Measuring
Liabilities at Fair Value." ASU No. 2009-5 provides clarification that in
circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value
using a valuation technique that uses the quoted price of the identical
liability when traded as an asset, quoted prices for similar liabilities or
similar liabilities when traded as assets, or another valuation technique that
is consistent with the principles of ASC Topic 820. ASU No. 2009-5 is effective
for the first reporting period (including interim periods) beginning after
issuance. The adoption of ASU No. 2009-5 is not expected to have a material
impact on our results of operations or our financial position. In October 2009, the FASB issued
ASU No. 2009-13, "Revenue Recognition (Topic 605) - Multiple Deliverable Revenue
Arrangements." ASU No. 2009-13 eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and
expands the disclosures related to multiple-deliverable revenue arrangements.
ASU No. 2009-13 is effective prospectively for revenue arrangements entered into
or materially modified in fiscal years beginning on or after June 15, 2010, with
earlier adoption permitted. The adoption of ASU No. 2009-13 will not have a
material impact on our results of operations or our financial position. In January 2010, the FASB issued
ASU No. 2010-02, "Consolidation (Topic 810) - Accounting and Reporting for
Decreases in Ownership of a Subsidiary - a Scope Clarification." ASU No. 2010-02
clarifies that the scope of the decrease in ownership provisions of Topic 810
applies to a subsidiary or group of assets that is a business, a subsidiary that
is a business that is transferred to an equity method investee or a joint
venture or an exchange of a group of assets that constitutes a business for a
noncontrolling interest in an entity and does not apply to sales in substance of
real estate. ASU No. 2010-02 is effective as of the beginning of the period in
which an entity adopts SFAS No. 160 or, if SFAS No. 160 has been previously
adopted, the first interim or annual period ending on or after December 15,
2009, applied retrospectively to the first period that the entity adopted SFAS
No. 160. The adoption of ASU No. 2010-02 did not have an impact on our results
of operations or our financial position. In January 2010, the FASB issued
ASU No. 2010-06, "Fair Value Measurements and Disclosures (Topic 820) -
Improving Disclosures about Fair Value Measurements." ASU 2010-06 requires new
disclosures regarding transfers in and out of the Level 1 and 2 and activity
within Level 3 fair value measurements and clarifies existing disclosures of
inputs and valuation techniques for Level 2 and 3 fair value measurements. ASU
2010-06 also includes conforming amendments to employers' disclosures about
postretirement benefit plan assets. The new disclosures and clarifications of
existing disclosures are effective for interim and annual reporting periods
beginning after December 15, 2009, except for the disclosure of activity within
Level 3 fair value measurements, which is effective for fiscal years beginning
after December 15, 2010, and for interim periods within those years. - 50 - ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK Market Risk Sensitive Instruments We are exposed to the impact of
interest rate changes, foreign currency fluctuations, and changes in the market
value of our fixed rate long-term debt. 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 following
quantitative disclosures were derived using quoted market prices, yields and
theoretical pricing models obtained through independent pricing sources for the
same or similar types of financial instruments, taking into consideration the
underlying terms, such as the coupon rate, term to maturity and imbedded call
options. Certain items such as lease contracts, insurance contracts, and
obligations for pension and other post-retirement benefits were not included in
the analysis. For further information see "Derivatives" and "Financial
Instruments" in the Notes to Consolidated Financial Statements. Interest Rates Our primary interest rate
exposures relate to the fair value of our fixed rate long-term debt and interest
expense related to our revolving credit facility. At December 31, 2009, the fair
value of our fixed rate debt was $449.4 million. On that date, the potential
decrease in fair value of our fixed rate long-term debt instruments resulting
from a hypothetical 10% adverse change in interest rates was approximately $40.9
million. Our primary interest rate
exposures on variable rate credit facilities are with respect to United States
and Canadian short-term rates. Cash borrowings under these facilities bear
interest at rates that vary with changes in prevailing market rates. At December
31, 2009, we had $650.0 million in variable rate credit facilities, under which
no cash borrowings and $35.5 million of letters of credit were outstanding. Foreign Currency Exchange Rates We are exposed to market risk
related to changes in foreign currency exchange rates. Our products have
historically been purchased from foreign manufacturers in pre-set United States
dollar prices. We also have assets, liabilities and intercompany accounts
denominated in certain foreign currencies that generate exchange gains and
losses as exchange rates change. To date, we generally have not been materially
adversely affected by fluctuations in exchange rates. At December 31, 2009, we had
outstanding foreign exchange contracts to exchange Canadian Dollars for a total
notional value of US $8.6 million at a weighted-average exchange rate of
$1.06893 maturing through May 2010. The fair value of these contracts at
December 31, 2009 was a $0.2 million unrealized loss. 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
counterparty, which presently has a high credit rating, to fail to meet its
obligations. - 51 - MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING February 16, 2010 To the Stockholders of Jones Apparel Group, Inc. The management of Jones Apparel
Group, Inc. is responsible for the preparation, integrity, objectivity and fair
presentation of the financial statements and other financial information
presented in this report. The financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America and reflect the effects of certain judgments and estimates made by
management. In order to ensure that our
internal control over financial reporting is effective, management regularly
assesses such controls and did so most recently for our financial reporting as
of December 31, 2009. This assessment was based on criteria for effective
internal control over financial reporting described in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission, referred to as COSO. Our assessment included the
documentation and understanding of our internal control over financial
reporting. We have evaluated the design effectiveness and tested the operating
effectiveness of internal controls to form our conclusion. Our internal control over
financial reporting is a process designed 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. Our internal control over financial reporting includes
those policies and procedures that pertain to maintaining records that, in
reasonable detail, accurately and fairly reflect transactions and dispositions
of assets, providing reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, assuring that receipts and
expenditures are being made in accordance with authorizations of our management
and directors and providing reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of assets that could
have a material effect on our financial statements. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. Based on this assessment, the
undersigned officers concluded that our internal controls and procedures are
effective 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. The Audit Committee of our Board
of Directors, which consists of independent, non-executive directors, meets
regularly with management, the internal auditors and the independent accountants
to review accounting, reporting, auditing and internal control matters. The
committee has direct and private access to both internal and external auditors.
BDO Seidman, LLP, the independent
registered public accounting firm who audits our financial statements, has
audited our internal control over financial reporting as of December 31, 2009
and has expressed an unqualified opinion thereon. - 52 -
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
We have audited Jones Apparel Group's internal control over financial reporting
as of December 31, 2009, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (the COSO criteria). Jones Apparel Group's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management's Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the
company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, Jones Apparel Group, Inc. maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2009,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
Jones Apparel Group, Inc. as of December 31, 2009 and 2008, and the related
consolidated statements of operations, changes in equity, and cash flows for
each of the three years in the period ended December 31, 2009 and our report
dated February 16, 2010 expressed an unqualified opinion thereon.
- 53 - ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders We have audited the accompanying consolidated balance sheets of Jones Apparel
Group, Inc as of December 31, 2009 and 2008 and the related consolidated
statements of operations, changes in equity, and cash flows for each of the
three years in the period ended December 31, 2009. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Jones
Apparel Group, Inc at December 31, 2009 and 2008, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2009, in conformity with accounting principles generally accepted
in the United States. We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), Jones Apparel Group's internal
control over financial reporting as of December 31, 2009, based on criteria
established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our
report dated February 16, 2010 expressed an unqualified opinion thereon.
- 54 - Jones Apparel Group, Inc. - 55 - Jones Apparel Group, Inc. See accompanying notes to consolidated financial statements - 56 - Jones Apparel Group, Inc. See accompanying notes to consolidated financial statements - 57 - Jones Apparel Group, Inc. See accompanying notes to consolidated financial statements - 58 - Jones Apparel Group, Inc. SUMMARY OF ACCOUNTING POLICIES Basis of Presentation 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, as well as several e-commerce
web sites. 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. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates. On September 6, 2007, we completed
the sale of Barneys to an affiliate of Istithmar PJSC. The results of operations
of Barneys for all periods have been reported as discontinued operations. We
classify as discontinued operations for all periods presented any component of
our business that we believe is probable of being sold or has been sold that has
operations and cash flows that are clearly distinguishable operationally and for
financial reporting purposes. For those components, we have no significant
continuing involvement after disposal and their operations and cash flows are
eliminated from our ongoing operations. Sales of significant components of our
business not classified as discontinued operations are reported as a component
of income from continuing operations. Credit Risk Derivative Financial Instruments - 59 - The derivatives we use in our risk
management strategies are highly effective hedges because all the critical terms
of the derivative instruments match those of the hedged item. On the date the
derivative contract is entered into, we designate the derivative as either a
fair value hedge or a cash flow hedge. Changes in derivative fair values that
are designated as fair value hedges are recognized in earnings as offsets to the
changes in fair value of the related hedged assets and liabilities. Changes in
derivative fair values that are designated as cash flow hedges are deferred and
recorded as a component of accumulated other comprehensive income until the
associated hedged transactions impact the income statement, at which time the
deferred gains and losses are reclassified to either cost of sales for inventory
purchases or to selling, general and administrative ("SG&A") expenses for all
other items. Any ineffective portion of a hedging derivative's change in fair
value will be immediately recognized in cost of sales. Differentials to be paid
or received under interest rate swap contracts are recognized in income over the
life of the contracts as adjustments to interest expense. Gains or losses
generated from the early termination of interest rate swap contracts and
treasury locks are amortized to earnings over the remaining terms of the
contracts as adjustments to interest expense. The fair values of the
derivatives, which are based on observable inputs such as yield curves or
foreign exchange spot rates, are reported as other current assets or accrued
expenses and other current liabilities, as appropriate. Accounts Receivable Inventories and Cost of Sales Cost of sales includes the
inventory cost elements listed above as well as warehouse outbound freight,
internally transferred merchandise freight and realized gains or losses on
foreign currency forward contracts associated with inventory purchases. Our cost
of sales may not be comparable to those of other entities, since some entities
include all of the costs associated with their distribution functions in cost of
sales while we include these costs in SG&A expenses. Property, Plant, Equipment and Depreciation and Amortization Operating Leases - 60 - Goodwill and Other Intangibles Foreign Currency Translation Defined Benefit Plans Treasury Stock Revenue Recognition Shipping and Handling Costs Advertising Expense Income Taxes - 61 - Earnings per Share We have outstanding restricted
stock grants that qualify as participating securities. Under the two-class
method, all earnings (distributed and undistributed) are allocated to common
shares and participating securities based on their respective rights to receive
dividends. Basic earnings per common share is calculated by dividing earnings
allocated to common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share reflect, in periods in
which they have a dilutive effect, the effect of unvested restricted stock not
classified as participating securities and common shares issuable upon exercise
of stock options. The difference between reported basic and diluted
weighted-average common shares results from the assumption that all dilutive
stock options outstanding were exercised and all outstanding restricted shares
have vested. The following options to purchase
shares of common stock were outstanding during a portion of 2007 but were not
included in the computation of diluted earnings per share because the exercise
prices of the options were greater than the average market price of the common
shares and, therefore, would be antidilutive. For 2008 and 2009, none of the
options outstanding were included in the computation of diluted earnings per
share due to the net loss for the year. Restricted Stock Long-Lived Assets Cash Equivalents Presentation of Prior Year Data New Accounting Standards - 62 - In April 2009, the FASB issued
FASB Staff Position No. FAS 115-2 and FAS 124-2, "Recognition and Presentation
of Other-Than-Temporary Impairments" (now ASC Subtopic 320-10-65), which amends
the other-than-temporary impairment guidance in U.S. GAAP for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities in
the financial statements. This Staff Position is effective for interim and
annual reporting periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. The adoption of this Staff
Position did not have an effect on our operations.
In May 2009, the FASB issued SFAS No.
165, "Subsequent Events" (now ASC Subtopic 855-10). This standard establishes
principles and requirements for subsequent events, which are events or
transactions that occur after the balance sheet date but before financial
statements are issued or are available to be issued. In particular, this
standard sets forth (a) the period after the balance sheet date during which
management of a reporting entity shall evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (b)
the circumstances under which an entity shall recognize events or transactions
occurring after the balance sheet date in its financial statements, and (c) the
disclosures that an entity shall make about events or transactions that occurred
after the balance sheet date. This standard is effective for interim or annual
financial periods ending after June 15, 2009 and is to be applied prospectively.
The adoption of this standard did not have a material impact on our results of
operations or our financial position. In June 2009, the FASB issued SFAS
No. 166, "Accounting for Transfers of Financial Assets - an amendment of FASB
Statement No. 140" (now part of ASC Topic 860, also issued as ASU No. 2009-16).
The objective of this standard is to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial reports about a transfer of financial assets; the
effects of a transfer on its financial position, financial performance, and cash
flows; and a transferor's continuing involvement in transferred financial
assets. Additionally, on and after the effective date, the concept of a
qualifying special-purpose entity is no longer relevant for accounting purposes.
This standard is effective as of the beginning of each reporting entity's first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period, and for interim and annual reporting
periods thereafter. Earlier application is prohibited. The recognition and
measurement provisions of this standard are to be applied to transfers that
occur on or after the effective date. The adoption of this standard is not
expected to have a material impact on our results of operations or our financial
position. In June 2009, the FASB issued SFAS
No. 167, "Amendments to FASB Interpretation No. 46(R)" (now part of ASC Subtopic
810, also issued as ASU No. 2009-17). This standard amends FASB Interpretation
46(R) to require an enterprise to perform an analysis to determine whether an
enterprise's variable interest or interests give it a controlling financial
interest in a variable interest entity by replacing the quantitative-based risks
and rewards calculation for determining which enterprise, if any, has a
controlling financial interest in a variable interest entity with an approach
focused on identifying which enterprise has the power to direct the activities
of a variable interest entity that most significantly impact the entity's
economic performance and has the obligation to absorb losses of or the right to
receive benefits from the entity. This standard also requires ongoing
reassessments of whether an enterprise is the primary beneficiary of a variable
interest entity. This standard is effective as of the beginning of each
reporting entity's first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period, and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. The adoption of this standard is not expected to have a material
impact on our results of operations or our financial position. In June 2009, the FASB issued SFAS
No. 168, "The FASB Accounting Standards CodificationTM and the Hierarchy of
Generally Accepted Accounting Principles - a replacement of FASB Statement No.
162" (now ASC Subtopic 105-10, also issued as ASU No. 2009-01). This standard
establishes the ASC as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in conformity with generally accepted
accounting principles. This standard is effective for financial statements
issued for interim and annual periods ending after September 15, 2009. The
adoption of this standard did not have an impact on our results of operations or
our financial position. - 63 - In August 2009, the FASB issued
ASU No. 2009-5, "Fair Value Measurements and Disclosures (Topic 820) - Measuring
Liabilities at Fair Value." ASU No. 2009-5 provides clarification that in
circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value
using a valuation technique that uses the quoted price of the identical
liability when traded as an asset, quoted prices for similar liabilities or
similar liabilities when traded as assets, or another valuation technique that
is consistent with the principles of ASC Topic 820. ASU No. 2009-5 is effective
for the first reporting period (including interim periods) beginning after
issuance. The adoption of ASU No. 2009-5 is not expected to have a material
impact on our results of operations or our financial position. In October 2009, the FASB issued
ASU No. 2009-13, "Revenue Recognition (Topic 605) - Multiple Deliverable Revenue
Arrangements." ASU No. 2009-13 eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and
expands the disclosures related to multiple-deliverable revenue arrangements.
ASU No. 2009-13 is effective prospectively for revenue arrangements entered into
or materially modified in fiscal years beginning on or after June 15, 2010, with
earlier adoption permitted. The adoption of ASU No. 2009-13 will not have a
material impact on our results of operations or our financial position. In January 2010, the FASB issued
ASU No. 2010-02, "Consolidation (Topic 810) - Accounting and Reporting for
Decreases in Ownership of a Subsidiary - a Scope Clarification." ASU No. 2010-02
clarifies that the scope of the decrease in ownership provisions of Topic 810
applies to a subsidiary or group of assets that is a business, a subsidiary that
is a business that is transferred to an equity method investee or a joint
venture or an exchange of a group of assets that constitutes a business for a
noncontrolling interest in an entity and does not apply to sales in substance of
real estate. ASU No. 2010-02 is effective as of the beginning of the period in
which an entity adopts SFAS No. 160 or, if SFAS No. 160 has been previously
adopted, the first interim or annual period ending on or after December 15,
2009, applied retrospectively to the first period that the entity adopted SFAS
No. 160. The adoption of ASU No. 2010-02 did not have an impact on our results
of operations or our financial position. In January 2010, the FASB issued
ASU No. 2010-06, "Fair Value Measurements and Disclosures (Topic 820) -
Improving Disclosures about Fair Value Measurements." ASU 2010-06 requires new
disclosures regarding transfers in and out of the Level 1 and 2 and activity
within Level 3 fair value measurements and clarifies existing disclosures of
inputs and valuation techniques for Level 2 and 3 fair value measurements. ASU
2010-06 also includes conforming amendments to employers' disclosures about
postretirement benefit plan assets. The new disclosures and clarifications of
existing disclosures are effective for interim and annual reporting periods
beginning after December 15, 2009, except for the disclosure of activity within
Level 3 fair value measurements, which is effective for fiscal years beginning
after December 15, 2010, and for interim periods within those years. - 64 - (LOSS) EARNINGS PER SHARE The computation of basic and
diluted (loss) earnings per share is as follows: ACCOUNTS RECEIVABLE AND SIGNIFICANT CUSTOMERS Accounts receivable consist of the
following: A significant portion of our sales
are to retailers throughout the United States and Canada. We have one
significant customer in our wholesale better apparel, wholesale jeanswear and
wholesale footwear and accessories operating segments. Macy's, Inc. accounted
for approximately 21%, 21% and 20% of consolidated gross revenues for 2009, 2008
and 2007, respectively, and accounted for approximately and 17% of accounts
receivable at both December 31, 2009 and 2008. - 65 - Due to our 25% ownership interest
in GRI, GRI is deemed to be a related party. Included in accounts receivable are
amounts due from GRI in the amount of $40.7 million and $43.3 million at
December 31, 2009 and 2008, respectively. Net revenues from GRI amounted to
$47.0 million and $61.1 million for 2009 and 2008, respectively. On April 23,
2009, we converted $10.0 million of outstanding GRI accounts receivable to a
three-year interest-bearing convertible note. GRI has the option, during the
90-day period that begins when the audited financial statements for the GRI
fiscal year ending January 31, 2011 become available (or such shorter period
that ends on the maturity date of the note), to convert the note into common
shares of GRI at a conversion rate based on the greater of eight times the net
income of GRI for such fiscal year, or an appraised value determined as of that
date. DISCONTINUED OPERATIONS On September 6, 2007, we completed
the sale of Barneys to an affiliate of Istithmar PJSC. In 2007, we recognized a
net after-tax gain on the sale of $254.2 million. In 2008, we reached final
settlement on certain liabilities remaining from the sale, resulting in an
additional after-tax gain of $0.9 million. The results of operations of Barneys
have been reported as discontinued operations in all periods. Operating results
of Barneys, which were formerly included in our retail segment, are summarized
as follows: (1) Net of $247.4 million of goodwill allocated to Barneys in
2007. We allocated $5.5 million of
interest expense in 2007 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 had been advanced to
Barneys. ACCRUED RESTRUCTURING COSTS Manufacturing Restructuring - 66 - The details of the manufacturing
restructuring accruals are as follows: During 2008 and 2007, $0.1
million and $3.6 million of the termination benefits accrual were utilized
(relating to severance for three and 123 employees, respectively). The net
accrual of $0.1 million at December 31, 2008 is reported as accrued
restructuring and severance payments. Moderate Apparel Restructuring The details of the moderate
apparel restructuring accruals are as follows: During 2009, 2008 and
2007, $0.7 million, $4.3 million and $2.2 million of the termination
benefits accrual were utilized (relating to severance for one, 328 and
113 employees, respectively). The net accrual of $2.0 million at
December 31, 2009 is reported as $0.7 million of accrued restructuring
and severance payments and $1.3 million of other noncurrent assets. The
net accrual of $1.2 million at December 31, 2008 is reported as $1.3
million of accrued restructuring and severance payments and $0.1 million
of other noncurrent assets. Other Restructurings In 2007, we discontinued our Anne
Klein Accessories retail concept. We accrued $0.1 million of one-time
termination benefits and associated employee costs in 2007 for 26 employees.
These amounts, which are reported as SG&A expenses in the retail segment, were
paid in 2008. - 67 - We began 2009 with 1,017 retail
locations. During 2009, we decided to close approximately 265 underperforming
retail locations by the end of 2010, of which 99 closed during the year. We
accrued $4.6 million of termination benefits and associated employee costs for
approximately 1,220 employees, including both store employees and administrative
support personnel. In connection with our decision to close these stores, we
reviewed the associated long-term assets for impairments. As a result of this
review, we recorded $23.2 million of impairment losses on leasehold improvements
and furniture and fixtures located in the stores to be closed. These costs are
reported as SG&A expenses in the retail segment. Jewelry. During 2009, we
decided to discontinue the domestic manufacturing, product development and
sourcing activities of our jewelry business, and also announced the closing of
our jewelry distribution center by the end of 2010. Total costs are expected to
be $6.6 million. We accrued $6.3 million of termination benefits and associated
employee costs for approximately 148 employees. The remaining $0.3 million will
be recorded over the period the related employees provide services. These costs
are reported as SG&A expenses in the wholesale footwear and accessories segment.
Edison Warehouse. On
October 17, 2007, we announced the closing of warehouse facilities in Edison,
New Jersey. In connection with the closing, we accrued $2.6 million of one-time
termination benefits and associated employee costs for 158 employees. These
costs are reported as SG&A expenses in the wholesale jeanswear segment. The
closing was substantially complete by the end of June 2008. Texas Warehouse. On
December 1, 2009, we announced the closing of warehouse facilities in Socorro,
Texas. Total costs are expected to be $3.3 million. We accrued $3.1 million of
termination benefits and associated employee costs for approximately 219
employees. The remaining $0.2 million will be recorded over the period the
related employees provide services. These costs are reported as SG&A expenses in
the wholesale jeanswear segment. The closing will be substantially complete by
the end of April 2010. The details of these restructuring
accruals are as follows: During 2009, 2008 and
2007, $6.5 million, $2.3 million and $1.2 million of the termination
benefits accruals were utilized (relating to partial or full severance
for 456, 180 and 469 employees, respectively). The net accruals of $7.9
million and $0.4 million at December 31, 2009 and 2008, respectively,
are reported as accrued restructuring and severance payments. Acquisition Restructurings The details of the acquisition
restructuring accruals are as follows: - 68 - The net accruals of $0.5
million and $0.8 million at December 31, 2009 and 2008, respectively, are
reported as other noncurrent liabilities. PROPERTY, PLANT AND EQUIPMENT Major classes of property, plant and equipment are as
follows: Depreciation and amortization
expense relating to property, plant and equipment (including capitalized leases)
reflected in results from continuing operations was $67.5 million, $76.3 million
and $74.4 million in 2009, 2008 and 2007, respectively. At December 31, 2009, we
had outstanding commitments of approximately $9.2 million relating primarily to
the construction or remodeling of retail store locations and distribution
centers. We capitalized approximately $0.5 million of interest in 2007 as part
of the cost of major capital projects and capitalized no interest in 2008 or
2009. Included in property, plant and
equipment are the following capitalized leases: - 69 - GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill represents the excess of
the purchase price and related costs over the value assigned to net tangible and
identifiable intangible assets of businesses acquired and accounted for under
the purchase method. Accounting rules require that we test at least annually for
possible goodwill impairment. We perform our test in the fourth fiscal quarter
of each year using a discounted cash flow analysis that requires that certain
assumptions and estimates be made regarding industry economic factors and future
profitability and cash flows. As a result of the 2007 impairment analysis, we
determined that the remaining goodwill balance existing in our wholesale
jeanswear segment was impaired as a result of decreases in projected revenues
and profitability for certain brands. Accordingly, we recorded an impairment
charge of $78.0 million. As a result of the 2008 impairment analysis, we
determined that the goodwill balance existing in our wholesale footwear and
accessories segment was impaired as a result of decreases in projected revenues
and profitability for the segment. Accordingly, we recorded an impairment charge
of $813.2 million. As a result of the 2009 impairment analysis, we determined
that the goodwill balance existing in our retail segment was impaired as a
result of decreases in projected revenues and profitability for the segment.
Accordingly, we recorded an impairment charge of $120.6 million. The changes in the carrying amount
of goodwill for 2008 and 2009, by segment and in total, are as follows: We also perform our annual
impairment test for indefinite-lived trademarks during the fourth fiscal quarter
of the year. As a result of the 2007 impairment analysis, we recorded trademark
impairment charges of $7.5 million as a result of decreases in projected
revenues for certain brands. We also recorded trademark impairment charges of
$80.5 million in 2007 as a result of our decision to discontinue or
significantly reduce the scale of certain brands. As a result of the 2008
impairment analysis, we recorded trademark impairment charges of $25.2 million
as a result of decreases in projected revenues for certain brands. As a result
of the 2009 impairment analysis, we recorded trademark impairment charges of
$28.7 million as a result of decreases in projected revenues for certain brands.
All trademark impairment charges are reported as SG&A expenses in the licensing,
other and eliminations segment. - 70 - The components of
other intangible assets are as follows: Amortization expense reflected in
results from continuing operations for intangible assets subject to amortization
was $2.3 million, $2.8 million and $2.3 million for 2009, 2008 and 2007,
respectively. Amortization expense for intangible assets subject to amortization
for each of the years in the five-year period ending December 31, 2014 is
estimated to be $2.0 million in 2010, $2.0 million in 2011, $1.9 million in
2012, $1.4 million in 2013 and $1.4 million in 2014. The cash flow models we use to
estimate the fair values of our goodwill and trademarks involve several
assumptions. Changes in these assumptions could materially impact our fair value
estimates. Assumptions critical to our fair value estimates are: (i) discount
rates used to derive the present value factors used in determining the fair
value of the reporting units and trademarks; (ii) royalty rates used in our
trademark valuations; (iii) projected revenue growth rates; and (iv) projected
long-term growth rates used in the derivation of terminal year values. These and
other assumptions are impacted by economic conditions and expectations of
management and will change in the future based on period-specific facts and
circumstances. The following table shows the range of assumptions we used to
derive our fair value estimates as part of our annual impairment testing for
2009 and 2008. FAIR VALUES ASC Subtopic 820-10 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. ASC Subtopic 820-10 outlines a valuation framework, creates a
fair value hierarchy in order to increase the consistency and comparability of
fair value measurements, and details the disclosures that are required for items
measured at fair value. We currently do not have non-financial assets and
non-financial liabilities that are required to be measured at fair value on a
recurring basis. We are permitted to choose to measure many financial
instruments and certain other items at fair value, although we did not elect the
fair value measurement option for any of our financial assets or liabilities.
We have several financial
instruments that must be measured under the fair value standard, including
derivatives, the assets and liabilities of the Jones Apparel Group, Inc.
Deferred Compensation Plan (the "Rabbi Trust") and deferred director fees that
are valued based on the quoted market price of our common stock. Our financial
assets and liabilities are to be measured using inputs from the three levels of
the fair value hierarchy, which are as follows: - 71 - Assets and Liabilities Measured at Fair Value on a Recurring Basis
In accordance with the fair value
hierarchy described above, the following table shows the fair value of our
financial assets and liabilities that are required to be measured at fair value
on a recurring basis at December 31, 2009 and 2008. Assets and Liabilities Measured at Fair Value on a Nonrecurring
Basis In accordance with the fair value
hierarchy described above, the following table shows the fair value of our
non-financial assets and liabilities that were measured at fair value on a
nonrecurring basis at December 31, 2009, and the total losses recorded as a
result of the remeasurement process. - 72 - During 2009, property and
equipment utilized in our retail operations with a carrying amount of
$24.4 million were written down to a fair value of zero, primarily as a
result of our decision to close approximately 265 underperforming retail
locations. These losses were recorded as an SG&A expense in the retail
segment. During 2009, trademarks with a carrying amount of $146.9
million were written down to a fair value of $118.2 million and the
$120.6 million of goodwill assigned to our retail segment was written
down to a fair value of zero. For further information regarding the
losses recorded for trademarks and goodwill, see "Goodwill and Other
Intangible Assets." Financial Instruments As a result of our global
operating and financing activities, we are exposed to changes in interest rates
and foreign currency exchange rates which may adversely affect results of
operations and financial condition. In seeking to minimize the risks and/or
costs associated with such activities, we manage exposure to changes in interest
rates and foreign currency exchange rates through our regular operating and
financing activities and, when deemed appropriate, through the use of derivative
financial instruments. The instruments eligible for utilization include forward,
option and swap agreements. We do not use financial instruments for trading or
other speculative purposes. At December 31, 2009, we had outstanding foreign
exchange contracts to exchange Canadian Dollars for a total notional value of US
$8.6 million at a weighted-average exchange rate of $1.06893 maturing through
May 2010. At
December 31, 2009 and 2008, the fair values of cash and cash equivalents,
receivables and accounts payable approximated their carrying values due to the
short-term nature of these instruments. The fair value of the note receivable
from GRI approximates the $10.0 million carrying value as it is a variable-rate
instrument. The estimated fair values of other financial instruments subject to
fair value disclosures, determined based on broker quotes or quoted market
prices or exchange rates for the same or similar instruments, and the related
carrying amounts are as follows: Financial instruments expose us to
counterparty credit risk for nonperformance and to market risk for changes in
interest and currency rates. We manage exposure to counterparty credit risk
through specific minimum credit standards and procedures to monitor the amount
of credit exposure. Our financial instrument counterparties are substantial
investment or commercial banks with significant experience with such
instruments. - 73 - CREDIT FACILITIES Prior to May 2009, we had a
revolving credit agreement with several lending institutions to borrow an
aggregate principal amount of up to $600 million (which was reduced by amendment
from $750 million on January 5, 2009). This agreement could be used for letters
of credit or cash borrowings. In May 2009, we replaced this revolving credit
facility and our C$10.0 million unsecured line of credit in Canada with a new
three-year $650 million secured revolving credit agreement (the "New Credit
Facility"). Under the New Credit Facility, up to the entire amount of the
facility is available for cash borrowings, with up to $400 million available for
trade letters of credit and up to $50 million for standby letters of credit, and
a subfacility available to our Canadian subsidiaries of up to $25 million for
letters of credit and borrowings. Borrowings under the New Credit Facility may
be used to refinance existing indebtedness and for general corporate purposes in
the ordinary course of business. Such borrowings bear interest either based on
the alternate base rate, as defined in the New Credit Facility, or based on
Eurocurrency rates, each with a margin that depends on the availability
remaining under the New Credit Facility. The New Credit Facility contains
customary events of default. We wrote off $4.4 million of deferred financing
costs related to our prior credit agreement as a result of a change in the
composition of participating lending institutions, which is reported as interest
expense and financing costs. We wrote off $1.1 million of deferred financing
fees in 2008 related to modifications made to prior revolving credit agreements
as a result of reductions made to the borrowing capacity of those agreements,
which is reported as interest expense and financing costs. Availability under the New Credit
Facility is determined in reference to a borrowing base consisting of a
percentage of eligible inventory, accounts receivable, credit card receivables
and licensee receivables, minus reserves determined by the joint collateral
agents. At December 31, 2009, we had no cash borrowings and $35.5 million of
letters of credit outstanding, and our remaining availability was $360.8
million. If availability under the New Credit Facility falls below a stated
level, we will be required to comply with a minimum fixed charge coverage ratio.
The New Credit Facility also contains affirmative and negative covenants that,
among other things, will limit or restrict our ability to (1) incur
indebtedness, (2) create liens, (3) merge, consolidate, liquidate or dissolve,
(4) make investments (including acquisitions), loans or advances, (5) sell
assets, (6) enter into sale and leaseback transactions, (7) enter into swap
agreements, (8) make certain restricted payments (including dividends and other
payments in respect of capital stock), (9) enter into transactions with
affiliates, (10) enter into restrictive agreements, and (11) amend material
documents. The New Credit Facility is secured by a first priority lien on
substantially all of our personal property. The weighted-average interest rate
for our credit facilities was 6.75% and 4.8% at December 31, 2009 and 2008,
respectively. LONG-TERM DEBT Long-term debt consists of the
following: Long-term debt
maturities during the next five years amount to $250.0 million in 2014. All of
our notes contain certain covenants, including, among others, restrictions on
liens, sale-leaseback transactions - 74 - and additional secured debt, and pay interest semiannually. The
weighted-average interest rate of our long-term debt was 5.6% and 5.2% at
December 31, 2009 and 2008, respectively. On April 1, 2009, we commenced a
cash tender offer to purchase any and all of our outstanding 4.250% Senior Notes
due 2009 (the "2009 Notes"), as well as a consent solicitation to amend the
indenture governing our outstanding 2009 Notes, our 5.125% Senior Notes due 2014
and our 6.125% Senior Notes due 2034 (collectively, the "Notes"). The purpose of
the consent solicitation was to receive the consent of holders of at least a
majority in principal amount of the Notes outstanding for proposed amendments to
the Indenture to provide for a carveout to the lien covenant, for liens incurred
in connection with the New Credit Facility. We received the required consents on
April 15, 2009; consequently, the Amendments became operative upon payment of
the consent fee to each validly consenting holder of the Notes, and are binding
on all holders, including non-consenting holders of Notes. The consideration for
each $1,000 principal amount of 2009 Notes validly tendered and not withdrawn
pursuant to the tender offer was $980, and the consent fee for each $1,000
principal amount of Notes with respect to which holders validly delivered and
did not revoke their consent pursuant to the consent solicitation was $20. Under the tender offer, we
repurchased a total of $242.5 million of our outstanding 2009 Notes for a
payment of $237.7 million, and we paid $12.9 million in consent fees to holders
of the Notes and $1.8 million of related costs, resulting in a loss on debt
extinguishment of $1.5 million. Of the consent fees paid, a net $7.1 million
relates to the remaining outstanding Notes and will be amortized over the life
of the remaining related Notes as additional interest expense. On November 15, 2009, we redeemed
the remaining $7.5 million outstanding 2009 Notes at maturity. ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss is comprised of the
following: DERIVATIVES ASC Topic 815, "Derivatives and
Hedging," establishes accounting and reporting standards for derivative
instruments. Specifically, ASC Topic 815 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 use foreign currency forward
contracts for the specific purpose of hedging the exposure to variability in
forecasted cash flows associated primarily with inventory purchases. These
instruments are designated as cash flow hedges as the principal terms of the
forward exchange contracts are the same as the underlying forecasted foreign
currency cash flows. Therefore, changes in the fair value of the forward
contracts should be highly effective in offsetting changes in the expected
foreign currency cash flows, and accordingly, changes in the fair value of
forward exchange contracts are recorded in accumulated other comprehensive
income, net of related tax effects, with the corresponding asset or liability
recorded in the balance sheet. Amounts recorded in accumulated other
comprehensive income are reflected in current-period earnings when the hedged
transaction affects earnings. Fair values are calculated by comparing - 75 - each hedging agreement's contractual exchange rate with the currency exchange
spot rate at the reporting date. The following summarizes the U.S.
Dollar notional amount and the fair value of our Canadian foreign currency
forward exchange contracts, which we have classified as cash flow hedges. The
contracts outstanding at December 31, 2009 mature at various dates through May
2010. The effect of our
cash flow hedges on the statement of operations was as follows: Since the
derivatives we use in our risk management strategies are highly effective
hedges because all the critical terms of the derivative instruments match
those of the hedged item, we record no ineffectiveness related to our cash
flow hedges. If foreign currency exchange rates do not change from their
December 31, 2009 amounts, we estimate that any reclassifications from other
comprehensive income to earnings within the next 12 months 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. OBLIGATIONS UNDER CAPITAL LEASES Obligations under capital leases
consist of the following: We lease an office facility in
Bristol, Pennsylvania under a 20-year net lease that runs until July 2018 and
requires minimum annual rent payments of approximately $1.1 million. The
building was capitalized at $12.2 million, which approximated the present value
of the minimum lease payments. We also lease various equipment under two- to
five-year leases at an aggregate annualized rental of $1.8 million. The
equipment was capitalized at $7.4 million, which approximated the present value
of the minimum lease payments. In 2003, we entered into a
sale-leaseback agreement for our Virginia warehouse facility. This transaction
resulted in a net gain of $7.5 million that has been deferred and is being
amortized over the lease term, which runs until March 2023 and requires minimum
annual rent payments of $2.4 million. The building was capitalized at $25.6
million, which approximated the present value of the minimum lease payments. The following is a schedule by
year of future minimum lease payments under capital leases, together with the
present value of the net minimum lease payments as of December 31, 2009: - 76 - COMMON STOCK The Board of Directors has
authorized several programs to repurchase our common stock from time to time in
open market transactions. We repurchased $496.9 million of our common stock
during 2007 and no amounts in 2008 or 2009. As of December 31, 2009, $304.1
million of Board authorized repurchases was still available. We may make
additional share repurchases in the future depending on, among other things,
market conditions and our financial condition, although any such repurchases
will be subject to limitations under our current revolving credit agreement. Our Board of Directors has
authorized our common stock repurchases as a tax-effective means to enhance
shareholder value and distribute cash to shareholders and, to a lesser extent,
to offset the impact of dilution resulting from the issuance of employee stock
options and shares of restricted stock. We believe that we have sufficient
sources of funds to repurchase shares without significantly impacting our
short-term or long-term liquidity. In authorizing future share repurchase
programs, our Board of Directors gives careful consideration to our projected
cash flows, our existing capital resources and repurchase limitations under our
current revolving credit agreement. On September 6, 2007, we entered
into an accelerated stock repurchase ("ASR") agreement with Goldman, Sachs & Co.
("Goldman") to repurchase $400 million of our outstanding common stock.
Purchases under the ASR were subject to collar provisions that established
minimum and maximum numbers of shares based generally on the volume-weighted
average price of our common stock during the term of the ASR program. We
received an initial delivery of 15.5 million shares on September 11, 2007 and a
second delivery of 2.4 million shares on October 18, 2007. Final settlement of
the ASR program was scheduled for no later than July 19, 2008 and could occur
earlier at the option of Goldman or later under certain circumstances. On June
5, 2008, Goldman informed us that it had concluded the ASR. As a result, we
received a final delivery of 3.2 million shares on June 10, 2008, bringing the
aggregate number of shares received under the ASR program to 21.1 million
shares. No cash was required to complete the final delivery of shares. The
combined average price for the shares delivered under the ASR was $19.00 per
share. COMMITMENTS AND CONTINGENCIES (a) CONTINGENT LIABILITIES. We
have been named as a defendant in various actions and proceedings, including
actions brought by certain employees whose employment has been terminated
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
effect on our financial position or results of operations. (b) ROYALTIES. We have an
exclusive licenses to produce and sell women's footwear under the Dockers(R)
Women trademark in the United States (including its territories and possessions)
and infants', toddlers' and boys' footwear (excluding girls' footwear) under the
Dockers(R) and Dockers(R) Premium trademarks in the United
States (including its territories and possessions) pursuant to agreements with
- 77 - Levi Strauss & Co. which expire on December 31, 2011. The agreements require
us to pay a percentage of net sales against guaranteed minimum royalty and
advertising payments as set forth in the agreement. Minimum payments under these
agreements amount to $0.8 million and $0.9 million for 2010 and 2011,
respectively. We have an exclusive license to
produce, market and distribute costume jewelry in the United States, Canada,
Mexico and Japan under the Givenchy trademark pursuant to an agreement
with Givenchy, which expires on December 31, 2011. The agreement requires us to
pay a percentage of net sales against guaranteed minimum royalty and advertising
payments as set forth in the agreement. Minimum payments under this agreement
amount to $0.7 million per year. We have an exclusive license with
New Balance Athletic Shoe, Inc. and its affiliate New Balance Licensing, LLC to
create and distribute a fashion-lifestyle footwear collection that brings
together New Balance's innovative performance and materials technology with Nine
West's fashion styling. The agreement, which expires December 31, 2010, requires
us to pay a percentage of net sales as set forth in the agreement. No minimum
payments are required under this agreement. In January 2010, we entered into a
sub-license agreement with VCJS LLC ("VCJS") to design, develop, produce and
distribute in the United States, Mexico and Canada Jessica Simpson
jeanswear under the Jessica Simpson (signature) trademark which VCJS
licenses from With You, Inc. ("WYI"). The agreement, which expires on December
31, 2014 (October 15, 2014 if the master license between WYI and VCJS is not
renewed), requires us to pay a percentage of net sales against guaranteed
minimum royalty and pooled marketing fee payments as set forth in the agreement.
Minimum payments under these agreements amount to $0.1 million, $0.4 million,
$0.7 million, $0.8 million and $1.1 million for 2010, 2011, 2012, 2013 and 2014,
respectively. (c) LEASES. Total rent expense
charged to continuing operations for 2009, 2008 and 2007 was as follows. The following is a schedule by
year of minimum rental payments required under operating leases: Certain of the leases provide for
renewal options and the payment of real estate taxes and other occupancy costs.
Future rental commitments for leases have not been reduced by minimum
non-cancelable sublease rentals aggregating $19.9 million. - 78 - STATEMENT OF CASH FLOWS INCOME TAXES The following summarizes the
(benefit) provision for income taxes for continuing operations: The domestic and foreign
components of loss before (benefit) provision for income taxes from continuing
operations are as follows: The provision (benefit) for income
taxes from continuing operations on adjusted historical income differs from the
amounts computed by applying the applicable Federal statutory rates due to the
following: - 79 - We have not provided for U.S.
Federal and foreign withholding taxes on $27.2 million of foreign subsidiary
undistributed earnings as of December 31, 2009. Such earnings are intended to be
reinvested indefinitely. The following is a summary of the
significant components of our deferred tax assets and liabilities: As of December 31, 2009, we had
federal, state and foreign net operating loss carryforwards of $399.0 million,
which expire through 2029, foreign and general business tax credit carryforwards
of $11.5 million, which expire through 2029 and state tax credit carryforwards
of $8.1 million, which expire through 2026. In 2006, we determined that $303.1
million of capital loss carryforwards, $12.8 million of state net operating loss
carryforwards and $6.2 million of state credit carryforwards may not be
utilized; therefore, we established valuation allowances of $107.7 million, $0.7
million (net of federal tax benefit) and $4.0 million (net of federal tax
benefit) related to the capital loss, state net operating loss and credit
carryforwards, respectively. In 2007, the capital loss
valuation allowance of $107.7 million was reversed as capital gain income
generated from the sale of Barneys fully utilized the capital loss
carryforwards. The reversal has been recorded in income from continuing
operations as the creation of the valuation allowance was recorded in continuing
operations in 2006 upon the sale of our Polo Jeans Company business. The state
net operating - 80 - loss valuation allowance of $0.7 million was also reversed as the 2002 state
net operating loss carryforward was unable to be utilized. During the fourth
fiscal quarter of 2007, we determined that $1.8 million of state credit
carryforwards expiring through 2021 may not be utilized; therefore, we
established a valuation allowance of $1.2 million (net of federal tax benefit)
related to the state credit carryforward. During the fourth fiscal quarter
of 2009, we determined that $10.7 million of state net operating loss
carryforwards expiring through 2013 may not be utilized; therefore, we
established a valuation allowance of $0.6 million (net of federal tax benefit)
related to the state net operating loss carryforwards. Uncertain tax positions Our total unrecognized tax
benefits as of December 31, 2009 and December 31, 2008 were $6.6 million and
$14.1 million, respectively (net of federal tax benefit), which included $6.0
million and $7.3 million of interest and penalties, respectively (net of federal
tax benefit). If recognized as of December 31,
2009 and 2008, $6.6 million and $14.1 million, respectively (net of federal tax
benefit) of our unrecognized tax benefit would reduce income tax expense and the
effective tax rate. We file a consolidated U.S.
federal income tax return as well as separate, unitary and combined income tax
returns in multiple state jurisdictions. In addition, we file income tax returns
in various foreign jurisdictions. The Internal Revenue Service has
completed examination of our federal returns for taxable years prior to 2006.
Our state income tax examinations, with limited exceptions, have been completed
for the periods prior to 2005. The Internal Revenue Service is currently
examining our 2006 through 2008 federal income tax returns. We reasonably expect
to settle all ongoing audits by December 31, 2010. STOCK OPTIONS AND RESTRICTED STOCK Under the Jones Apparel Group,
Inc. 2009 Long Term Incentive Plan, we may grant stock options and other awards
from time to time to key employees, officers, directors, advisors and
independent consultants to us or to any of our subsidiaries. In general, options
become exercisable over either a three-year or five-year period from the grant
date and expire 10 years after the date of grant for options granted on or
before May 28, 2003 and seven years after the date of grant thereafter. In
certain cases for non-employee directors, options become exercisable six months
after the grant date. Shares available for future option and restricted stock
grants at December 31, 2009 and 2008 totaled 2.5 million and 4.2 million,
respectively. Our policy is to issue new shares upon the exercise of options
and, when possible, to offset these new shares by repurchasing shares in the
open market. We currently have no plans to repurchase any shares in 2010. Compensation cost recorded for
stock-based employee compensation awards (including awards to non-employee
directors) reflected in continuing operations as an SG&A expense was $13.0
million, $12.3 million and $14.0 million for 2009, 2008 and 2007, respectively.
The total tax benefit recognized for the compensation cost recorded for
stock-based employee compensation awards for 2009, 2008 and 2007 totaled $4.6
million, $4.1 million and $2.4 million, respectively. Total compensation cost
for continuing operations related to unvested awards not yet recognized at
December 31, 2009 was $7.6 million, which is expected to be amortized over a
weighted-average period of approximately 16 months. Cash received - 81 - from option exercises for 2008 and 2007 was $0.1 million and $11.1 million,
respectively. No options were exercised in 2009. The following tables summarize
information about stock option transactions and related information (options in
millions): The fair value of each option
award is estimated on the date of the grant using the Black-Scholes-Merton
option pricing model. Expected volatilities are based on historical volatility
of our stock price and implied volatilities from publicly traded options on our
stock. We use historical data to estimate an option's expected life; the
expected life for grants to senior management-level employees and other
employees are considered separately for valuation purposes. The risk-free
interest rate input is based on the U.S. Treasury yield curve in effect at the
time of the grant. Compensation cost, net of projected forfeitures, is
recognized on a straight-line basis over the period between the grant and
vesting dates, with compensation cost for grants with a graded vesting schedule
recognized on a straight-line basis over the requisite service period for each
separately vesting portion of the award as if the award was, in substance,
multiple awards. We did not grant any options in 2007, 2008 or 2009. Compensation cost for restricted
stock is measured as the excess, if any, of the quoted market price of our stock
at the grant date over the amount the employee must pay to acquire the stock
(which is generally zero). The compensation cost, net of projected forfeitures,
is recognized over the period between the issue date and the date any
restrictions lapse, with compensation cost for grants with a graded vesting
schedule recognized on a straight-line basis over the requisite service period
for the total award. The restrictions do not affect voting and dividend rights.
The following tables summarize
information about unvested restricted stock transactions (shares in millions): - 82 - During 2009, 2,051,820 shares of
restricted common stock were issued to employees and directors under the 1999
Stock Incentive Plan and the 2009 Long-Term Incentive Plan. The restrictions
generally lapse on the third anniversary of issue. The value of this stock based
on quoted market values at the grant dates was $7.3 million. During 2008, 1,327,074 shares of
restricted common stock were issued to employees and directors under the 1999
Stock Incentive Plan. The restrictions generally lapse on the third anniversary
of issue. The value of this stock based on quoted market values at the grant
dates was $20.3 million. During 2007, 761,750 shares of
restricted common stock were issued to employees and directors under the 1999
Stock Incentive Plan. The restrictions generally lapse on the third anniversary
of issue. The value of this stock based on quoted market values at the grant
dates was $24.6 million. EMPLOYEE BENEFIT PLANS Defined Contribution Plan We have elected to make the Jones
Plan a "Safe Harbor Plan" under Section 401(k)(12) of the Code. As a result of
this election, we make a fully-vested safe harbor matching contribution for all
eligible participants amounting to 100% of the first 3% of the participant's
salary deferred and 50% of the next 2% of salary deferred, subject to maximums
set by the Department of the Treasury. We may, at our sole discretion,
contribute additional amounts to all employees on a pro rata basis. We contributed approximately $7.0
million, $7.1 million and $6.9 million to our defined contribution plan from
continuing operations during 2009, 2008 and 2007, respectively. Defined Benefit Plans We maintain several defined
benefit plans, including the Pension Plan for Associates of Nine West Group Inc.
(the "Cash Balance Plan") and The Napier Company Retirement Plan for certain
associates of Victoria (the "Napier Plan"). The Cash Balance Plan expresses
retirement benefits as an account balance which increases each year through
interest credits, with service credits frozen as of February 15, 1999. All
benefits under the Napier Plan are frozen at the amounts earned by the
participants as of December 31, 1995. Our funding policy is to contribute at
least the minimum amount to meet the funding ratio - 83 - requirements of the Pension Protection Act, which began to phase in during
2008. We plan to contribute $5.7 million to our defined benefit plans in 2010.
The measurement date for all plans is December 31. Obligations and Funded Status Amounts Recognized on the Balance Sheet Amounts Recognized in Accumulated Other Comprehensive (Loss) Income Information for Pension Plans with an Accumulated Benefit Obligation in
Excess of Plan Assets - 84 - Components of Net Periodic Benefit Cost and Other Amounts Recognized in
Other Comprehensive Income or Loss The estimated net
loss that will be amortized from accumulated other comprehensive income into net
periodic benefit cost in 2010 is $1.6 million. Assumptions Significant assumptions related
to the calculation of our obligations include the discount rate used to
calculate the present value of benefit obligations to be paid in the future and
the expected long-term rate of return on assets. We review these assumptions
annually based upon currently available information, including information
provided by our actuaries. Based on these reviews, we lowered the discount rate
for benefit obligations at December 31, 2009 to 6.1%, as compared with 6.8% in
the prior year, based on the Citigroup Above Median AA Spot Rates as of December
31, 2009. At December 31, 2009, an unfavorable quarter-point (0.25%) change in
the discount rate would increase our benefit obligation liability by $1.5
million and our 2010 expense by $0.1 million, while a quarter-point change in
the expected long-term return on plan asset assumption would increase our 2010
expense by $0.1 million. Estimated Future Benefit Payments - 85 - Plan Assets Our overall investment strategy is
to diversify investments across types of investments and investment managers.
The primary objectives are to achieve a rate of return sufficient to meet
current and future plan cash requirements and to emphasize long-term growth of
principal while avoiding excessive risk and maintaining fund liquidity.
Permitted investment vehicles include investment-grade fixed income securities,
domestic and foreign equity securities, mutual funds, guaranteed insurance
contracts and real estate, while speculative and derivative investment vehicles,
short selling and margin transactions are generally prohibited. The investment
managers have full discretion to manage their portion of the investments subject
to the objectives and policies of the respective plans. The performance of the
investment managers is reviewed on a regular basis. At December 31, 2009, the
weighted-average target allocation percentages for fund investments were 59%
equity securities and 41% fixed income securities. To determine the overall expected
long-term rate-of-return-on-assets assumption, we add an expected inflation rate
to the expected long-term real returns of our various asset classes, taking into
account expected volatility and correlation between the returns of the asset
classes as follows: for equities and real estate, a historical average
arithmetic real return; for government fixed-income securities, current yields
on inflation-indexed bonds; and for corporate fixed-income securities, the yield
on government fixed-income securities plus a blend of current and historical
credit spreads. The fair values of our pension
plan assets at December 31, 2009 by asset category are presented in the
following table. All fair values are based on quoted prices in active markets
for identical assets (Level 1 in the fair value hierarchy). Other Plans We also maintain the Nine West
Group Inc. Supplemental Executive Retirement Plan, the Nine West Group Inc.
Postretirement Executive Life Plan, the Nine West Group, Inc. Postretirement
Medical Plan and the Nine West Group Inc. Long Term Disabled Postemployment
Benefit Plan, none of which have a material effect on our results of operations
or on our financial position. These plans, which are unfunded, were underfunded
by $4.1 million at December 31, 2009. Of this amount, $0.3 million is reported
under accrued expenses and other current liabilities and $3.8 million is
reported under other noncurrent liabilities. We also maintain the Jones Apparel
Group, Inc. Deferred Compensation Plan, a non-qualified defined contribution
plan for certain management and other highly compensated employees (the "Rabbi
- - 86 - Trust"). Under the plan, participants may elect have up to 90% of their
salary and annual bonus deferred and deposited with a qualified trustee, who in
turn invests the money in a variety of investment vehicles as selected by each
participant. The assets of the Rabbi Trust, consisting of primarily debt and
equity securities, are recorded at current market prices (Level 1 in the fair
value hierarchy). The trust assets are available to satisfy claims of our
general creditors in the event of bankruptcy. The trust's assets, included in
prepaid expenses and other current assets, and the corresponding deferred
compensation liability, included in accrued employee compensation and benefits,
were $7.8 million and $6.4 million at December 31, 2009 and 2008, respectively.
This plan has no effect on our results of operations. We participate in a multi-employer
defined benefit plan that covers union employees at a distribution center that
has been closed. As a result of closing this facility, in March 2009 we paid a
partial withdrawal liability payment of $2.4 million. Should any of the other
participating companies in this plan also cease participation, we may become
liable for a full withdrawal liability payment. We do not believe any resulting
liability will be material. EQUITY METHOD INVESTMENTS We had two joint ventures formed
with HCL Technologies Limited ("HCL") to provide us with computer consulting,
programming and associated support services. HCL is a global technology and
software services company offering a suite of services targeted at technology
vendors, software product companies and organizations. We had a 49% ownership
interest in each joint venture, which operated under the names HCL Jones
Technologies, LLC and HCL Jones Technologies (Bermuda), Ltd. The agreement under
which the joint ventures were established terminated in January 2008. We had a 50% ownership interest in
a joint venture with Sutton Development Pty. Ltd. ("Sutton") to operate retail
locations in Australia, which operated under the name Nine West Australia Pty
Ltd. We sold our interest in this joint venture to Sutton on December 3, 2007
for $20.7 million, which resulted in a pre-tax gain of $8.2 million. The sales
price was subject to certain working capital adjustments, which resulted in
additional sales proceeds and pre-tax gain of $0.8 million in 2008. On June 20, 2008, we acquired a
10% equity interest in GRI, an international accessories and apparel brand
management and retail-distribution network, for $20.2 million. On June 24, 2009,
we increased our equity interest to 25% for an additional $15.2 million. The
selling shareholders of GRI are entitled to receive an additional cash payment
equaling 60% of the amount of GRI's fiscal year 2011 net income that exceeds a
certain threshold. GRI is the exclusive licensee of several
of our brands in Asia, including Nine West, Anne Klein New York, AK Anne
Klein, Easy Spirit, Enzo Angiolini and Joan & David. GRI also
distributes other women's apparel, shoes and accessory brands. See "Accounts
Receivable" for additional information regarding GRI. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION We identify operating segments
based on, among other things, differences in products sold and 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 jeanswear, 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 and our own 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, goodwill impairment charges, gains or losses
on sales of subsidiaries, equity in earnings of unconsolidated affiliates and
income taxes. Summarized below are our revenues and income by reportable segment
for 2009, 2008 and 2007. - 87 - Revenues from external customers
and long-lived assets excluding deferred taxes related to continuing operations
in the United States and foreign countries are as follows: - 88 - SUPPLEMENTAL PRO FORMA CONDENSED 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 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. Effective January 1, 2010, Nine West merged
into Jones Retail, which then changed its name to JAG Footwear, Accessories and
Retail Corporation. Condensed Consolidating Balance Sheets - 89 - Condensed Consolidating Statements of Operations - 90 - Condensed Consolidating Statements of Cash Flows - 91 - UNAUDITED CONSOLIDATED FINANCIAL INFORMATION Unaudited interim consolidated financial information for the
two years ended December 31, 2009 is summarized as follows: Quarterly figures may not add to full year
due to rounding. SUBSEQUENT EVENTS On February 4, 2010, we announced
that we had acquired 100% of the membership interests of Moda Nicola
International, LLC ("MNI"), owner of the Robert Rodriguez Collection, a
privately held designer, marketer and wholesaler of women's contemporary
eveningwear and sportswear. The initial estimated purchase price was $17.0
million, subject to certain holdback provisions and working capital adjustments.
Under the terms of the agreement, the selling members of MNI are entitled to
receive future cash payments upon achievement of certain financial targets set
within the agreement. This acquisition will be reported as part of our wholesale
better apparel segment.
We have evaluated subsequent events through February 16, 2010, the date on which these financial statements were issued. - 92 - ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. ITEM 9A. 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 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. The purpose of disclosure controls
is to ensure that information required to be disclosed in our reports filed with
or submitted to the SEC under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. Disclosure controls are also designed to ensure that such information is
accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer, to allow timely
decisions regarding required disclosure. The purpose of internal controls is to
provide reasonable assurance that our transactions are properly authorized, our
assets are safeguarded against unauthorized or improper use and our transactions
are properly recorded and reported to permit the preparation of our financial
statements in conformity with generally accepted accounting principles. Our management does not expect
that our disclosure controls or our internal controls will prevent all error and
all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable rather than absolute assurance that the objectives of
the control system are met. The design of a control system must also reflect the
fact that there are resource constraints, with the benefits of controls
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud (if any) within the company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that simple errors or mistakes can occur.
Controls can also be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the control. The
design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected. Our internal controls are
evaluated on an ongoing basis by our Internal Audit department, by other
personnel in our organization and by our independent auditors in connection with
their audit and review activities. The overall goals of these various evaluation
activities are to monitor our disclosure and internal controls and to make
modifications as necessary, as disclosure and internal controls are intended to
be dynamic systems that change (including improvements and corrections) as
conditions warrant. Part of this evaluation is to determine whether there were
any significant deficiencies or material weaknesses in our internal controls, or
whether we had identified any acts of fraud involving personnel who have a
significant role in the our internal controls. Significant deficiencies are
control issues that could have a significant adverse effect on the ability to
record, process, summarize and report financial data in the financial
statements; material weaknesses are particularly serious conditions where the
internal control does not reduce to a relatively low level the risk that
misstatements caused by error or fraud may occur in amounts that would be
material in relation to the financial statements and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. Based upon this evaluation, our
Chief Executive Officer and our Chief Financial Officer concluded
that both our disclosure controls and procedures and our internal controls and
procedures are effective in timely alerting them to material information
required to be included in our periodic SEC filings and - 93 - ensuring 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 in ensuring 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 address the
implementation of SAP, an enterprise resource planning ("ERP") system. We began
the process of implementing SAP throughout Jones Apparel Group, Inc. and our
consolidated subsidiaries in 2006. SAP will integrate our operational and
financial systems and expand the functionality of our financial reporting
processes. During the fourth fiscal quarter of 2009, no additional businesses
were converted to this system. We have adequately controlled the transition to
the new processes and controls, with no negative impact to our internal control
environment. We expect to continue the implementation of this system to all
locations over a multi-year period. As the phased roll out occurs, we will
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. Management's Annual Report on Internal Control Over Financial Reporting
Management's report on Internal
Control Over Financial reporting appears on page
52. Our independent registered
public accounting firm, BDO Seidman, LLP, has issued an audit report on our
internal control over financial reporting, which appears on page 53. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information about our
directors appearing in the Proxy Statement under the caption "Election of
Directors" is incorporated herein by reference. We have adopted a Code of Business
Conduct and Ethics and a Code of Ethics for Senior Executive and Financial
Officers, which applies to our Chief Executive Officer, Chief Financial Officer,
Controller and other personnel performing similar functions. Both codes are
posted on our website, www.jonesapparel.com under the "Our Company - Corporate
Governance" caption. We intend to make all required disclosures regarding any
amendment to, or a waiver of, a provision of the Code of Ethics for Senior
Executive and Financial Officers by posting such information on our website. The information appearing in the
Proxy Statement relating to the members of the Audit Committee and the Audit
Committee financial expert under the captions "Corporate Governance - Board
Structure and Committee Composition" and "Corporate Governance - Board Structure
and Committee Composition - Audit Committee" and the information appearing in
the Proxy Statement under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" is incorporated herein by this reference. The balance of the information
required by this item is contained in the discussion entitled "Executive
Officers of the Registrant" in Part I of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information appearing in the
Proxy Statement under the captions "Executive Compensation," "Corporate
Governance - Compensation Committee Interlocks and Insider Participation" and
the information appearing in the Proxy Statement relating to the compensation of
directors under the caption "Corporate Governance - Director Compensation and
Stock Ownership Guidelines" is incorporated herein by this reference. - 94 - ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS The information
appearing in the Proxy Statement under the caption "Security Ownership of
Certain Beneficial Owners" is incorporated herein by this reference. Equity Compensation Plan Information The following table
gives information about our common stock that may be issued upon the exercise of
options, warrants and rights under all of our existing equity compensation plans
as of December 31, 2009. For further information, see "Stock Options and
Restricted Stock" in Notes to Consolidated Financial Statements. Plan Category Number of securities to be issued upon exercise of
outstanding options, warrants and rights Weighted-average exercise price of outstanding options,
warrants and rights Number of securities remaining available for future
issuance under equity compensation plans Equity compensation plans approved by security holders 6,215,377 $32.79 2,497,100 Equity compensation plans not approved by security holders -- -- -- Total 6,215,377 $32.79 2,497,100 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information appearing in the
Proxy Statement under the captions "Corporate Governance - Independence of
Directors," "Corporate Governance - Board Structure and Committee Composition"
and "Corporate Governance - Policy with Respect to Related Person Transactions"
is incorporated herein by this reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information appearing
in the Proxy Statement under the caption "Fees Paid to Independent Registered
Public Accountants" is incorporated herein by this reference. - 95 - PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
- 96 - Pursuant to the requirements of Section 13 or 15(d) 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. By: Pursuant to the requirements of
the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated. Chairman and Director - 97 -
INDEX TO FINANCIAL STATEMENT SCHEDULES Report of Independent Registered Public Accounting Firm on
Schedule II. Schedule II. Valuation and qualifying accounts Schedules other than those listed above have been omitted
since the information is not applicable, not required or is included in the
respective financial statements or notes thereto. Exhibit No. - 98 - Exhibit No. - 99 - Exhibit No. - 100 - Exhibit No. - 101 - Exhibit No. - 102 - ____________________ - 103 - Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders The audits referred to in our report dated February 16, 2010 relating to the
consolidated financial statements of Jones Apparel Group, Inc., which is
contained in Item 8 of this Form 10-K also included the audit of the financial
statement schedule listed in the accompanying index. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits. In our opinion such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein. New York, New York - 104 - SCHEDULE II _________________________ EXHIBIT 3.2 JONES APPAREL GROUP, INC. AMENDED AND RESTATED (as of 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 2 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. 3
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 4 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 5 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 6 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 7 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. 8
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 9 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; 10
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. 11 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 Number and Term of Office. The number of Directors of the
Corporation 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 elected at an annual
meeting, they 12 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 Regular Meetings. The Board of Directors may hold regular
meetings at such times and places as it may determine.
5.4 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.
5.5 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.
5.6 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 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. 13
5.7 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.
5.8 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.
5.9 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.
5.10 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 14 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 5.10, 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 5.10 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.
5.11 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 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 15 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 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 16 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. ARTICLE VII - OFFICERS
7.1 Officers. The officers of the corporation shall be chosen by
the Board of Directors and shall include a Chairman,
Chief Executive Officer, 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 17 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, Chief Executive Officer,
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
7.4 18 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.
7.5 President. The President shall have such
authority and duties as shall from time to time be assigned to him or her by the
Board of Directors or the Chief Executive Officer. The President shall report to
the Chief Executive Officer. The President 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.
19
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 20 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 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 21 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 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. 22 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. * * * * * 23 EXHIBIT 10.43 Form of Section 409A Amendment to Employment Agreements with
Named Executive Officers
THIS SECTION 409A AMENDMENT dated
as of July ____, 2008 to the Employment Agreement dated {__________} by and
between {______________} (the "Company") and {_______________} (the "Employee"),
{as amended} (the "Agreement"). All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Agreement. WHEREAS, the Company and the
Employee entered into the Agreement; and WHEREAS, the Company and the
Employee desire to amend the Agreement to comply with Section 409A of the
Internal Revenue Code of 1986, as amended, (the "Code"); NOW, THEREFORE, the parties hereto
agree to amend the Agreement as follows. 1. This Section 409A Amendment
shall apply to all or any portion of any payment or benefit payable under the
Agreement as a result of termination of the Employee's employment that is not
exempted from Section 409A ("409A Severance Compensation"). 2. Notwithstanding anything in the
Agreement to the contrary, the following rules shall apply to any 409A Severance
Compensation in order to prevent any accelerated or additional tax under Section
409A of the Code:
(a) If the termination of the Employee's employment does not qualify as a
"separation from service" within the meaning of Treasury Regulation Section
1.409A-1(h) from the "Company's Controlled Group," then any 409A Severance
Compensation will not commence until a "separation from service" occurs or, if
earlier, the earliest other date as is permitted under Section 409A of the Code.
For this purpose, the "Company's Controlled Group" means (i) the Company, (ii)
any corporation which is a member of a controlled group of corporations (as
defined in Section 414(b) of the Code) that includes the Company and (iii) any
trade or business (whether or not incorporated) which is under "common control"
(as defined in Section 414(c) of the Code) with the Company.
(b) If at the time of the Employee's separation from service, the Employee is a
"specified employee" as defined in Section 409A of the Code, then (i) the Company will defer the
commencement of any 409A Severance Compensation (without any reduction in
such payments or benefits ultimately paid or provided to the Employee) until
the date that is six (6) months following the Employee's separation from
service or, if earlier, the earliest other date as is permitted under
Section 409A (the "409A Deferral Period"); (ii) immediately following the
expiration of the 409A Deferral Period, the Company will make a lump sum
payment to the Employee in an amount equal to the 409A Severance Compensation that the Employee would have received during
the 409A Deferral Period but for the application of clause (i) above; and
(iii) any amounts payable to
the Employee following the expiration of the 409A Deferral Period shall be
paid to the Employee at the same time and in the same manner as set forth in
the Agreement.
(c) Any and all provisions of the Agreement concerning any 409A Severance
Compensation to be paid by the Company to the Employee following termination of
the Employee's employment that confer discretion on the Company to make the
payment either in the form of installments or in a lump sum are hereby amended
to eliminate such discretion as to form and, in lieu thereof, to provide solely
for payment in installments in accordance with past payroll practices. 3. Except as otherwise set forth
in this Section 409A Amendment, the Agreement is ratified and confirmed in all
respects and remains in full force and effect. IN WITNESS WHEREOF, the Company has caused this 409A Amendment to be executed
on its behalf by a duly authorized officer and the Employee has hereunto set his
hand. By: _____________________ Agreed in all respects: EMPLOYEE: _____________________ Sidney Kimmel July 14, 2008 EXHIBIT 10.45 JONES APPAREL GROUP, INC. THIS AGREEMENT dated as of
___________, 20___, is by and between JONES APPAREL GROUP, INC., a Pennsylvania
corporation (the "Company") and the person named on Annex I (the "Employee").
The Company has adopted the Jones
Apparel Group, Inc. 2009 Long Term Incentive Plan (the "Plan"). The Plan, as it
has been amended to date and may hereafter be amended and continued, is
incorporated herein by reference and made part of this Agreement. All
capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Plan. The Committee, which is charged
with the administration of the Plan pursuant to Section 3 thereof, has
determined that it would be to the advantage and in the interest of the Company
to grant the award provided for herein to the Employee as an inducement to
remain in the service of the Company or one of its subsidiaries, and as an
incentive for increased efforts during such service. In consideration of the mutual
promises and covenants made herein and the mutual benefits to be derived
herefrom, the parties hereto agree as follows: 1. Grant of Restricted Shares.
(a) Subject to the provisions of this Agreement and to the provisions of the
Plan, the Company hereby grants to the Employee that number of shares of
restricted Common Stock of the Company, par value $.01 per share, set forth on
Annex I attached hereto (the "Restricted Shares"). The Restricted Shares
shall be issued by the Company and registered in the name of the Employee. They
may be evidenced either by means of a certificate or through the entry of an
uncertificated book position on the stock transfer books of the Company, at the
Company's option. Certificates issued with respect to Restricted Shares shall be
held by the Company in escrow under the terms hereof. Such certificates shall
bear the legend set forth in subsection (c) below or such other appropriate
legend as the Committee shall determine, which legend shall be removed only if
and when the Restricted Shares vest as provided herein, at which time the
certificates shall be delivered to the Employee. Uncertificated book positions
shall be subject to such "stop transfer" or other appropriate restrictions in
the stock transfer books of the Company as the Committee shall determine. Upon
the issuance of Restricted Shares hereunder, the Employee shall be entitled to
vote the Restricted Shares, and shall be entitled to receive, free of all
restrictions, ordinary cash dividends and dividends in the form of shares
thereon; provided, however, that dividends in respect of Restricted Shares as to
which vesting is conditioned upon the achievement of performance goals
("Performance-Based Awards") shall be accumulated and not paid out to the
Employee unless and until the Restricted Shares vest. Grantees of Restricted
Shares that are not Performance-Based Awards shall not be required to return any
such ordinary dividends to the Company in the event of forfeiture of such
Restricted Shares. The Employee's right to receive any extraordinary dividends
or other distributions with respect to Restricted Shares prior to their becoming
nonforfeitable shall be at the sole discretion of the Committee, but in the event of any such extraordinary event, the Committee shall take such
action as is appropriate to preserve the value of, and prevent the unintended
enhancement of the value of, the Restricted Shares.
(b) In order to comply with any applicable securities laws, the Company may
require the Employee (i) to furnish evidence satisfactory to the Company
(including a written and signed representation letter) to the effect that the
Restricted Shares were acquired for investment only and not for resale or
distribution and (ii) to agree that the Restricted Shares shall only be sold by
the Employee following registration under the Securities Act of 1933, as
amended, or pursuant to an exemption therefrom.
(c) Unless otherwise determined by the Committee, any certificate issued in
respect of the Restricted Shares prior to the lapse of any outstanding
restrictions relating thereto shall bear the following legend: "The sale, transfer, alienation, attachment, assignment, pledge or
encumbrance of the shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the Jones Apparel Group,
Inc. 2009 Long Term Incentive Plan and an Agreement entered into by the
registered owner and the Company dated as of ___________, 20___. Copies
of such Plan and Agreement are on file at the offices of the Company.
Any attempt to dispose of these shares in contravention of the
applicable restrictions, including by way of sale, assignment, transfer,
pledge, hypothecation or otherwise, shall be null and void and without
effect." 2. Vesting. Subject to Section 3 hereof, the
restrictions on transfer of the Restricted Shares shall lapse and the Restricted
Shares shall become vested and nonforfeitable as follows:
(a) See Annex I attached hereto.
(b) In the event of (i) the dissolution or liquidation of the Company, or (ii)
the disposition by the Company of substantially all of the assets or stock of a
subsidiary of which the Employee is then an employee, officer or director,
consultant, adviser, agent or independent representative, then, if the Committee
shall so determine, any Restricted Shares not forfeited prior to a "change in
control" (as defined in the Plan) shall become immediately free of all
restrictions and fully vested and transferable.
(c) Except as otherwise provided in an employment agreement between the Company
and the Employee, upon the Employee's termination of employment or other
termination of service by the Company other than (i) for cause or (ii) for
permanent and total disability, during the 24-month period following a change in
control in connection with which the grant of Restricted Shares is assumed,
converted or replaced, then, unless the Committee determines otherwise, any
restrictions applicable to the Restricted Shares shall lapse, and the 2 Restricted Shares shall become immediately free of all restrictions and fully
vested and transferable. If the grant of Restricted Shares is not assumed,
converted or replaced, then upon such change in control, any restrictions
applicable to the Restricted Shares shall lapse, and the Restricted Shares shall
become immediately free of all restrictions and fully vested and transferable.
3. Termination of Employment.
Except as provided in Sections
2(c) or Section 4 hereof, Restricted Shares shall not vest unless the Employee
is then an employee (including directors and officers who are employees),
director or officer of the Company or any subsidiary of the Company, or a
consultant, advisor, agent or independent representative of the Company or any
subsidiary of the Company, or any combination thereof and unless the Employee
has remained continuously so employed or has continuously so served since the
date of grant of the Restricted Shares. Except as otherwise provided in
Section 2(c) or Section 4 hereof, in the event that the employment of the
Employee shall terminate, all unvested Restricted Shares shall be forfeited and
be immediately transferred to, and reacquired by, the Company at no cost to the
Company. 4. Acceleration of Benefits
upon Death, Disability or Retirement of Employee.
(a) The period of restrictions applicable to all unvested Restricted Shares
shall terminate on the date of termination of employment or service by reason of
disability (as such term is defined in the Plan) or death.
(b) In the case of termination of employment or service by reason of retirement
(as such term is defined in the Plan): (i) the period of restrictions applicable
to all unvested Restricted Shares that are not Performance-Based Awards shall
terminate on the date of retirement; and (ii) the period of restrictions
applicable to all unvested Restricted Shares that are Performance-Based Awards
shall terminate only at such time as the Performance Goals are achieved in
accordance with Section 12(e) of the Plan. 5. Nontransferability of
Restricted Shares. The Restricted
Shares are not transferable and may not be sold, assigned, transferred, disposed
of, pledged or otherwise encumbered by the Employee, other than by will or the
laws of descent and distribution until such Restricted Shares become
nonforfeitable in accordance with the provisions of this Agreement. Any
Employee's successor (a "Successor") shall take rights herein granted subject to
the terms and conditions hereof. No such transfer of the Restricted Shares to
any Successor shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of such evidence as
the Committee may deem necessary to establish the validity of the transfer and
the acceptance by such Successor of the terms and conditions hereof. 3 6. No Right to Continued
Employment. Nothing in this Agreement or the
Plan shall confer upon the Employee any right to continue in the employ of the
Company or any of its affiliate corporations or interfere in any way with the
right of the Company or any such affiliate corporation to terminate such
employment at any time. 7. Withholding. The Employee shall pay to the
Company, or make arrangements satisfactory to the Company to have paid, promptly
upon the Company's request and in any event no later than the time the Employee
recognizes taxable income in respect of the Restricted Shares, an amount equal
to the taxes the Company determines it is required to withhold under applicable
tax laws with respect to the Restricted Shares. Such payment shall be made in
the form of cash, shares of Common Stock already owned for at least six months,
or in a combination of such methods, as irrevocably elected by the Employee
prior to the applicable tax due date with respect to such Restricted Shares. The
Employee shall promptly notify the Company of any election made pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended. In the event
that the Employee does not pay or have paid on the Employee's behalf such amount
on or before the time that the Employee recognizes taxable income in respect of
the Restricted Shares, the Company may, in its discretion and to the extent
permitted by law, satisfy the withholding obligations through (i) additional
withholding on salary or other wages or (ii) withholding from the shares to be
delivered shares sufficient to satisfy all or a portion of the Company's minimum
statutory withholding obligations, and the Employee acknowledges and agrees that
the Company may so elect. 8. Effect of Certain Changes.
Notwithstanding any other
provision of the Plan, in the event of stock dividends, stock splits, reverse
stock splits, recapitalizations, mergers, consolidations, combinations or
exchanges of shares, spin-offs, reorganizations, liquidations and similar events
affecting the capital structure of the Company, the Committee shall
appropriately adjust the aggregate number of shares and class of shares subject
to this award. 9. Payment of Transfer Taxes,
Fees, and Other Expenses. The Company agrees to pay any and
all original issue taxes and stock transfer taxes that may be imposed on the
issuance of the Restricted Shares acquired pursuant to this Agreement, together
with any and all of the fees and expenses necessarily incurred by the Company in
connection therewith. 10. Other Restrictions. The vesting of each Restricted
Share shall be subject to the requirement that, if at any time the Committee
shall determine that (i) the listing, registration or qualification of the
shares of Common Stock subject or related thereto upon any securities exchange
or under any state or 4 federal law, or (ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the Employee with respect to the disposition of
shares of Common Stock, is necessary or desirable as a condition of, or in
connection with, such vesting, then in any such event, such vesting shall not be
effective unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained, free of any conditions not
acceptable to the Committee. 11. Section 409A of the
Internal Revenue Code. It is the intention of the Company
that this award shall not constitute "nonqualified deferred compensation"
subject to Section 409A of the Code, and the terms and conditions of the award
shall be interpreted accordingly. In the event that this award is deemed to
constitute "nonqualified deferred compensation" or is otherwise not exempted
from Section 409A of the Code, the Committee retains the right unilaterally to
amend this award to conform with the requirements of Section 409A of the Code.
If required under Section 409A of the Code, any payments (whether in cash,
shares of Common Stock or other property) to be made with respect to this award
upon the Employee's "separation from service" (within the meaning of Treasury
Regulation Section 1.409A-1(h)) shall be delayed until the first day of the
seventh month following such separation from service, or, if earlier, the
earliest other date as is permitted under Section 409A, if the Employee is a
"specified employee" (as defined in Section 409A of the Code). 12. Notices. Any notices to be given under the
terms of this Agreement shall be in writing and addressed to the Company in care
of its Chief Financial Officer, 1411 Broadway, New York, New York 10018, and any
notice to the Employee shall be addressed to him at his address now on file with
the Company, or to such other address as either may last have designated to the
other by notice as provided herein. Any notice so addressed shall be delivered
by hand, delivered by overnight courier, or delivered by certified or registered
United States mail, and if so mailed, deemed to be given on the second business
day after mailing at a post office or branch post office within the United
States. 13. Effect of Agreement.
Except as otherwise provided
hereunder, this Agreement shall be binding upon and shall inure to the benefit
of any successor or successors of the Company. 14. Laws Applicable to
Construction. This Agreement has been granted,
executed and delivered in the State of Pennsylvania, and the interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Pennsylvania, as applied to contracts executed in and performed
wholly within the State of Pennsylvania. 5 15. Conflicts and
Interpretation. If there is any conflict between
this Agreement and the Plan, or if there is any ambiguity in this Agreement, any
term which is not defined in this Agreement, or any matter as to which this
Agreement is silent, in any such case the Plan shall govern, including, without
limitation, the provisions thereof pursuant to which the Committee has the
power, among others, to (i) interpret the Plan, (ii) prescribe, amend and
rescind rules and regulations relating to the Plan and (iii) make all other
determinations deemed necessary or advisable for the administration of the Plan.
In the event that any question or controversy shall arise with respect to the
nature, scope or extent of any one or more rights conferred by this award, the
determination by the Committee (as constituted at the time of such
determination) of the rights of the Employee shall be conclusive, final and
binding upon the Employee and upon any other person who shall assert any right
pursuant to this award. 16. Headings. The headings of paragraphs herein
are included solely for convenience of reference and shall not affect the
meaning or interpretation of any of the provisions of this Agreement. 17. Amendment. This Agreement may not be
modified, amended or waived in any manner except by an instrument in writing
signed by both parties hereto. The waiver by either party of compliance with any
provision of this Agreement shall not operate or be construed as a waiver of any
other provision of this Agreement, or of any subsequent breach by such party of
a provision of this Agreement. IN WITNESS WHEREOF, the Company
has caused this Agreement to be executed on its behalf by a duly authorized
officer and the Employee has hereunto set his hand. EMPLOYEE: 6 ANNEX I 7 EXHIBIT 10.46 JONES APPAREL GROUP, INC. RESTRICTED STOCK AGREEMENT THIS AGREEMENT dated as of
___________, 20__, between JONES APPAREL GROUP, INC., a Pennsylvania corporation
(the "Company") and the person named on Annex I (the "Grantee"). The Company has adopted the Jones
Apparel Group, Inc. 2009 Long Term Incentive Plan (the "Plan"). The Plan, as it
has been amended to date and may hereafter be amended and continued, is
incorporated herein by reference and made part of this Agreement. All
capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Plan. The Committee, which is charged
with the administration of the Plan pursuant to Section 3 thereof, has
determined that it would be to the advantage and in the interest of the Company
to grant the award provided for herein to the Grantee as a portion of the
compensation due to the Grantee for service as a member of the Board of
Directors of the Company (the "Board") or any committee of the Board. In consideration of the mutual
promises and covenants made herein and the mutual benefits to be derived
herefrom, the parties hereto agree as follows: 1. Grant of Restricted Shares.
(a) Subject to the provisions of this Agreement and to the provisions of the
Plan, the Company hereby grants to the Grantee that number of shares of
restricted Common Stock of the Company, par value $.01 per share, set forth on
Annex I attached hereto (the "Restricted Shares"). The Restricted Shares
shall be issued by the Company and registered in the name of the Grantee. They
may be evidenced either by means of a certificate or through the entry of an
uncertificated book position on the stock transfer books of the Company, at the
Company's option. Certificates issued with respect to Restricted Shares shall be
held by the Company in escrow under the terms hereof. Such certificates shall
bear the legend set forth in subsection (c) below or such other appropriate
legend as the Committee shall determine, which legend shall be removed only if
and when the Restricted Shares vest as provided herein, at which time the
certificates shall be delivered to the Grantee. Uncertificated book positions
shall be subject to such "stop transfer" or other appropriate restrictions in
the stock transfer books of the Company as the Committee shall determine. Upon
the issuance of Restricted Shares hereunder, the Grantee shall be entitled to
vote the Restricted Shares, and shall be entitled to receive, free of all
restrictions, ordinary cash dividends and dividends in the form of shares
thereon; provided, however, that dividends in respect of Restricted Shares as to
which vesting is conditioned upon the achievement of performance goals
("Performance-Based Awards") shall be accumulated and not paid out to the
Grantee unless and until the Restricted Shares vest. Grantees of Restricted
Shares that are not Performance-Based Awards shall not be required to return any
such ordinary dividends to the Company in the event of forfeiture of such
Restricted Shares. The Grantee's right to receive any extraordinary dividends or other distributions with
respect to Restricted Shares prior to their becoming nonforfeitable shall be at
the sole discretion of the Committee, but in the event of any such extraordinary
event, the Committee shall take such action as is appropriate to preserve the
value of, and prevent the unintended enhancement of the value of, the Restricted
Shares.
(b) In order to comply with any applicable securities laws, the Company may
require the Grantee (i) to furnish evidence satisfactory to the Company
(including a written and signed representation letter) to the effect that the
Restricted Shares were acquired for investment only and not for resale or
distribution and (ii) to agree that the Restricted Shares shall only be sold by
the Grantee following registration under the Securities Act of 1933, as amended,
or pursuant to an exemption therefrom.
(c) Unless otherwise determined by the Committee, any certificate issued in
respect of the Restricted Shares prior to the lapse of any outstanding
restrictions relating thereto shall bear the following legend: "The sale, transfer, alienation, attachment, assignment, pledge or
encumbrance of the shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the Jones Apparel Group,
Inc. 2009 Long Term Incentive Plan and an Agreement entered into by the
registered owner and the Company dated as of _______________, 20__.
Copies of such Plan and Agreement are on file at the offices of the
Company. Any attempt to dispose of these shares in contravention of the
applicable restrictions, including by way of sale, assignment, transfer,
pledge, hypothecation or otherwise, shall be null and void and without
effect." 2. Vesting. Subject to Section 3 hereof, the
restrictions on transfer of the Restricted Shares shall lapse and the Restricted
Shares shall become vested and nonforfeitable as follows:
(a) See Annex I attached hereto.
(b) In the event of (i) the dissolution or liquidation of the Company, or (ii)
the disposition by the Company of substantially all of the assets or stock of a
subsidiary of which the Grantee is then a director, then, if the Committee shall
so determine, any Restricted Shares not forfeited prior to a "change in control"
(as defined in the Plan) shall become immediately free of all restrictions and
fully vested and transferable. 3. Termination of Service as a
Director. Except as provided in Section 4
hereof, Restricted Shares shall not vest unless the Grantee is then a director
of the Company and unless the Grantee has continuously so served since the date
of grant of the Restricted Shares. In the event that the service of the Grantee
as a 2 director of the Company shall terminate (other than by reason of death or
disability), all unvested Restricted Shares shall be forfeited and be
immediately transferred to, and reacquired by, the Company at no cost to the
Company. 4. Acceleration of Benefits
upon Death or Disability of Grantee. If the Grantee shall (a) die while
he or she is a director of the Company, or (b) become permanently and totally
disabled within the meaning of Section 22(e)(3) of the Internal Revenue Code of
1986, as amended, while serving as a director of the Company, then the period of
restrictions applicable to all unvested Restricted Shares shall terminate on the
date of termination of service as a director by reason of death or disability.
5. Nontransferability of
Restricted Shares. The Restricted Shares are not
transferable and may not be sold, assigned, transferred, disposed of, pledged or
otherwise encumbered by the Grantee, other than by will or the laws of descent
and distribution until such Restricted Shares become nonforfeitable in
accordance with the provisions of this Agreement. Any Grantee's successor (a
"Successor") shall take rights herein granted subject to the terms and
conditions hereof. No such transfer of the Restricted Shares to any Successor
shall be effective to bind the Company unless the Company shall have been
furnished with written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by such Successor of the terms and conditions hereof. 6. Effect of Certain Changes.
Notwithstanding any other
provision of the Plan, in the event of stock dividends, stock splits, reverse
stock splits, recapitalizations, mergers, consolidations, combinations or
exchanges of shares, spin-offs, reorganizations, liquidations and similar events
affecting the capital structure of the Company, the Committee shall
appropriately adjust the aggregate number of shares and class of shares subject
to this award. 7. Payment of Transfer Taxes,
Fees, and Other Expenses. The Company agrees to pay any and
all original issue taxes and stock transfer taxes that may be imposed on the
issuance of the Restricted Shares acquired pursuant to this Agreement, together
with any and all of the fees and expenses necessarily incurred by the Company in
connection therewith. 8. Other Restrictions. The vesting of each Restricted
Share shall be subject to the requirement that, if at any time the Committee
shall determine that (i) the listing, registration or qualification of the
shares of Common Stock subject or related thereto upon any securities exchange
or under any state or federal law, or (ii) the consent or approval of any
government regulatory body, or (iii) an agreement by the Grantee with respect to
the disposition of shares of Common Stock, is 3 necessary or desirable as a condition of, or in connection with, such
vesting, then in any such event, such vesting shall not be effective unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained, free of any conditions not acceptable to the
Committee. 9. Section 409A of the Internal
Revenue Code. It is the intention of the Company
that this award shall not constitute "nonqualified deferred compensation"
subject to Section 409A of the Code, and the terms and conditions of the award
shall be interpreted accordingly. In the event that this award is deemed to
constitute "nonqualified deferred compensation" or is otherwise not exempted
from Section 409A of the Code, the Committee retains the right unilaterally to
amend this award to conform with the requirements of Section 409A of the Code.
10. Notices. Any notices to be given under the
terms of this Agreement shall be in writing and addressed to the Company in care
of its Chief Financial Officer, 1411 Broadway, New York, New York 10018, and any
notice to the Grantee shall be addressed to him or her at his or her address now
on file with the Company, or to such other address as either may last have
designated to the other by notice as provided herein. Any notice so addressed
shall be delivered by hand, delivered by overnight courier, or delivered by
certified or registered United States mail, and if so mailed, deemed to be given
on the second business day after mailing at a post office or branch post office
within the United States. 11. Effect of Agreement.
Except as otherwise provided
hereunder, this Agreement shall be binding upon and shall inure to the benefit
of any successor or successors of the Company. 12. Laws Applicable to
Construction. This Agreement has been granted,
executed and delivered in the State of Pennsylvania, and the interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Pennsylvania, as applied to contracts executed in and performed
wholly within the State of Pennsylvania. 13. Conflicts and
Interpretation. If there is any conflict between
this Agreement and the Plan, or if there is any ambiguity in this Agreement, any
term which is not defined in this Agreement, or any matter as to which this
Agreement is silent, in any such case the Plan shall govern, including, without
limitation, the provisions thereof pursuant to which the Committee has the
power, among others, to (i) interpret the Plan, (ii) prescribe, amend and
rescind rules and regulations relating to the Plan and (iii) make all other
determinations deemed necessary or advisable for the administration of the Plan.
In the event that any question or controversy shall arise with respect to the
nature, scope or 4 extent of any one or more rights conferred by this award, the determination
by the Committee (as constituted at the time of such determination) of the
rights of the Grantee shall be conclusive, final and binding upon the Grantee
and upon any other person who shall assert any right pursuant to this award. 14. Headings. The headings of paragraphs herein
are included solely for convenience of reference and shall not affect the
meaning or interpretation of any of the provisions of this Agreement. 15. Amendment. This Agreement may not be
modified, amended or waived in any manner except by an instrument in writing
signed by both parties hereto. The waiver by either party of compliance with any
provision of this Agreement shall not operate or be construed as a waiver of any
other provision of this Agreement, or of any subsequent breach by such party of
a provision of this Agreement. IN WITNESS WHEREOF, the Company
has caused this Agreement to be executed on its behalf by a duly authorized
officer and the Grantee has hereunto set his hand. By: __________________ GRANTEE: _____________________ 5 ANNEX I 6
Washington, D.C. 20549
______________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
(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)
Title of each class
Name of each exchange
on which registered
Large accelerated filer [X]
Part
Those portions of the registrant's proxy
statement for the registrant's 2010 Annual Meeting of Stockholders (the
"Proxy Statement") that are specifically identified herein as
incorporated by reference into this Form 10-K.
III
Group
Category
Products
Brand
Product
Classification
Retail
Price
Points
Jones
New
York
Better
Skirts,
blouses, pants, jackets, sweaters, jeanswear, suits, dresses, casual tops,
outerwear, shorts
Jones New York
Jones New York Signature
Jones New York Sport
Jones Jeans
Jones New York Dress
Jones New York Suit
Jones Wear
Jones & Co
Jones Studio
Career
Lifestyle
Lifestyle
Lifestyle
Dresses
Suits
Dresses
Career
Dresses$32 -
$446
$20 - $209
$20 - $159
$36 - $59
$49 - $278
$89 - $320
$70 - $120
$39 - $119
$50 - $70
Nine
West
Better
Skirts, blouses,
pants,
jackets, sweaters, suits, dresses, outerwear, shorts, casual tops,
jeanswear
Nine West
Nine West Dress
Nine West Suits
Nine West Denim
Career
Dresses
Suits
Lifestyle
$20 - $309
$99 - $225
$139 - $264
$30 - $99
Anne
Klein
Bridge
Skirts, blouses, pants,
jackets, sweaters, dresses
Anne Klein New York
Lifestyle
$95
- $2,400
Anne
Klein
Better
Skirts,
blouses, pants, jackets, sweaters, vests, dresses, casual tops, jeanswear
AK
Anne Klein
AK Sport
Anne Klein Dress
Anne Klein Suit
Anne Klein DenimLifestyle
Lifestyle
Dresses
Suits
Lifestyle
$24 - $375
$29 - $169
$128 - $287
$275 - $360
$22 - $99
Rachel
Roy
Designer
Skirts,
blouses, pants, jackets, sweaters, dresses, outerwear, accessories
Rachel Roy New York
Designer
$185
- $4,995
Better
Skirts, blouses, pants, jackets, sweaters, dresses
Rachel Rachel Roy
Lifestyle
$39
- $250
Other
Bridge
Suits
Albert
Nipon
Suits
$280
- $520
Other
Better
Skirts,
blouses, pants,
jackets, sweaters,
suits, dresses
Kasper
Evan-Picone
Le Suit
Rena RowanSuits, Dresses, Sportswear
Suits, Dresses
Suits
Dresses $29
- $320
$40 - $240
$176
- - $240
$68 - $158
Group
Products
Brand
Product
Classification
Retail
Price
Points
Jones
New
York
Skirts, blouses,
pants, jackets, sweaters,
casual tops, dresses
Jones Wear
Collection Sportswear
$40 -
$100
Gloria
Vanderbilt
Skirts, blouses, shorts,
jackets, sweaters,
jeanswear, capris,
casual tops
Gloria Vanderbilt
Casual Sportswear
$12
- $48
l.e.i.
Skirts,
shorts, jeanswear, capris,
casual tops
l.e.i.
Casual Sportswear
$8
- $20
Energie
Skirts, shorts,
jackets, sweaters,
jeanswear,
casual tops
Energie
Casual Sportswear
$6
- $48
Other
Skirts, blouses, pants, jackets, sweaters, jeanswear, dresses,
casual tops and bottoms
Evan-Picone
Bandolino Blu
GLO/GLO Girls
Grane
Collection Sportswear
Casual Sportswear
Casual Sportswear
Casual Sportswear
$10 - $44
Retail
Price Points
Brand
Product
Classification
Shoes
Boots
Bridge
Joan & David
Sophisticated
Classics
$129
- $250
$250 - $375
Better
Nine West
Nine West Kids
Enzo Angiolini
AK Anne Klein
Circa Joan & David
Boutique 9
Rachel Rachel Roy Contemporary
Children's
Sophisticated Classics
Modern Classics
Sophisticated Classics
Contemporary
Contemporary
$39 - $159
$30 -$45
$59 - $130
$49 - $89
$49 - $129
$59 - $180
$89 - $129
$79 - $209
$45 - $49
$99 - $225
$89 - $179
$99 - $199
$160 - $325
$109 - $199
Upper
Moderate
Bandolino
Easy Spirit Modern Classics
Comfort/Fit,
Active,
Sport/Casuals
$29 - $79
$28 - $89 $79 -
$169
$69 - $129
Moderate
Nine & Company
Mootsies Tootsies
Mootsies Tootsies Kids
Sam & Libby
Sam
& Libby Kids
Dockers(R) Women
Dockers(R) Boys Contemporary
Lifestyle
Children's
Contemporary
Children's
Lifestyle
Children's$40
- $70
$30 - $55
$30 - $35
$40 - $60
$30 - $35
$40 - $65
$45 - $48
$120
$60 -
$70
$40
$50 - $90
$35 - $40
$65 - $75
$45 - $60
Accessories
Brand
Product Classification
Retail Price
Points
Bridge
Judith Jack
Marcasite and Sterling Silver Jewelry
$45 - $417
Better
AK
Anne Klein
Nine West
Givenchy
Rachel Rachel Roy
Bandolino
Evan-Picone
Handbags
and Costume Jewelry
Handbags,
Small Leather Goods
and Costume Jewelry
Costume and Fashion
Jewelry
Handbags
and Costume Jewelry
Handbags
Handbags $18 -
$178
$14 - $199
$10 - $250
$22 - $195
$64 - $98
$44 - $58
Moderate
Nine & Company
Napier
l.e.i. Handbags, Small
Leather Goods and
Costume Jewelry
Costume Jewelry
Costume Jewelry
$12 - $69
$8 - $48
$5 - $7
Retail Price
Points
Average
store
size (sq. ft.)
Store
type
Number of
locations
Brands
offered
Shoes and
Boots
Accessories
Apparel
Type of
locations
Nine West
185
Primarily
Nine West
$39 -$325
$6 - $525
$115 - $145
Upscale and regional malls and urban retail centers
1,593
Easy Spirit
83
Primarily
Easy Spirit
$20 -
$189
$5 -
$59
$59 -
$109
Upscale and regional malls and
urban retail centers
1,421
Bandolino
39
Primarily
Bandolino$29 -
$169
$25 -
$89
-
Urban retail
locations and regional malls
1,396
Retail Price
Points
Average
store
size (sq. ft.)
Store
type
Number of
locations
Brands
offered
Shoes and
Boots
Accessories
Apparel
Type of
locations
AK Anne Klein
6
Anne Klein
$49 - $189
$22 - $248
-
Upscale urban retail locations and regional malls
1,308
Apparel
4
Various
-
-
$18 - $737
Urban retail locations and regional malls
5,123
ShoeWoo
4
Various
$39 - $375
$7 - $225
---
Urban retail locations
2,623
type
Number of
locations
Brands
offered
Type of
locations
Average
store
size (sq. ft.)
Nine West
198
Primarily Nine West
Manufacturer
outlet centers
2,947
Jones New York
170
Primarily Jones New
York and
Jones New York Sport
Manufacturer
outlet centers 3,795
Easy Spirit
115
Primarily Easy Spirit
Manufacturer
outlet centers 3,369
Kasper
84
Primarily Kasper
Manufacturer
outlet centers 2,636
Anne Klein
49
Primarily Anne Klein
Manufacturer
outlet centers
2,686
Brand
Category
Jones New York
Men's
Accessories, Cold Weather Accessories and Jewelry (U.S., Canada)
Men's Neckwear (Canada)
Men's Neckwear (U.S.)
Men's Sportswear, Sweaters, Knit Shirts, Woven Shirts, Finished Bottom
Slacks and
Outerwear (Canada)
Men's Tailored Clothing, Dress Shirts, Outerwear, Dress Slacks (Canada)
Men's Sleepwear (Canada)
Men's Tailored Clothing, Formal Wear (U.S.)
Men's Umbrellas (U.S.)
Men's and Women's Optical Eyewear (U.S., Canada, Argentina, Aruba,
Australia,
Bahamas, Barbados, Belize, Benelux, Bolivia, Chile,
Colombia, Costa Rica, Cyprus,
Denmark, Dominican Republic, Ecuador, El Salvador,
Finland, France, French Guiana,
Guatemala, Honduras, Indonesia, Ireland, Israel,
Jamaica, Korea, Kuwait, Lebanon,
Mexico, Netherlands Antilles, New Zealand, Nicaragua,
Norway, Panama, Paraguay,
Peru, Philippines, Qatar, Russia, Saudi Arabia, South
Africa, Suriname, Sweden,
Thailand, Trinidad, Turkey, United Arab Emirates,
Uruguay, Venezuela)
Women's Costume Jewelry (Canada)
Women's Hats (U.S., Canada)
Women's Leather Outerwear (U.S.)
Women's Outerwear, Rainwear (U.S.)
Women's Wool Coats (U.S.)
Women's Outerwear, Wool Coats, Rainwear (Canada)
Women's Scarves, Wraps (U.S., Canada)
Women's Sleepwear, Loungewear, Daywear (U.S., Canada)
Women's Sunglasses (U.S., Canada)
Women's Umbrellas, Rain Accessories (U.S.)
Jones Wear
Women's Costume Jewelry
(Canada)
Women's Optical Eyewear (U.S.)
Albert Nipon
Men's Tailored Clothing (U.S.)
Evan-Picone
Men's
Tailored Clothing (U.S.)
Manufacturing and Wholesale Distribution Rights
for Women's Sportswear (Japan)
Energie
Men's Denim and Sportswear
and Footwear
(U.S.)
Boys' Denim and Sportswear (4-6x and 8-20) (U.S.)
Gloria Vanderbilt
Handbags (U.S.)
Intimate Apparel, Sleepwear (U.S.)
GLO Jeans
Junior Outerwear (U.S.)
Junior Handbags (U.S.)
Junior Watches (U.S.)
GRANE
Junior
Outerwear (U.S.)
Anne Klein New York
and AK Anne Klein
Belts (U.S.,
Canada, Mexico, Bermuda)
Home Sewing Patterns (Worldwide)
Hosiery, Casual Legwear (U.S., Canada)
Outerwear, Wool Coats, Leather Outerwear, Rainwear (U.S., Canada)
Scarves, Cold Weather Accessories, Gloves (U.S., Canada)
Sunglasses, Optical Eyewear (Worldwide)
Watches (Worldwide)
Manufacturing and Wholesale and Retail Distribution Rights for Apparel
(Japan)
Retail and Wholesale Distribution Rights for Handbags, non-exclusive
retail rights for
Footwear (Japan)
Sublicensed Wholesale and Retail Distribution Rights for Scarves,
Towels, Jewelry (Japan)
Manufacturing and Wholesale and Retail Distribution Rights for Apparel,
Handbags, &
Accessories, non-exclusive retail rights for Footwear
(Korea)
Manufacturing and Wholesale Distribution rights for Scarves,
Handkerchiefs, Cold Weather
Brand
Category
Accessories & Umbrellas (Korea)
Retail and Wholesale Distribution Rights for Apparel (Central America,
South America,
Caribbean, Dominican Republic)
Retail Rights for Belts, Eyewear, Coats, Sleepwear, Socks, Scarves,
Swimwear, Fragrances
and Cosmetics if any such items are made available in
the Territory, non-exclusive rights for
Footwear, Handbags, Jewelry & Watches (Central America,
South America, Caribbean,
Dominican Republic)
Retail Rights for Apparel, Belts, Sunglasses, Coats, Socks, Scarves,
Swimwear, as well as
Sleepwear, Fragrances if such items are made available
in the Territory, non-exclusive rights
for Footwear, Handbags Jewelry & Watches (Saudi Arabia)
Retail and Wholesale Distribution Rights for Apparel, Belts, Sunglasses,
Coats, Socks, Scarves,
Swimwear, as well as Sleepwear, Fragrances if such
items are made available in the Territory,
Footwear, Handbags, Jewelry & non-exclusive retail
rights for Watches (China, Hong Kong,
Indonesia, Macau, Malaysia, Singapore, Taiwan,
Thailand)
Retail Distribution Rights for Apparel, Belts, Small Leather Goods,
Scarves, Sleepwear, Watches
and Socks, non-exclusive rights for Footwear, Handbags
& Jewelry (Philippines)
Anne Klein Coat
Outerwear,
Wool Coats, Leather Outerwear, Rainwear (U.S., Canada)
A|Line
Sunglasses, Optical Eyewear
(U.S.)
Nine West
Belts (U.S., Canada)
Casual Legwear (U.S., Canada)
Gloves, Cold Weather Accessories (U.S., Canada)
Hats (U.S., Canada)
Leather, Wool, Casual Outerwear, Rainwear (U.S., Canada, Spain)
Luggage (U.S., Canada)
Optical Eyewear (U.S., Canada, China, Mexico)
Sunglasses (U.S., Canada, Spain)
Manufacturing, Retail and Wholesale Distribution Rights for Apparel. Retail
rights for Belts, Cold
Weather Accessories, Hats, Luggage, Sunglasses, Coats,
Legwear, Scarves, as well as
Sleepwear, Swimwear, Fragrances and Cosmetics if such
items are made available in the
Territory, Footwear, Handbags, Jewelry & non-exclusive
retail rights for Watches (China,
Hong Kong, Macau, Malaysia, Singapore, Taiwan,
Thailand)
Nine & Company
Intimate
Apparel, Sleepwear (U.S.)
Sunglasses (U.S.)
Belts (U.S.)
Gloves, Cold Weather Accessories (U.S.)
l.e.i.
Juniors' and Girls' Scarves,
Hats, Hair Accessories, Gloves, Cold Weather Accessories (U.S.,
Canada)
Juniors' and Girls' Intimate Apparel (U.S., Canada)
Juniors' and Girls' Sunglasses (U.S., Canada)
Juniors' and Girls' Casual Legwear (U.S.)
Juniors' and Girls' Footwear (U.S., Canada)
Juniors' and Girls' Handbags, Belts (U.S., Canada)
Juniors' and Girls' Optical Eyewear (U.S., Canada, Mexico)
Easy Spirit
Slippers
(U.S., Canada)
Enzo Angiolini
Sunglasses (U.S.)
Joan & David
Manufacturing
and Retail Distribution Rights for Apparel, Footwear, Handbags (China, Hong
Kong, Korea, Macau, Malaysia, Philippines, Singapore,
Taiwan, Thailand)
Brand
Category
International
footwear and accessories retail/wholesale distribution
Nine West
and Enzo Angiolini retail locations (Bahrain, Kuwait, Oman, Qatar,
the United
Arab Emirates, Jordan, India) and AK Anne Klein
and Anne Klein New York retail locations
and wholesale distribution rights for AK Anne Klein
and Anne Klein New York footwear and
accessories (Bahrain, Kuwait, Oman, Qatar, the United
Arab Emirates)
Nine West and AK Anne Klein retail locations (Saudi Arabia,
Lebanon, Egypt)
Nine West and AK Anne Klein retail locations and wholesale
distribution rights for Nine West,
Anne Klein, Enzo Angiolini, Bandolino and Easy
Spirit footwear and accessories and AK Anne
Klein, Circa Joan & David, Sam & Libby and
Mootsies Tootsies footwear (Belize, Colombia,
Costa Rica, Ecuador, El Salvador, Guatemala, Honduras,
Nicaragua, Panama, Venezuela, the
Dominican Republic, French Guiana, Guyana, Suriname,
the Caribbean Islands)
Nine West and AK Anne Klein retail locations and wholesale
distribution rights for Nine West and
AK Anne Klein footwear and accessories (Greece,
Cyprus, Bulgaria)
Nine West retail locations and wholesale distribution rights for
Nine West footwear and accessories
(Chile, Peru, Uruguay) and wholesale distribution
rights for Enzo Angiolini footwear and
accessories (Chile)
Nine West, AK Anne Klein, Enzo Angiolini, NW Nine West and Easy
Spirit retail locations and
wholesale distribution rights for Nine West, AK Anne
Klein, Enzo Angiolini, NW Nine West and
Easy Spirit footwear and accessories (Hong Kong,
Indonesia, Japan, Korea, Macau, Malaysia,
the People's Republic of China, the Philippines,
Singapore, Taiwan, Thailand, Vietnam, Cambodia)
Nine West retail locations and wholesale distribution rights for
Nine West footwear and accessories
(South Africa)
Nine West, AK Anne Klein, Enzo Angiolini and Westies retail
locations, wholesale distribution rights
for Nine West footwear and accessories and
Enzo Angiolini, Westies and AK Anne Klein footwear,
and manufacturing rights for Westies footwear
(Mexico)
Retail locations for Nine West (Turkey, Romania, Kazakhstan
Azerbaijan), AK Anne Klein (Turkey)
and Enzo Angiolini (Turkey) and wholesale
distribution rights for Enzo Angiolini, Circa Joan & David,
Boutique 9 and AK Anne Klein footwear
(Turkey)
Nine West, AK Anne Klein and Easy Spirit retail locations and
wholesale distribution rights for Nine
West, AK Anne Klein and Easy Spirit footwear
and accessories (Israel)
Nine West, Bandolino and Easy Spirit retail locations,
wholesale distribution rights for Nine West,
Enzo Angiolini, Easy Spirit, Bandolino, Nine & Company
and Westies footwear and accessories and
AK Anne Klein, Circa Joan & David, Sam & Libby
and Mootsies Tootsies footwear (Canada)
Nine West retail locations (the United Kingdom, Ireland, the Channel
Islands) and wholesale distribution
rights for Nine West and Easy Spirit
footwear and accessories (the United Kingdom, Ireland, the
Channel Islands)
Nine West retail locations and wholesale distribution rights for
Nine West, AK Anne Klein and Enzo
Angiolini footwear and accessories (Spain,
Portugal, Andorra)
Nine West retail locations (Russia, Poland)
Nine West retail locations (France)
Nine West and Enzo Angiolini retail locations and wholesale
distribution rights for Nine West and
Enzo Angiolini footwear and accessories
(Australia, New Zealand)
Wholesale distribution rights for Nine West and Napier costume
jewelry (Canada)
Trademark
Expiration
Dates
Trademark
Expiration
Dates
Trademark
Expiration
Dates
Jones New York
2012-2019
Nine & Company
2012-20156
Anne Klein
2010-2019
Jones New York Sport
2013
Napier
2019
Kasper
2011-2018
Evan-Picone
2011-2018
Judith Jack
2010-2012
Le Suit
2018
Nine West
2009-2020
Energie
2015-2018
Joan & David
2012-2019
Easy Spirit
2010-2019
Gloria Vanderbilt
2012-2017
Mootsies Tootsies
2010-2013
Enzo Angiolini
2010-2020
l.e.i.
2010-2019
Sam & Libby
2011-2017
Bandolino
2011-2017
We implemented a comprehensive
monitoring program in 1996. Through independent agreements with domestic and
foreign manufacturers that produce our products, we monitor compliance with the
Jones Apparel Group Standards for Contractors and Suppliers ("JAG Standards").
Our monitoring program evaluates 100% of our global contract factories at least
annually for approved factories, and more frequently for factories with major
non-conformances. With 24 employees spread across five countries, our compliance
staff is multi-lingual, with the majority holding a post-secondary education
degree. In addition to our internal staff, we retain a number of recognized,
unaffiliated third party workplace compliance audit firms to conduct factory
audits on our behalf. In 2009, 933 audits were conducted, including 697 by third
party auditors.
Reliance on audits alone creates the
risk that whatever improvements we do see may be temporary and cosmetic. To
address this, a large part of our compliance program emphasizes uncovering the
root causes of factory noncompliance and providing factories with the tools and
training needed to sustain a viable long-term compliance program.
The effectiveness of any supply chain
monitoring effort is dependent on the cooperation and collaboration among
different divisions across a company. On a daily basis, our compliance group
communicates the compliance status of suppliers to internal business units and
provides advice on how we can work together to help key factories to improve. We
recognize that in order for factories to make progress in their labor and health
and safety practices, our internal business units must understand the principles
embodied in the JAG Standards and support monitoring efforts with their
influence over factories. Since 2008, we have issued periodic CSR newsletters to
all our employees, to communicate our compliance efforts, the major issues that
affect factories' compliance, and the important CSR issues of the day.
Like any multinational company, our
business practices impact a diverse group, including business associates,
governments, trade unions, NGOs and both employees working for us and for the
factories making our products. A key element in our compliance program is
engagement with these parties, which encompasses issues of factory compliance
and human rights, and occurs at various levels - factory, community and
multi-lateral initiatives.
We strive to be a trusted and
responsible member of the communities in which we work and live. To accomplish
this goal, we promote and support employees to make a positive impact, through a
combination of monetary and product donations and volunteer support. In 2009, we
and our associates contributed time and money to a number of causes at the local
community, national and global levels.
With a goal of reducing our carbon
footprint, we have established an Executive Green Committee to explore
environmental opportunities throughout the company. The Executive Green
Committee consists of ten strategic business executives having direct impact on
our decisions to incorporate green initiatives. Additionally, we have identified
more than 230 of our associates to be "eco-ambassadors" working in parallel with
the Executive Green Committee to raise environmental awareness among employees,
exemplify green practices in the workplace, and brainstorm new ways to increase
efficiencies and adopt environmentally-friendly practices.
We continue to explore innovative
ways to reduce costs while obtaining environmental benefits. We implemented a
lighting retrofit solution in an effort to reduce energy use at our West
Deptford, N.J., distribution centers, which was completed in May 2008. For 2009,
the first full year with the lighting retrofit, energy usage was reduced by
approximately 40%. Additionally, we are improving lighting at our retail store
locations. Lighting retrofits and replacements of heating, ventilation and air
conditioning ("HVAC") systems are reducing not only energy use, but financial
costs as well. In retail stores, the new lighting fixtures generate less heat,
decreasing HVAC energy use. Based on the results of these projects, we are
committed to exploring similar opportunities in other distribution centers.
Our REDUCE THE USE campaign has been
put in place to create awareness, to decrease our use of paper and other
supplies and to lower the overall costs of paper products. Our U.S.-based
non-retail associates are paid electronically and can access their pay stubs
through a secure web-site. This system eliminated the printing of paychecks for
approximately 3,800 employees, saving paper, printing, and shipping costs. We
are currently exploring paperless payment options for our retail-based
employees.
The continued goal and mission of the
JAGreen Printed Materials & Packaging Group is to evaluate the current use of
paper in our hangtags, shoeboxes, shopping bags and printed collateral to begin
to move toward more significant use of recycled, renewable and Forest
Stewardship Council-rated materials.
We have a longstanding practice to
recycle where we can in our business processes. For several years, our
distribution centers have recycled cardboard and plastic packaging, and our
office locations have been recycling paper and purchasing recycled and recycling
toner cartridges for printers and copiers. In 2008, we began to recycle plastic
and glass bottles and metal cans at our office locations and distribution
centers and electronic equipment through our information technology departments.
During 2009, we recycled 2,441 tons of cardboard, 90 tons of plastic packaging
and 50 tons of miscellaneous waste (including white paper, glass, metal and
plastic).
Location
Owned/Leased
Use
Approximate Area
in Square Feet (1)(2)
Bristol, Pennsylvania
leased
Administrative and computer services
172,600
New York, New York
leased
Administrative, executive and sales offices
564,000
Vaughan, Canada
leased
Administrative offices and distribution warehouse
125,000
Lawrenceburg, Tennessee
owned
Distribution
warehouses
1,223,800
South Hill, Virginia
leased
Distribution warehouses
823,040
White Plains, New York
leased
Administrative offices
132,200
West Deptford, New Jersey
leased
Distribution warehouses
988,400
Socorro, Texas (3)
leased
Distribution warehouses
952,000
East Providence, Rhode Island
(3)
leased
Distribution warehouses, product development,
administrative and computer services
164,700
(1) Including mezzanine where applicable.
(2) Excludes subleased square footage.
(3) These facilities are scheduled to close in 2010.
Name
Age
Office
Wesley R. Card
62
Chief Executive Officer
Richard Dickson
41
President and Chief Executive Officer - Branded
Businesses
Sidney Kimmel
82
Chairman
Ira M. Dansky
64
Executive Vice President, General Counsel
and Secretary
John
T. McClain
48
Chief
Financial Officer
Andrew
Cohen
60
Chief
Executive Officer - Footwear, Accessories and Retail
Christopher
R. Cade
42
Executive
Vice President, Chief Accounting Officer and Controller
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Price range of common stock:
2009
High
$6.40
$11.69
$19.09
$19.74
Low
$2.39
$4.71
$9.17
$15.90
2008
High
$18.06
$17.86
$22.12
$16.43
Low
$12.10
$12.91
$12.25
$2.34
Dividends paid per share of common stock:
2009
$0.05
$0.05
$0.05
$0.05
2008
$0.14
$0.14
$0.14
$0.14
Year Ended December 31,
2009
2008
2007
2006
2005
Income Statement Data
Net sales
$
3,279.7
$
3,562.6
$
3,793.3
$
4,014.8
$
4,473.3
Licensing income
46.8
52.1
52.0
51.1
58.9
Other revenues
0.9
1.7
3.2
21.1
-
Total revenues
3,327.4
3,616.4
3,848.5
4,087.0
4,532.2
Cost of goods sold
2,181.5
2,440.2
2,609.1
2,674.2
2,950.4
Gross profit
1,145.9
1,176.2
1,239.4
1,412.8
1,581.8
Selling, general and administrative
expenses
1,008.7
1,069.2
1,100.4
1,096.3
1,128.3
Loss on sale of Polo Jeans
Company business
-
-
-
45.1
-
Trademark impairments
28.7
25.2
88.0
50.2
-
Goodwill impairment
120.6
813.2
78.0
441.2
-
Operating (loss) income
(12.1
)
(731.4
)
(27.0
)
(220.0
)
453.5
Interest income
2.8
7.5
3.7
3.5
1.1
Interest expense and financing costs
55.6
49.1
51.5
50.5
71.0
Loss and costs associated with repurchase of 4.250% Senior
Notes
1.5
-
-
-
-
Gain on sale of stock in Rubicon Retail
Limited
-
-
-
17.4
-
Gain on sale of interest in
Australian joint venture
-
0.8
8.2
-
-
Equity in (loss) earnings of unconsolidated affiliates
(3.7
)
(0.7
)
8.1
4.5
3.2
(Loss) income
from continuing operations before provision for income taxes
(70.1
)
(772.9
)
(58.5
)
(245.1
)
386.8
Provision (benefit) for income taxes
(1)
16.2
(6.6
)
(104.4
)
(70.1
)
134.0
(Loss) income from continuing
operations
(86.3
)
(766.3
)
45.9
(175.0
)
252.8
Income from
discontinued operations, net of tax (2)
-
0.9
265.2
29.0
21.5
Cumulative effect of change in accounting for
share-based payments, net of tax
-
-
-
1.9
-
Net
(loss) income
(86.3
)
(765.4
)
311.1
(144.1
)
274.3
Less: income attributable to noncontrolling interest
0.3
-
-
-
-
(Loss) income attributable to Jones
$
(86.6
)
$
(765.4
)
$
311.1
$
(144.1
)
$
274.3
Per Share Data
Basic (loss) earnings per share (3)
(Loss) income from
continuing operations attributable to Jones
$
(1.02
)
$
(9.05
)
$
0.45
$
(1.57
)
$
2.12
Income from discontinued operations
attributable to Jones
-
0.01
2.62
0.26
0.18
Cumulative effect of
change in accounting principle
-
-
-
0.02
-
Basic
(loss) earnings per share attributable to Jones
$
(1.02
)
$
(9.04
)
$
3.07
$
(1.29
)
$
2.30
Diluted (loss) earnings per share
(Loss) income from
continuing operations attributable to Jones
$
(1.02
)
$
(9.05
)
$
0.45
$
(1.57
)
$
2.11
Income from discontinued
operations attributable to Jones
-
0.01
2.58
0.26
0.18
Cumulative effect of change in accounting
principle
-
-
-
0.02
-
Diluted (loss) earnings per share
attributable to Jones
$
(1.02
)
$
(9.04
)
$
3.03
$
(1.29
)
$
2.29
Dividends
declared
per share
$
0.20
$
0.56
$
0.56
$
0.50
$
0.44
Weighted average common shares outstanding
Basic
81.7
82.9
99.9
110.6
118.0
Diluted
81.7
82.9
101.3
110.6
118.8
December 31,
2009
2008
2007
2006
2005
Balance Sheet Data
Working capital
$
741.1
$
693.6
$
898.5
$
984.2
$
447.9
Total assets
2,025.0
2,427.5
3,236.6
3,801.1
4,577.8
Short-term debt and current portion of long-term debt and capital lease obligations
2.6
253.1
4.8
104.1
357.3
Long-term debt, including capital lease obligations
526.4
528.9
777.7
785.1
786.4
Total equity (4)
1,092.5
1,182.2
1,996.8
2,211.6
2,666.4
(1)
As a result of the capital
gain generated by the sale of Barneys, in 2007 we reversed a $107.7
million deferred tax valuation allowance previously created from capital
loss carryforwards that we had not expected to be able to utilize. The
reversal of the tax valuation allowance has been recorded in income from
continuing operations, as the creation of the deferred tax valuation
allowance was recorded in continuing operations in 2006 upon the sale of
our Polo Jeans Company business.
(2)
On September 6, 2007, we sold
Barneys. The results of operations of Barneys have been reported as
discontinued operations for all periods presented. The 2007 amount
includes an after-tax gain of $254.2 million from the sale. In 2008, we
reached final settlement on certain liabilities remaining from the sale,
resulting in an additional after-tax gain of $0.9 million.
(3)
In June 2008, the FASB issued
FASB Staff Position No. EITF 03-6-1, "Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities" (now ASC Subtopic 260-10-45-61A), which classifies unvested
share-based payment awards that contain nonforfeitable rights to
dividends or dividend equivalents (whether paid or unpaid) as
participating securities and requires them to be included in the
computation of earnings per share pursuant to the two-class method
described in ASC Subtopic 260-10-45-60B. This Staff Position is
effective for financial statements issued for fiscal years beginning
after December 15, 2008. The adoption of this Staff Position required us
to allocate a portion of net income to the unvested restricted shares
held by our employees and directors, which are now classified as
participating securities. Prior period earnings per share figures have
been restated to conform to this presentation.
(4)
The decreases between 2005 and
2009 are primarily the result of the impairments of goodwill and
indefinite-lived trademarks.
Assumptions
Effect of one percentage point
unfavorable change in:
Goodwill
Trademarks
Goodwill
Trademarks
Discount rates
12.9%
12.9%
none
$ 10.3
Royalty rates
--
4.0% - 7.0%
--
$ 29.0
Weighted-average revenue growth rates
2.3%
6.1%
none
$ 4.0
Long-term growth rates
3.0%
0% - 3.0%
none
$ 8.0
(In millions)
2009
2008
2007
Net sales
$
3,279.7
98.6
%
$
3,562.6
98.5
%
$
3,793.3
98.6
%
Licensing income
46.8
1.4
52.1
1.4
52.0
1.4
Other revenues
0.9
0.0
1.7
0.0
3.2
0.1
Total revenues
3,327.4
100.0
3,616.4
100.0
3,848.5
100.0
Cost of goods sold
2,181.5
65.6
2,440.2
67.5
2,609.1
67.8
Gross profit
1,145.9
34.4
1,176.2
32.5
1,239.4
32.2
Selling, general and administrative expenses
1,008.7
30.3
1,069.2
29.6
1,100.4
28.6
Trademark
impairments
28.7
0.9
25.2
0.7
88.0
2.3
Goodwill impairments
120.6
3.6
813.2
22.5
78.0
2.0
Operating loss
(12.1
)
(0.4
)
(731.4
)
(20.2
)
(27.0
)
(0.7
)
Interest income
2.8
0.1
7.5
0.2
3.7
0.1
Interest expense and financing costs
55.6
1.7
49.1
1.4
51.5
1.3
Loss and
costs associated with repurchase of 4.250% Senior Notes
1.5
0.0
-
-
-
-
Gain
on sale of interest in Australian joint venture
-
-
0.8
0.0
8.2
0.2
Equity in (loss) earnings of unconsolidated affiliates
(3.7
)
(0.1
)
(0.7
)
(0.0
)
8.1
0.2
Loss from continuing
operations before provision (benefit) for income taxes
(70.1
)
(2.1
)
(772.9
)
(21.4
)
(58.5
)
(1.5
)
Provision (benefit) for income taxes
16.2
0.5
(6.6
)
(0.2
)
(104.4
)
(2.7
)
(Loss) income from continuing operations
(86.3
)
(2.6
)
(766.3
)
(21.2
)
45.9
1.2
Income from
discontinued operations, including gain on sale of Barneys in 2007, net of tax
-
-
0.9
0.0
265.2
6.9
Net (loss) income
(86.3
)
(2.6
)
(765.4
)
(21.2
)
311.1
8.1
Less: income
attributable to noncontrolling interest
0.3
0.0
-
-
-
-
(Loss) income
attributable to Jones
$
(86.6
)
(2.6
%)
$
(765.4
)
(21.2
%)
$
311.1
8.1
%
(In millions)
2009
2008
Increase
(Decrease)
Percent
Change
Wholesale better apparel
$
922.8
$
1,098.7
$
(175.9
)
(16.0%
)
Wholesale jeanswear
828.9
796.5
32.4
4.1%
Wholesale footwear and accessories
839.6
938.3
(98.7
)
(10.5%
)
Retail
689.3
730.2
(40.9
)
(5.6%
)
Licensing and other
46.8
52.7
(5.9
)
(11.2%
)
Total revenues
$
3,327.4
$
3,616.4
$
(289.0
)
(8.0%
)
(In millions)
2008
2007
Decrease
Percent
Change
Wholesale better apparel
$
1,098.7
$
1,101.0
$
(2.3
)
(0.2%
)
Wholesale jeanswear
796.5
985.0
(188.5
)
(19.1%
)
Wholesale footwear and accessories
938.3
955.8
(17.5
)
(1.8%
)
Retail
730.2
753.7
(23.5
)
(3.1%
)
Licensing and other
52.7
53.0
(0.3
)
(0.6%
)
Total revenues
$
3,616.4
$
3,848.5
$
(232.1
)
(6.0%
)
The current economic environment has
resulted in lower consumer confidence and lower retail sales. This trend may
lead to further reduced consumer spending which could affect our net sales and
our future profitability. Additionally, rising costs combined with reduced
consumer spending may reduce our gross profit margins.
Total
Less than
1 year
1 - 3
years
3 - 5
years
More than
5 years
Long-term debt
$
500.0
$
-
$
-
$
250.0
$
250.0
Interest on long-term debt
443.4
28.1
56.3
54.7
304.3
Capital lease
obligations
43.7
4.5
7.1
7.3
24.8
Operating lease obligations
(1)
673.6
123.9
214.5
151.2
184.0
Purchase obligations (2)
761.9
741.2
13.0
7.7
-
Minimum royalty payments
(3)
6.4
1.7
2.7
2.0
-
Capital expenditure
commitments
9.2
9.2
-
-
-
Deferred compensation
7.8
7.8
-
-
-
Other long-term liabilities
(4)
82.0
4.0
19.3
15.3
43.4
Total contractual obligations
(5)
$
2,528.0
$
920.4
$
312.9
$
488.2
$
806.5
(1)
Future rental commitments for
leases have not been reduced by minimum non-cancelable sublease rentals
aggregating $19.8 million.
(2)
Includes outstanding letters
of credit of $35.5 million, which primarily represent inventory purchase
commitments which typically mature in two to six months.
(3)
Under exclusive licenses to
manufacture certain items under trademarks not owned by us pursuant to
various license agreements, we are obligated to pay the licensors a
percentage of our net sales of these licensed products, subject to
minimum scheduled royalty and advertising payments.
(4)
Consists primarily of deferred
rent and pension and postretirement liabilities. Pension and
postretirement liabilities, which total $19.3 million, are reported
under the more than five years column, as we cannot make reasonably
reliable estimates of the timing and amounts to be paid. We plan to
contribute $5.7 million to our defined benefit plans in 2010.
(5)
Excludes $6.6 million of
uncertain tax positions, for which we cannot make reasonably reliable
estimates of the timing and amounts to be paid.
Wesley R. Card
Chief Executive OfficerJohn T. McClain
Chief Financial Officer
BDO Seidman, LLP
Accountants and Consultants100 Park Ave
New York, NY 10017
Telephone: (212) 885-8000
Fax: (212) 697-1299
Jones Apparel Group, Inc.
New York, New York
A company's internal control over financial reporting is a process designed 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. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
New York, New York
February 16, 2010
BDO Seidman, LLP
Accountants and Consultants100 Park Ave
New York, NY 10017
Telephone: (212) 885-8000
Fax: (212) 697-1299
Jones Apparel Group, Inc.
New York, New York
New York, New York
February 16, 2010
Consolidated Balance Sheets
(All amounts in millions except per share data)
December 31,
2009
2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
333.4
$
338.3
Accounts receivable
303.1
370.2
Inventories,
primarily finished goods
375.0
509.5
Prepaid and refundable income taxes
-
16.9
Deferred taxes
28.1
28.0
Prepaid expenses and other current assets
25.6
42.6
TOTAL CURRENT
ASSETS
1,065.2
1,305.5
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization
239.0
301.0
GOODWILL
40.1
160.7
OTHER
INTANGIBLES, less
accumulated amortization
559.8
590.8
PREPAID AND REFUNDABLE INCOME TAXES
4.7
-
DEFERRED TAXES
3.9
14.2
INVESTMENT IN AND LOANS TO UNCONSOLIDATED AFFILIATE
42.1
19.6
OTHER ASSETS
70.2
35.7
TOTAL
ASSETS
$
2,025.0
$
2,427.5
LIABILITIES AND
EQUITY
CURRENT LIABILITIES:
Current portion of
long-term debt
$
-
$
250.0
Current portion of capital lease obligations
2.6
3.1
Accounts payable
185.3
231.4
Income taxes payable
11.8
0.1
Accrued employee compensation
and benefits
42.7
30.0
Accrued restructuring and
severance payments
9.7
13.0
Accrued expenses and other current liabilities
72.0
84.3
TOTAL CURRENT LIABILITIES
324.1
611.9
NONCURRENT LIABILITIES:
Long-term debt
499.5
499.5
Obligations under capital leases
26.9
29.4
Income taxes
-
20.8
Other
82.0
83.7
TOTAL NONCURRENT LIABILITIES
608.4
633.4
TOTAL LIABILITIES
932.5
1,245.3
COMMITMENTS AND
CONTINGENCIES
-
-
EQUITY:
Preferred stock, $.01 par value - shares authorized 1.0; none issued
-
-
Common stock, $.01 par value - shares authorized 200.0; issued
156.8 and 154.8
1.6
1.5
Additional paid-in capital
1,360.3
1,350.7
Retained earnings
1,564.4
1,668.0
Accumulated other comprehensive
(loss) income
(7.6
)
(11.7
)
Treasury stock,
71.4 shares for both periods, at cost
(1,826.3
)
(1,826.3
)
TOTAL
JONES STOCKHOLDERS'
EQUITY
1,092.4
1,182.2
Noncontrolling interest
0.1
-
TOTAL EQUITY
1,092.5
1,182.2
TOTAL LIABILITIES AND
EQUITY
$
2,025.0
$
2,427.5
See accompanying notes to consolidated financial statements
Consolidated Statements of Operations
(All amounts in millions except per share data)
Year Ended December 31,
2009
2008
2007
Net sales
$
3,279.7
$
3,562.6
$
3,793.3
Licensing income
46.8
52.1
52.0
Other revenues
0.9
1.7
3.2
Total revenues
3,327.4
3,616.4
3,848.5
Cost of goods sold
2,181.5
2,440.2
2,609.1
Gross profit
1,145.9
1,176.2
1,239.4
Selling, general and administrative expenses
1,008.7
1,069.2
1,100.4
Trademark impairments
28.7
25.2
88.0
Goodwill impairment
120.6
813.2
78.0
Operating loss
(12.1
)
(731.4
)
(27.0
)
Interest income
2.8
7.5
3.7
Interest expense and financing costs
55.6
49.1
51.5
Loss and costs associated with repurchase of 4.250% Senior Notes
1.5
-
-
Gain on sale of interest in Australian joint venture
-
0.8
8.2
Equity in (loss) earnings of unconsolidated affiliates
(3.7
)
(0.7
)
8.1
Loss from continuing operations before provision
(benefit) for income taxes
(70.1
)
(772.9
)
(58.5
)
Provision
(benefit) for income taxes
16.2
(6.6
)
(104.4
)
(Loss) income from
continuing operations
(86.3
)
(766.3
)
45.9
Income from discontinued operations,
including gain on sale of Barneys, net of tax
-
0.9
265.2
Net (loss) income
(86.3
)
(765.4
)
311.1
Less:
income attributable to noncontrolling interest
0.3
-
-
(Loss) income
attributable to Jones
$
(86.6
)
$
(765.4
)
$
311.1
(Loss) earnings
per share
Basic
(Loss) income from
continuing operations attributable to Jones
$
(1.02
)
$
(9.05
)
$
0.45
Income from discontinued operations
attributable to Jones
-
0.01
2.62
Basic
(loss) earnings per share attributable to Jones
$
(1.02
)
$
(9.04
)
$
3.07
Diluted
(Loss) income from continuing operations
attributable to Jones
$
(1.02
)
$
(9.05
)
$
0.45
Income from discontinued
operations attributable to Jones
-
0.01
2.58
Diluted (loss) earnings per share
attributable to Jones
$
(1.02
)
$
(9.04
)
$
3.03
Weighted average common shares outstanding
Basic
81.7
82.9
99.9
Diluted
81.7
82.9
101.3
Dividends declared per share
$
0.20
$
0.56
$
0.56
Consolidated Statements of Changes in
Equity
(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
(loss)
income
Treasury
stock
Non-controlling interest
Balance, January
1, 2007
107.9
$
2,211.6
$
1.5
$
1,320.0
$
2,226.4
$
(5.9
)
$
(1,330.4
)
$
-
Year ended December 31, 2007:
Comprehensive
income:
Net
income
-
311.1
-
-
311.1
-
-
-
Pension
and postretirement liability adjustments, net of $1.7 tax
-
2.9
-
-
-
2.9
-
-
Change in fair value of
cash flow hedges, net of $1.8 tax benefit
-
(2.5
)
-
-
-
(2.5
)
-
-
Reclassification adjustment for hedge gains and losses included in net
income,
net of $0.4 tax benefit
-
0.5
-
-
-
0.5
-
-
Foreign currency
translation adjustments
-
7.6
-
-
-
7.6
-
-
Total
comprehensive income
319.6
Effect
of sale of Barneys
-
(0.5
)
-
-
-
(0.5
)
-
-
Forfeitures of
restricted stock by employees, net of issuances
(0.2
)
-
-
-
-
-
-
-
Amortization
expense in connection with employee stock options and restricted stock
-
7.2
-
7.2
-
-
-
-
Exercise of
employee stock options
0.6
11.1
-
11.1
-
-
-
-
Tax effects from exercise of employee stock options and vesting of
restricted stock
-
1.4
-
1.4
-
-
-
-
Dividends on
common stock ($0.56 per share)
-
(57.2
)
-
-
(57.2
)
-
-
-
Treasury stock
acquired
(23.0
)
(496.9
)
-
-
-
-
(496.9
)
-
Other
-
0.5
-
-
0.5
-
-
-
Balance,
December 31, 2007
85.3
1,996.8
1.5
1,339.7
2,480.8
2.1
(1,827.3
)
-
Year ended December 31, 2008:
Comprehensive
loss:
Net
loss
-
(765.4
)
-
-
(765.4
)
-
-
-
Pension
and postretirement liability adjustments, net of $3.6 tax benefit
-
(5.7
)
-
-
-
(5.7
)
-
-
Change in fair value of
cash flow hedges, net of $0.6 tax
-
0.6
-
-
-
0.6
-
-
Reclassification adjustment for hedge gains and losses included in net
income,
net of $0.3 tax benefit
-
0.7
-
-
-
0.7
-
-
Foreign currency
translation adjustments
-
(9.4
)
-
-
-
(9.4
)
-
-
Total
comprehensive loss
(779.2
)
Issuance of
restricted stock to employees, net of forfeitures
1.3
-
-
-
-
-
-
-
Amortization
expense in connection with employee stock options and restricted stock
-
12.3
-
12.3
-
-
-
-
Exercise of
employee stock options
-
0.1
-
0.1
-
-
-
-
Tax effects from exercise of employee stock options and vesting of
restricted stock
-
(1.4
)
-
(1.4
)
-
-
-
-
Dividends on
common stock ($0.56 per share)
-
(47.4
)
-
-
(47.4
)
-
-
-
Treasury stock
acquired
(3.2
)
1.0
-
-
-
-
1.0
-
Balance,
December 31, 2008
83.4
1,182.2
1.5
1,350.7
1,668.0
(11.7
)
(1,826.3
)
-
Year ended December 31, 2009:
Comprehensive
loss:
Net
(loss) income
-
(86.3
)
-
-
(86.6
)
-
-
0.3
Pension
and postretirement liability adjustments, net of $0.3 tax benefit
-
(0.6
)
-
-
-
(0.6
)
-
-
Change in fair value of
cash flow hedges, net of $0.4 tax benefit
-
(0.7
)
-
-
-
(0.7
)
-
-
Reclassification adjustment for hedge gains and losses included in net
loss,
net of $0.2 tax benefit
-
0.4
-
-
-
0.4
-
-
Foreign currency
translation adjustments
-
5.0
-
-
-
5.0
-
-
Total
comprehensive loss
(82.2
)
Issuance of
restricted stock to employees, net of forfeitures
2.0
-
-
-
-
-
-
-
Amortization
expense in connection with employee stock options and restricted stock
-
13.0
0.1
12.9
-
-
-
-
Distributions to noncontrolling interest
-
(0.2
)
-
-
-
-
-
(0.2
)
Tax effects from vesting of
restricted stock
-
(1.1
)
-
(1.1
)
-
-
-
-
Tax effects of expired employee stock options
-
(2.2
)
-
(2.2
)
-
-
-
-
Dividends on
common stock ($0.20 per share)
-
(17.0
)
-
-
(17.0
)
-
-
-
Balance,
December 31, 2009
85.4
$
1,092.5
$
1.6
$
1,360.3
$
1,564.4
$
(7.6
)
$
(1,826.3
)
$
0.1
Consolidated Statements of Cash Flows
(All amounts in millions)
Year Ended December 31,
2009
2008
2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net
(loss) income
$
(86.3
)
$
(765.4
)
$
311.1
Less:
Income from discontinued operations, net of tax
-
(0.9
)
(265.2
)
(Loss) income from continuing operations
(86.3
)
(766.3
)
45.9
Adjustments to reconcile (loss) income from continuing operations to net cash provided by operating activities, net of
acquisitions and divestitures:
Loss
and costs associated with repurchase of 4.250% Senior Notes
1.5
-
-
Impairment losses on
property, plant and equipment
24.4
0.9
2.1
Trademark impairments
28.7
25.2
88.0
Goodwill
impairment
120.6
813.2
78.0
Amortization
of employee stock options and restricted stock
13.0
12.3
14.0
Depreciation and other amortization
78.7
80.8
76.5
Gain on sale of
interest in Australian joint venture
-
(0.8
)
(8.2
)
Equity in
loss (earnings)
of unconsolidated affiliates
3.7
0.7
(8.1
)
Dividends
received from unconsolidated affiliates
-
-
2.6
Provision for losses on accounts receivable
1.7
10.3
0.2
Deferred taxes
10.7
(5.0
)
8.7
Write-off of deferred financing fees
4.4
1.1
-
Losses on
sales of property, plant and equipment
0.7
2.7
4.0
Other
items, net
0.6
(0.4
)
(1.8
)
Changes in operating assets and liabilities:
Accounts receivable
56.3
(45.2
)
22.5
Inventories
136.9
11.1
9.6
Prepaid expenses and other current assets
9.5
22.2
1.2
Accounts payable
(46.8
)
8.6
(55.5
)
Income taxes payable/prepaid
income taxes
0.6
12.8
(171.7
)
Accrued expenses and other
current liabilities
(4.6
)
(15.9
)
4.9
Other
assets and liabilities
(5.3
)
7.2
6.6
Total adjustments
435.3
941.8
73.6
Net cash provided by operating activities
of continuing operations
349.0
175.5
119.5
Net cash provided by
operating activities of discontinued operations
-
-
39.0
Net cash provided by operating activities
349.0
175.5
158.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds
from sale of Barneys, net of cash sold and selling costs
-
-
845.5
Proceeds
from sale of interest in Australian joint venture
-
0.8
20.7
Investment in GRI Group Limited
(15.2
)
(20.2
)
-
Costs related to acquisition of Rachel Roy Fashions, Inc.
-
(0.2
)
-
Capital expenditures
(30.0
)
(71.2
)
(111.2
)
Proceeds from sale of Mexican operations
-
5.9
-
Proceeds from sales of property, plant and equipment
-
0.5
3.0
Net cash
(used in) provided by investing activities of continuing operations
(45.2
)
(84.4
)
758.0
Net cash used in investing activities
of discontinued operations
-
-
(40.5
)
Net cash
(used in) provided by investing activities
(45.2
)
(84.4
)
717.5
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of 4.250% Senior Notes
(237.7
)
-
-
Redemption at maturity of 4.250% Senior Notes
(7.5
)
-
-
Payment of consent fees
(12.9
)
-
-
Costs associated with consent fees and repurchase of notes
(1.8
)
-
-
Costs related to secured revolving credit agreement
(30.1
)
-
-
Net
repayment under credit facilities
-
-
(100.0
)
Purchases of treasury stock
-
1.0
(496.9
)
Proceeds from exercise of employee stock options
-
0.1
11.1
Dividends paid
(17.0
)
(47.4
)
(57.2
)
Net cash
transferred to discontinued operations
-
-
(21.7
)
Principal payments on capital leases
(3.1
)
(4.8
)
(4.1
)
Excess tax benefits
from share-based payment arrangement
-
-
2.4
Other
(0.2
)
(0.3
)
-
Net cash used in financing activities
of continuing operations
(310.3
)
(51.4
)
(666.4
)
Net cash
provided by financing activities of discontinued operations
-
-
17.9
Net cash used in financing activities
(310.3
)
(51.4
)
(648.5
)
EFFECT OF EXCHANGE RATES ON CASH
1.6
(4.2
)
3.8
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(4.9
)
35.5
231.3
CASH AND CASH EQUIVALENTS, BEGINNING,
including $7.2 reported under assets held for sale in 2007
338.3
302.8
71.5
CASH AND CASH EQUIVALENTS, ENDING
$
333.4
$
338.3
$
302.8
Notes to Consolidated Financial Statements
The consolidated financial statements
include the accounts of Jones Apparel Group, Inc. and our wholly-owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated. The results of operations of acquired companies are included in our
operating results from the respective dates of acquisition. We also have a 25%
interest in GRI, which is accounted for under the equity method of accounting.
Financial instruments which
potentially subject us to concentration of credit risk consist principally of
cash investments and accounts receivable. We place our cash and cash equivalents
in investment-grade, highly-liquid U.S. government agency and corporate money
market accounts. We perform ongoing credit evaluations of our customers'
financial condition and, generally, require no collateral from our customers.
The allowance for non-collection of accounts receivable is based upon the
expected collectibility of all accounts receivable.
Our primary objectives for holding
derivative financial instruments are to manage foreign currency and interest
rate risks. We do not use financial instruments for trading or other speculative
purposes. We have historically used derivative financial instruments to hedge
both the fair value of recognized assets or liabilities (a "fair value" hedge)
and the variability of anticipated cash flows of a forecasted transaction (a
"cash flow" hedge). Our strategies related to derivative financial instruments
have been:
Accounts receivable are reported
at amounts we expect to be collected, net of trade discounts and deductions for
co-op advertising normally taken by our customers, allowances we provide to our
retail customers to effectively flow goods through the retail channels, an
allowance for non-collection due to the financial position of our customers and
credit card accounts, and an allowance for estimated sales returns.
Inventories are valued at the lower
of cost or market. Inventory values are determined using the FIFO (first in,
first out) and weighted average cost methods. We reduce the carrying cost of
inventories for obsolete or slow moving items as necessary to properly reflect
inventory value. The cost elements included in inventory consist of all direct
costs of merchandise (net of purchase discounts and vendor allowances),
allocated overhead (primarily design and indirect production costs), inbound
freight and merchandise acquisition costs such as commissions and import fees.
Property, plant and equipment are
recorded at cost. Depreciation and amortization are computed by the
straight-line method over the estimated useful lives of the assets. Leasehold
improvements recorded at the inception of a lease are amortized using the
straight-line method over the life of the lease or the useful life of the
improvement, whichever is shorter; for improvements made during the lease term,
the amortization period is the shorter of the useful life or the remaining lease
term (including any renewal periods that are deemed to be reasonably assured).
Property under capital leases is amortized over the lives of the respective
leases or the estimated useful lives of the assets, whichever is shorter.
Total rent payments under operating
leases that include scheduled payment increases and rent holidays are amortized
on a straight-line basis over the term of the lease. Rent expense on our
buildings and retail stores is classified as an SG&A expense and, for certain
stores, includes contingent rents that are based on a percentage of retail sales
over stated levels. Landlord allowances are amortized by the straight-line
method over the term of the lease as a reduction of rent expense.
Goodwill represents the excess of
purchase price over the fair value of net assets acquired in business
combinations accounted for under the purchase method of accounting. We test at
least annually our goodwill and other intangibles without determinable lives
(primarily tradenames and trademarks) for impairment through the use of
discounted cash flow models. Other intangibles with determinable lives,
including license agreements, are amortized on a straight-line basis over the
estimated useful lives of the assets (currently ranging from three to 19 years).
The financial statements of foreign
subsidiaries are translated into U.S. dollars in accordance with ASC Section
830, "Foreign Currency Matters." Where the functional currency of a foreign
subsidiary is its local currency, balance sheet accounts are translated at the
current exchange rate and income statement items are translated at the average
exchange rate for the period. Gains and losses resulting from translation are
accumulated in a separate component of stockholders' equity. These adjustments,
along with gains and losses on transactions denominated and settled in a foreign
currency, are reflected in the consolidated statements of operations. Net
foreign currency losses reflected in results from continuing operations were
$1.2 million, $0.2 million and $0.2 million in 2009, 2008 and 2007,
respectively.
Our funding policy is to contribute
at least the minimum amount to meet the funding ratio requirements of the
Pension Protection Act.
Treasury stock is recorded at
acquisition cost. Gains and losses on disposition are recorded as increases or
decreases to additional paid-in capital with losses in excess of previously
recorded gains charged directly to retained earnings.
Wholesale apparel and footwear and
accessories sales are recognized either when products are shipped or, in certain
situations, upon acceptance by the customer. Retail sales are recorded at the
time of register receipt. Allowances for estimated returns are provided when
sales are recorded primarily by reducing revenues for the total revenues related
to estimated returns, with an offsetting reduction to cost of sales for the cost
of the estimated returns. Sales taxes collected from retail customers are
excluded from reported revenues. Licensing income is recognized based on the
higher of contractual minimums or sales of licensed products reported by our
licensees.
Shipping and handling costs billed to
customers are recorded as revenue. Freight costs associated with shipping goods
to customers are recorded as a cost of sales.
We record national advertising
campaign costs as an expense when the advertising first takes place and we
expense advertising production costs as incurred, net of reimbursements for
cooperative advertising. Advertising costs associated with our cooperative
advertising programs are accrued as the related revenues are recognized. Net
advertising expense reflected in results from continuing operations was $45.3
million, $54.7 million and $54.2 million in 2009, 2008 and 2007, respectively,
net of co-operative advertising reimbursements of $11.6 million, $12.9 million
and $12.8 million, respectively.
We use the asset and liability method
of accounting for income taxes. Current tax assets and liabilities are
recognized for the estimated Federal, foreign, state and local income taxes
payable or refundable on the tax returns for the current year. Deferred tax
assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred income tax provisions are based on
the changes to the respective assets and liabilities from period to period.
Valuation allowances are recorded to reduce deferred tax assets when uncertainty
regarding their realizability exists.
In June 2008, the FASB issued FASB
Staff Position No. EITF 03-6-1, "Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities" (now ASC Subtopic
260-10-45-61A), which classifies unvested share-based payment awards that
contain nonforfeitable rights to dividends or dividend equivalents (whether paid
or unpaid) as participating securities and requires them to be included in the
computation of earnings per share pursuant to the two-class method described in
ASC Subtopic 260-10-45-60B. We adopted this Staff Position on January 1, 2009.
Prior period earnings per share figures have been restated to conform to this
presentation.
For the year ended December 31,
2009
2008
2007
Number of options (in millions)
-
-
8.3
Weighted average exercise price
-
-
$32.65
Compensation cost for restricted
stock is measured as the excess, if any, of the quoted market price of our
stock at the date the common stock is issued over the amount the employee
must pay to acquire the stock (which is generally zero). The compensation
cost, net of projected forfeitures, is recognized over the period between
the issue date and the date any restrictions lapse.
We review certain long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. In that regard, we assess the
recoverability of such assets based upon estimated non-discounted cash flow
forecasts. If an asset impairment is identified, the asset is written down to
fair value based on discounted cash flow or other fair value measures.
We consider all highly liquid
short-term investments to be cash equivalents.
Certain reclassifications have been
made to conform prior year data with the current presentation.
In April 2009, the FASB issued FASB
Staff Position No. FAS 107-1 and APB 28-1, "Interim Disclosures about Fair Value
of Financial Instruments" (now ASC Subtopic 825-10-65), which requires
disclosures about fair value of financial instruments for interim reporting
periods of publicly traded companies as well as in annual financial statements.
This Staff Position is effective for interim reporting periods ending after June
15, 2009, and its requirements are reflected herein.
Year Ended December 31,
2009
2008
2007
(In millions
except per share amounts)
(Loss) income from continuing operations$
(86.3
)
$
(766.3
)
$
45.9
Less: income from continuing operations attributable to
noncontrolling interest
0.3
-
-
(Loss) income
from continuing operations attributable to Jones
(86.6
)
(766.3
)
45.9
Less: (loss) income from continuing operations allocated
to participating securities
(3.6
)
(16.0
)
0.5
(Loss) income
from continuing operations available to common stockholders of Jones
(83.0
)
(750.3
)
45.4
Income from discontinued operations
-
0.9
265.2
Less: income
from discontinued operations allocated to participating securities
-
-
3.6
Income from discontinued operations available to common
stockholders of Jones
-
0.9
261.6
(Loss) income available to common stockholders of Jones
$
(83.0
)
$
(749.4
)
$
307.0
Weighted-average common shares outstanding - basic
81.7
82.9
99.9
Effect of
dilutive employee stock options
-
-
1.4
Weighted-average common shares and share equivalents
outstanding - diluted
81.7
82.9
101.3
(Loss) earnings per share - basic
(Loss)
income from continuing operations attributable to Jones
$
(1.02
)
$
(9.05
)
$
0.45
Income from discontinued
operations attributable to Jones
-
0.01
2.62
Basic (loss) earnings per share attributable to Jones
$
(1.02
)
$
(9.04
)
$
3.07
(Loss) earnings per share - diluted
(Loss)
income from continuing operations attributable to Jones
$
(1.02
)
$
(9.05
)
$
0.45
Income from discontinued
operations attributable to Jones
-
0.01
2.58
Diluted (loss) earnings per share attributable to Jones
$
(1.02
)
$
(9.04
)
$
3.03
December 31,
2009
2008
(In millions)
Trade accounts receivable
$
327.9
$
397.6
Allowances for doubtful accounts, returns, discounts and co-op advertising
(24.8
)
(27.4
)
$
303.1
$
370.2
Year Ended December 31,
2009
2008
2007
(In millions)
Total revenues
$
-
$
-
$
452.1
Income from operations of Barneys before provision for income taxes
$
-
$
-
$
22.0
Provision for income taxes
-
-
11.0
Income from operations of Barneys
-
-
11.0
Gain on sale of Barneys before provision for income taxes (1)
-
1.5
389.1
Provision for income taxes
-
0.6
134.9
Gain on sale of Barneys
-
0.9
254.2
Income from discontinued operations
$
-
$
0.9
$
265.2
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 closings, we incurred $6.9 million of one-time
termination benefits and associated employee costs for 1,838 employees and
$1.0 million of other costs. Of this amount, $2.3 million has been recorded
as an SG&A expense and $5.6 million was recorded as cost of sales in the
wholesale jeanswear segment. At that time, we also 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 $8.6
million, which was reported as cost of sales in the wholesale jeanswear
segment in 2006. The closings were substantially completed by the end of
March 2007. On May 8, 2008, we sold the Mexican operations for $5.9 million,
resulting in a gain of $0.2 million.
(In millions)
One-time termination benefits
Other associated costs
Total manufacturing restructuring
Balance, January 1, 2007
$
2.8
$
0.6
$
3.4
Additions
1.1
0.5
1.6
Payments and reductions
(3.6
)
(0.2
)
(3.8
)
Balance, December 31, 2007
0.3
0.9
1.2
Reversals
(0.2
)
(0.4
)
(0.6
)
Payments and reductions
(0.1
)
(0.4
)
(0.5
)
Balance, December 31, 2008
-
0.1
0.1
Reversals
-
(0.1
)
(0.1
)
Balance, December 31, 2009
$
-
$
-
$
-
In connection with the exit from and
reorganization of certain moderate apparel product lines, we decided to close
certain New York offices, and on October 9, 2007, we announced the closing of
warehouse facilities in Goose Creek, South Carolina. We recorded $7.2 million of
one-time termination benefits and associated employee costs for approximately
440 employees and $4.2 million of lease obligations as SG&A expenses in our
wholesale jeanswear segment. These closings were substantially complete by the
end of February 2008.
(In millions)
One-time termination benefits
Lease obligations
Total moderate apparel restructuring
Balance, January 1, 2007
$
-
$
-
$
-
Additions
7.9
-
7.9
Payments and reductions
(2.2
)
-
(2.2
)
Balance, December 31, 2007
5.7
-
5.7
(Reversals) additions
(0.5
)
0.9
0.4
Payments and reductions
(4.3
)
(0.6
)
(4.9
)
Balance, December 31, 2008
0.9
0.3
1.2
(Reversals) additions
(0.2
)
3.3
3.1
Payments and reductions
(0.7
)
(1.6
)
(2.3
)
Balance, December 31, 2009
$
-
$
2.0
$
2.0
Retail Stores. On May 30,
2006, we announced the closing of our Stein Mart leased shoe departments,
effective January 2007. In connection with the closing, we accrued $1.2 million
of one-time termination benefits and associated employee costs in 2006 for 468
employees. These amounts, which are reported as SG&A expenses in the retail
segment, were paid in 2007.
(In millions)
Retail stores
Jewelry
Texas warehouse
Edison warehouse
Balance, January 1, 2007
$
1.2
$
-
$
-
$
-
Additions
0.1
-
-
2.8
Payments and reductions
(1.2
)
-
-
-
Balance, December 31, 2007
0.1
-
-
2.8
Reversals
-
-
-
(0.2
)
Payments and reductions
(0.1
)
-
-
(2.2
)
Balance, December 31, 2008
-
-
-
0.4
Additions
4.6
6.3
3.1
-
Payments and reductions
(2.7
)
(3.4
)
-
(0.4
)
Balance, December 31, 2009
$
1.9
$
2.9
$
3.1
$
-
In connection with the acquisitions
of McNaughton (in 2001), Kasper (in 2003) and Maxwell (in 2004), we assessed and
formulated plans to restructure certain operations of each company. These plans
involved the closure of manufacturing facilities, certain offices, foreign
subsidiaries, and selected domestic and international retail locations. The
objectives of the plans were to eliminate unprofitable or marginally profitable
lines of business and reduce overhead expenses. These costs were reported as a
component of goodwill.
(In millions)
One-time termination benefits
Other costs
Total acquisition restructuring
Balance, January 1, 2007
$
0.1
$
1.4
$
1.5
Payments and reductions
-
(0.3
)
(0.3
)
Balance, December 31, 2007
0.1
1.1
1.2
Payments and reductions
(0.1
)
(0.3
)
(0.4
)
Balance, December 31, 2008
-
0.8
0.8
Payments and reductions
-
(0.3
)
(0.3
)
Balance, December 31, 2009
$
-
$
0.5
$
0.5
December 31,
2009
2008
Useful
lives
(years)
(In millions)
Land and buildings
$
73.1
$
73.0
10 - 20
Leasehold improvements
246.9
261.6
1 - 18
Machinery, equipment and software
385.2
365.7
3 - 10
Furniture and fixtures
66.0
70.9
5 - 8
Construction in progress
7.2
14.1
-
778.4
785.3
Less: accumulated depreciation and amortization
539.4
484.3
$
239.0
$
301.0
December 31,
2009
2008
Useful
lives
(years)
(In millions)
Buildings
$
37.8
$
37.8
10 - 20
Machinery and equipment
14.0
13.9
3 - 5
51.8
51.7
Less: accumulated amortization
25.4
21.7
$
26.4
$
30.0
(In millions)
Wholesale
Better
Apparel
Wholesale
Jeanswear
Wholesale
Footwear &
Accessories
Retail
Total
Balance, January 1,
2008
Goodwill
$
40.1
$
519.2
$
813.2
$
120.6
$
1,493.1
Accumulated impairment losses
-
(519.2
)
-
-
(519.2
)
Net goodwill
40.1
-
813.2
120.6
973.9
Impairment loss
-
-
(813.2
)
-
(813.2
)
Balance, December 13, 2008
Goodwill
40.1
519.2
813.2
120.6
1,493.1
Accumulated impairment losses
-
(519.2
)
(813.2
)
-
(1,332.4
)
Net goodwill
40.1
-
-
120.6
160.7
Impairment loss
-
-
-
(120.6
)
(120.6
)
Balance, December 13, 2009
Goodwill
40.1
519.2
813.2
120.6
1,493.1
Accumulated impairment losses
-
(519.2
)
(813.2
)
(120.6
)
(1,453.0
)
Net goodwill
$
40.1
$
-
$
-
$
-
$
40.1
December 31,
2009
2008
(In millions)
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Amortized intangible assets
License agreements
$
60.5
$
48.1
$
60.5
$
45.8
Acquired favorable
leases
0.5
0.3
0.5
0.3
61.0
48.4
61.0
46.1
Indefinite-life trademarks
547.2
-
575.9
-
$
608.2
$
48.4
$
636.9
$
46.1
2009
2008
Goodwill
Trademarks
Goodwill
Trademarks
Discount rates
12.9%
12.9%
11.5%
11.5%
Royalty rates
--
4.0% -
7.0%
--
4.0% -
7.0%
Weighted-average revenue growth rates
2.3%
6.1%
2.8%
7.5%
Long-term growth rates
3.0%
0% - 3.0%
3.0%
0% - 3.0%
(In millions)
Description
Classification
Total
Value
Quoted
prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
December 31, 2009:
Rabbi
Trust assets
Other
current assets
$
7.8
$
7.8
$
-
$
-
Total
assets
$
7.8
$
7.8
$
-
$
-
Rabbi
Trust liabilities
Accrued
employee compensation and benefits
$
7.8
$
7.8
$
-
$
-
Derivatives
Accrued
expenses and other current liabilities
0.2
-
0.2
-
Deferred
director fees
Accrued
expenses and other current liabilities
1.1
1.1
-
-
Total
liabilities
$
9.1
$
8.9
$
0.2
$
-
December 31, 2008:
Rabbi
Trust assets
Other
current assets
$
6.4
$
6.4
$
-
$
-
Derivatives
Other
current assets
0.1
-
0.1
-
Total
assets
$
6.5
$
6.4
$
0.1
$
-
Rabbi
Trust liabilities
Accrued
employee compensation and benefits
$
6.4
$
6.4
$
-
$
-
Deferred
director fees
Accrued
expenses and other current liabilities
0.2
0.2
-
-
Total
liabilities
$
6.6
$
6.6
$
-
$
-
(In millions)
Fair Value Measurements Using
Description
Carrying Value at
December 31, 2009
Quoted
prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Total losses
recorded for 2009
Property and equipment
$
-
$
-
$
-
$
-
$
24.4
Trademarks
118.2
-
-
118.2
28.7
Goodwill
-
-
-
-
120.6
December 31,
2009
2008
(In millions)
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Long-term debt, including current portion
$
499.5
449.4
$
749.5
$
462.2
Foreign currency exchange contracts, net
(liability) asset
(0.2
)
(0.2
)
0.1
0.1
December 31,
2009
2008
(In millions)
4.250% Senior Notes due
2009
$
-
$
250.0
5.125% Senior Notes due 2014, net of
unamortized discount of $0.1 and $0.1
249.9
249.9
6.125% Senior Notes due
2034, net of
unamortized discount of $0.4 and $0.4
249.6
249.6
499.5
749.5
Less current portion
-
250.0
$
499.5
$
499.5
December 31,
2009
2008
(In millions)
Foreign currency
translation adjustments
$
7.2
$
2.2
Pension and postretirement
liability adjustments
(14.7
)
(14.1
)
Unrealized
gains (losses) on
hedge contracts
(0.1
)
0.2
$
(7.6
)
$
(11.7
)
(In millions)
December 31, 2009
December 31, 2008
Notional
amount
Fair
value -
other current liabilities
Notional
amount
Fair
value -
other current assets
Canadian Dollar - U.S. Dollar
$
8.6
$
0.2
$
10.5
$
0.1
(In millions)
Amount of Pretax Gain (Loss) Recognized
in Other Comprehensive Income
Location of Pretax Gain (Loss)
Reclassified from Other Comprehensive Income into Income
Amount of Pretax Gain (Loss)
Reclassified from Other Comprehensive Income into Income
Derivative type
2009
2008
2007
2009
2008
2007
Foreign exchange contracts
$
(1.1
)
$
1.2
$
(3.8
)
Cost of sales
$
(0.6
)
$
(1.0
)
$
(0.6
)
December 31,
2009
2008
(In millions)
Warehouses, office facilities and equipment
$
29.5
$
32.5
Less: current portion
2.6
3.1
Obligations under capital leases - noncurrent
$
26.9
$
29.4
Year Ending December 31,
(In millions)
2010
$
4.5
2011
3.5
2012
3.6
2013
3.6
2014
3.7
Later years
24.8
Total minimum lease payments
43.7
Less: amount representing interest
14.2
Present value of net minimum lease payments
$
29.5
Year Ended December 31,
2009
2008
2007
(In millions)
Minimum rent
$
121.5
$
130.2
$
130.9
Contingent rent
0.5
0.3
0.5
Less: sublease rent
(3.5
)
(7.6
)
(5.3
)
$
118.5
$
122.9
$
126.1
Year Ending December 31,
(In millions)
2010
$
123.9
2011
117.2
2012
97.3
2013
79.6
2014
71.6
Later years
184.0
$
673.6
Year Ended December 31,
2009
2008
2007
(In millions)
Supplemental disclosures of cash flow information for continuing
operations:
Cash paid
(received) during the year for:
Interest
$
43.9
$
45.6
$
52.1
Net
income tax (refunds) payments
(1.9
)
(16.0
)
67.7
Supplemental disclosures of non-cash investing and financing activities
for continuing operations:
Property acquired through capital lease financing
0.1
4.0
4.1
Restricted stock issued to employees
7.3
20.3
19.2
Year Ended December 31,
2009
2008
2007
(In millions)
Current:
Federal
$
(5.2
)
$
(15.3
)
$
(123.5
)
State and local
4.9
9.2
5.2
Foreign
5.8
4.5
5.2
5.5
(1.6
)
(113.1
)
Deferred:
Federal
13.0
2.5
11.3
State and local
1.0
(5.7
)
(3.0
)
Foreign
(3.3
)
(1.8
)
0.4
10.7
(5.0
)
8.7
Provision
(benefit) for income taxes
$
16.2
$
(6.6
)
$
(104.4
)
Year Ended December 31,
2009
2008
2007
(In millions)
Loss from
continuing operations before provision (benefit) for income taxes
United States
$
(54.1
)
$
(770.6
)
$
(73.0
)
Foreign
(16.0
)
(2.3
)
14.5
$
(70.1
)
$
(772.9
)
$
(58.5
)
Year Ended December 31,
2009
2008
2007
(In millions)
Benefit for Federal income taxes at the statutory rate
$
(24.5
)
$
(270.5
)
$
(20.5
)
State and local income taxes, net of federal benefit
3.3
2.2
0.4
Foreign income tax
difference
(2.1
)
(4.8
)
(4.2
)
Nondeductible goodwill impairment
41.3
265.8
27.3
Change in
deferred balance - fixed assets
(2.3
)
-
-
Valuation allowances
0.6
-
(107.2
)
Other items, net
(0.1
)
0.7
(0.2
)
Provision (benefit) for income taxes
$
16.2
$
(6.6
)
$
(104.4
)
December 31,
2009
2008
(In millions)
Deferred tax assets (liabilities):
Nondeductible accruals and allowances
$
51.7
$
58.0
Depreciation
14.8
15.3
Intangible asset valuation and amortization
(87.6
)
(73.2
)
Loss and credit carryforwards
42.5
34.4
Amortization of stock-based compensation
12.4
13.2
Deferred compensation
2.6
2.2
Inventory valuation
(7.8
)
(10.9
)
Inventory overhead
0.1
1.1
Pension
8.4
7.4
Gain on sale-leaseback transaction
2.4
2.7
Prepaid expenses
(2.0
)
(1.9
)
Display costs
(1.6
)
(1.8
)
Other (net)
1.9
0.9
Valuation allowances
(5.8
)
(5.2
)
Net deferred tax asset
$
32.0
$
42.2
Included in:
Current assets
$
28.1
$
28.0
Noncurrent assets
3.9
14.2
Net deferred tax asset
$
32.0
$
42.2
(In millions)
2009
2008
Uncertain tax positions,
beginning of year
$
14.1
$
16.7
(Decreases) increases for tax positions
related to prior years
(0.3
)
3.1
Settlements with tax authorities during
the year
(7.2
)
(5.7
)
Uncertain tax positions, end of year
$
6.6
$
14.1
2009
2008
2007
Options
Weighted Average Exercise Price
Options
Weighted Average Exercise Price
Options
Weighted Average Exercise Price
Outstanding, January 1
7.0
$32.73
7.6
$32.44
9.4
$31.43
Exercised
-
-
-
-
(0.6
)
19.61
Cancelled
(0.3
)
33.22
(0.3
)
34.21
(1.0
)
32.46
Expired
(0.5
)
31.54
(0.3
)
24.37
(0.2
)
23.60
Outstanding, December 31
6.2
$32.79
7.0
$32.73
7.6
$32.44
Exercisable, December 31
6.1
$32.74
6.8
$32.61
7.2
$32.20
2009
2008
2007
Weighted-average
contractual term (in years) of:
Options outstanding at
end of year
1.6
2.5
3.4
Options exercisable at end of year
1.6
2.5
3.3
Intrinsic value (in
millions) of:
Options outstanding at
end of year
$0.3
$0.1
$0.3
Options exercisable at end of year
$0.3
$0.1
$0.3
Options exercised
during the year
-
-
$6.8
Fair value (in millions) of options vested during the year
$2.1
$2.2
$3.0
2009
2008
2007
Shares
Weighted Average
Fair Value
Shares
Weighted Average
Fair Value
Shares
Weighted Average
Fair Value
Nonvested, January 1
1.8
$19.78
0.8
$32.48
1.3
$33.61
Granted
2.1
3.55
1.3
15.32
0.8
32.36
Vested
(0.2
)
28.99
(0.2
)
35.34
(0.3
)
34.46
Forfeited
(0.1
)
11.80
(0.1
)
22.22
(1.0
)
33.21
Nonvested, December 31
3.6
$10.33
1.8
$19.78
0.8
$32.48
2009
2008
2007
Fair value (in millions)
of shares vested during the year
$4.5
$8.0
$11.9
We maintain the Jones Apparel Group,
Inc. Retirement Plan (the "Jones Plan") under Section 401(k) of the Internal
Revenue Code (the "Code"). Employees not covered by a collective bargaining
agreement and meeting certain other requirements are eligible to participate in
the Jones Plan. Under the Jones Plan, participants may elect to have up to 50%
of their salary (subject to limitations imposed by the Code) deferred and
deposited with a qualified trustee, who in turn invests the money in a variety
of investment vehicles as selected by each participant. All employee
contributions into the Jones Plan are 100% vested.
Year Ended December 31,
2009
2008
(In millions)
Change in
benefit obligation
Benefit
obligation, beginning of year
$
40.3
$
39.0
Interest
cost
2.7
2.6
Actuarial loss (gain) - effect of assumption changes
4.1
1.5
Settlements
-
0.8
Benefits paid
(3.3
)
(3.6
)
Benefit obligation, end of year
43.8
40.3
Change in
plan assets
Fair value
of plan assets, beginning of year
26.4
34.6
Actual return on plan assets
3.7
(6.8
)
Employer
contribution
1.5
2.2
Benefits
paid
(3.3
)
(3.6
)
Fair value
of plan assets, end of year
28.3
26.4
Underfunded status at end of year
$
(15.5
)
$
(13.9
)
December 31,
2009
2008
(In millions)
Noncurrent liabilities
$
15.5
$
13.9
December 31,
2009
2008
(In millions)
Net loss
$
23.8
$
22.9
December 31,
2009
2008
(In millions)
Projected benefit
obligation
$
43.8
$
40.3
Accumulated benefit obligation
43.8
40.3
Fair value of plan
assets
28.3
26.4
Year Ended December 31,
2009
2008
(In millions)
Net Periodic
Benefit Cost:
Interest cost
$
2.7
$
2.6
Expected
return on plan assets
(2.0
)
(2.7
)
Settlement costs
-
1.8
Amortization
of net loss
1.5
0.8
Total net periodic benefit cost
2.2
2.5
Other
Changes in Plan Assets and Benefit Obligations
Recognized in
Other Comprehensive Income or Loss:
Net loss
2.5
11.0
Amortization of net gain
(1.5
)
(1.8
)
1.0
9.2
Total
recognized in net periodic benefit cost and other comprehensive income
$
3.2
$
11.7
2009
2008
Weighted-average
assumptions used to determine:
Benefit
obligations at December 31
Discount rate
6.1%
6.8%
Expected long-term return on plan assets
7.9%
7.9%
Net periodic benefit cost for year ended December 31
Discount rate
6.8%
6.8%
Expected long-term return on plan assets
7.9%
7.9%
Year Ending December 31,
(In millions)
2010
$
1.7
2011
1.7
2012
1.9
2013
2.1
2014
2.1
2015 through 2019
13.0
$
22.5
Asset Category
Cash and
equivalents (a)
$
13.2
Equity Securities:
U.S. companies (b)
12.9
International
companies (c)
2.2
Fixed
income (a)(d)
-
Total
$
28.3
(a)
Due to a change in our fixed income managers for the plans at December
31, 2009, amounts that had been previously invested in fixed income
securities were temporarily invested in money market funds pending
transfer to the new fixed income manager for investment into fixed
income securities. This transfer was completed in January 2010.
(b)
This category consists of both index and
actively managed mutual funds that invest in large and mid-cap U.S.
common stocks.
(c)
This category consists of both index and
actively managed mutual funds that invest in large and emerging market
international common stocks.
(d)
This category consists of managed mutual
funds that invest in high-grade corporate, government and mortgage
backed securities.
(In millions)
Wholesale Better Apparel
Wholesale Jeanswear
Wholesale Footwear & Accessories
Retail
Licensing, Other & Eliminations
Consolidated
For the year ended December 31, 2009
Revenues from external customers
$
922.8
$
828.9
$
839.6
$
689.3
$
46.8
$
3,327.4
Intersegment revenues
133.7
2.0
56.4
-
(192.1
)
-
Total revenues
1,056.5
830.9
896.0
689.3
(145.3
)
3,327.4
Segment income
(loss)
$
112.1
$
65.7
$
61.4
$
(71.4
)
$
(59.3
)
108.5
Net interest expense
(52.8
)
Goodwill impairment
(120.6
)
Loss and costs
associated with repurchase of 4.250% Senior Notes
(1.5
)
Equity in loss of unconsolidated affiliate
(3.7
)
Loss from continuing operations before provision for income taxes
$
(70.1
)
Depreciation and amortization
$
13.7
$
1.3
$
7.9
$
21.4
$
47.4
$
91.7
For the year ended December 31, 2008
Revenues from external customers
$
1,098.7
$
796.5
$
938.3
$
730.2
$
52.7
$
3,616.4
Intersegment revenues
146.5
3.8
81.8
-
(232.1
)
-
Total revenues
1,245.2
800.3
1,020.1
730.2
(179.4
)
3,616.4
Segment income (loss)
$
122.3
$
18.8
$
56.4
$
(54.3
)
$
(61.6
)
81.6
Net interest expense
(41.6
)
Goodwill impairment
(813.2
)
Gain on sale of Mexican operations and interest in Australian joint venture
1.0
Equity in loss of unconsolidated affiliates
(0.7
)
Loss from continuing operations before benefit for income taxes
$
(772.9
)
Depreciation and amortization
$
7.4
$
4.2
$
8.7
$
26.2
$
46.6
$
93.1
For the year ended December 31, 2007
Revenues from external customers
1,101.0
985.0
955.8
753.7
53.0
3,848.5
Intersegment revenues
155.8
10.7
72.6
-
(239.1
)
-
Total revenues
1,256.8
995.7
1,028.4
753.7
(186.1
)
3,848.5
Segment income (loss)
$
126.0
$
(4.2
)
$
109.2
$
(43.2
)
$
(136.8
)
51.0
Net interest expense
(47.8
)
Goodwill impairment
(78.0
)
Gain on sale of interest in Australian joint venture
8.2
Equity in earnings of unconsolidated affiliates
8.1
Loss from continuing operations before benefit for income taxes
$
(58.5
)
Depreciation and amortization
$
11.2
$
10.4
$
10.9
$
23.0
$
35.0
$
90.5
Total assets
December 31, 2009
$
773.1
$
556.2
$
433.7
$
194.1
$
67.9
$
2,025.0
December 31, 2008
1,098.9
711.5
371.7
127.2
118.2
2,427.5
December 31, 2007
1,146.4
703.5
1,127.7
209.9
49.1
3,236.6
On or for the Year Ended December 31,
2009
2008
2007
(In millions)
Revenues from external customers:
United States
$
3,033.6
$
3,279.0
$
3,523.2
Foreign countries
293.8
337.4
325.3
$
3,327.4
$
3,616.4
$
3,848.5
Long-lived assets:
United States
$
903.7
$
1,083.5
$
1,930.0
Foreign countries
52.2
24.3
11.2
$
955.9
$
1,107.8
$
1,941.2
(In millions)
December 31, 2009
December 31, 2008
Issuers
Others
Elim- inations
Cons- olidated
Issuers
Others
Elim- inations
Cons- olidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
322.1
$
11.3
$
-
$
333.4
$
318.4
$
19.9
$
-
$
338.3
Accounts receivable
189.5
113.6
-
303.1
219.7
150.5
-
370.2
Inventories
259.7
115.1
0.2
375.0
339.3
170.6
(0.4
)
509.5
Prepaid and refundable income taxes
0.7
0.1
(0.8
)
-
15.0
0.2
1.7
16.9
Deferred taxes
13.3
14.8
-
28.1
12.5
16.7
(1.2
)
28.0
Prepaid expenses and other current assets
18.2
7.4
-
25.6
34.7
7.9
-
42.6
TOTAL CURRENT ASSETS
803.5
262.3
(0.6
)
1,065.2
939.6
365.8
0.1
1,305.5
Property, plant and equipment - net
93.4
145.6
-
239.0
135.4
165.6
-
301.0
Due from affiliates
-
1,382.9
(1,382.9
)
-
-
1,154.6
(1,154.6
)
-
Goodwill
40.1
-
-
40.1
160.7
-
-
160.7
Other intangibles - net
0.5
559.3
-
559.8
0.5
590.3
-
590.8
Prepaid and
refundable income taxes
5.4
-
(0.7
)
4.7
-
-
-
-
Deferred taxes
83.3
-
(79.4
)
3.9
73.7
-
(59.5
)
14.2
Investments in
and loans to subsidiaries
2,125.2
42.1
(2,125.2
)
42.1
1,866.2
19.6
(1,866.2
)
19.6
Other assets
60.2
10.0
-
70.2
25.9
10.0
(0.2
)
35.7
TOTAL ASSETS
$
3,211.6
$
2,402.2
$
(3,588.8
)
$
2,025.0
$
3,202.0
$
2,305.9
$
(3,080.4
)
$
2,427.5
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt
$
-
$
-
$
-
$
-
$
250.0
$
-
$
-
$
250.0
Current portion of capital lease obligations
-
2.6
-
2.6
-
3.1
-
3.1
Accounts payable
129.8
55.5
-
185.3
160.4
71.0
-
231.4
Income taxes payable
23.1
7.8
(19.1
)
11.8
-
19.5
(19.4
)
0.1
Deferred taxes
-
-
-
-
-
1.3
(1.3
)
-
Accrued expenses and other current liabilities
75.7
48.7
-
124.4
85.7
41.6
-
127.3
TOTAL CURRENT LIABILITIES
228.6
114.6
(19.1
)
324.1
496.1
136.5
(20.7
)
611.9
NONCURRENT LIABILITIES:
Long-term debt
499.5
-
-
499.5
499.5
-
-
499.5
Obligations under capital leases
-
26.9
-
26.9
-
29.4
-
29.4
Deferred taxes
-
203.5
(203.5
)
-
-
47.1
(47.1
)
-
Income taxes payable
-
0.7
(0.7
)
-
15.6
5.2
-
20.8
Due to affiliates
1,382.9
-
(1,382.9
)
-
1,154.6
-
(1,154.6
)
-
Other
63.3
18.7
-
82.0
66.8
16.9
-
83.7
TOTAL NONCURRENT LIABILITIES
1,945.7
249.8
(1,587.1
)
608.4
1,736.5
98.6
(1,201.7
)
633.4
TOTAL LIABILITIES
2,174.3
364.4
(1,606.2
)
932.5
2,232.6
235.1
(1,222.4
)
1,245.3
EQUITY:
Common stock and additional paid-in capital
1,361.9
1,540.5
(1,540.5
)
1,361.9
1,352.2
1,706.8
(1,706.8
)
1,352.2
Retained earnings
1,509.3
493.3
(438.2
)
1,564.4
1,455.2
365.7
(152.9
)
1,668.0
Accumulated other comprehensive (loss) income
(7.6
)
3.9
(3.9
)
(7.6
)
(11.7
)
(1.7
)
1.7
(11.7
)
Treasury stock
(1,826.3
)
-
-
(1,826.3
)
(1,826.3
)
-
-
(1,826.3
)
Total
Jones stockholders' equity
1,037.3
2,037.7
(1,982.6
)
1,092.4
969.4
2,070.8
(1,858.0
)
1,182.2
Noncontrolling interest
-
0.1
-
0.1
-
-
-
-
TOTAL EQUITY
1,037.3
2,037.8
(1,982.6
)
1,092.5
969.4
2,070.8
(1,858.0
)
1,182.2
TOTAL LIABILITIES AND EQUITY
$
3,211.6
$
2,402.2
$
(3,588.8
)
$
2,025.0
$
3,202.0
$
2,305.9
$
(3,080.4
)
$
2,427.5
(In millions)
Year Ended December 31, 2009
Issuers
Others
Eliminations
Consolidated
Net sales
$
2,337.9
$
955.8
$
(14.0
)
$
3,279.7
Licensing income
0.1
46.7
-
46.8
Other revenues
0.9
-
-
0.9
Total revenues
2,338.9
1,002.5
(14.0
)
3,327.4
Cost of goods sold
1,495.2
689.8
(3.5
)
2,181.5
Gross profit
843.7
312.7
(10.5
)
1,145.9
Selling, general and administrative expenses
930.4
89.8
(11.5
)
1,008.7
Trademark impairments
-
28.7
-
28.7
Goodwill impairment
120.6
-
-
120.6
Operating (loss) income
(207.3
)
194.2
1.0
(12.1
)
Net interest expense (income) and financing costs
58.2
(5.4
)
-
52.8
Loss and
costs associated with repurchase of 4.250% Senior Notes
1.5
-
-
1.5
Equity in loss of unconsolidated affiliates
-
3.7
-
3.7
(Loss) income from continuing operations before
(benefit) provision for income taxes
(267.0
)
195.9
1.0
(70.1
)
(Benefit) provision for income taxes
(65.9
)
68.0
14.1
16.2
(Loss)
income before earnings of subsidiaries
(201.1
)
127.9
(13.1
)
(86.3
)
Equity in earnings of subsidiaries
272.3
-
(272.3
)
-
Net
income (loss)
71.2
127.9
(285.4
)
(86.3
)
Less: income attributable
to noncontrolling interest
-
0.3
-
0.3
Income (loss) attributable to Jones
$
71.2
$
127.6
$
(285.4
)
$
(86.6
)
Year Ended December 31, 2008
Issuers
Others
Eliminations
Consolidated
Net sales
$
2,630.6
$
949.4
$
(17.4
)
$
3,562.6
Licensing income
0.1
52.0
-
52.1
Other revenues
1.1
0.6
-
1.7
Total revenues
2,631.8
1,002.0
(17.4
)
3,616.4
Cost of goods sold
1,756.5
692.1
(8.4
)
2,440.2
Gross profit
875.3
309.9
(9.0
)
1,176.2
Selling, general and administrative expenses
975.7
106.4
(12.9
)
1,069.2
Trademark impairments
-
25.2
-
25.2
Goodwill impairment
812.0
67.6
(66.4
)
813.2
Operating (loss) income
(912.4
)
110.7
70.3
(731.4
)
Net interest expense (income) and financing costs
51.6
(10.0
)
-
41.6
Gain on sale of interest in Australian joint venture
-
0.8
-
0.8
Equity in loss of unconsolidated affiliates
-
0.5
0.2
0.7
(Loss) income from continuing operations before
(benefit) provision for income taxes
(964.0
)
121.0
70.1
(772.9
)
(Benefit) provision for income taxes
(106.4
)
94.9
4.9
(6.6
)
(Loss) income from continuing operations
(857.6
)
26.1
65.2
(766.3
)
Income from discontinued operations, net of tax
0.9
-
-
0.9
Equity in earnings of subsidiaries
133.1
-
(133.1
)
-
Net (loss) income
$
(723.6
)
$
26.1
$
(67.9
)
$
(765.4
)
Year Ended December 31, 2007
Issuers
Others
Eliminations
Consolidated
Net sales
$
2,642.9
$
1,167.7
$
(17.3
)
$
3,793.3
Licensing income
0.1
51.9
-
52.0
Other revenues
1.0
2.2
-
3.2
Total
revenues
2,644.0
1,221.8
(17.3
)
3,848.5
Cost of goods
sold
1,723.5
893.9
(8.3
)
2,609.1
Gross profit
920.5
327.9
(9.0
)
1,239.4
Selling,
general and administrative expenses
981.6
131.6
(12.8
)
1,100.4
Trademark
impairments
-
88.0
-
88.0
Goodwill
impairment
394.7
78.0
(394.7
)
78.0
Operating
(loss) income
(455.8
)
30.3
398.5
(27.0
)
Net interest
expense (income) and financing costs
66.6
(18.8
)
-
47.8
Gain on sale of
interest in Australian joint venture
-
8.2
-
8.2
Equity
in earnings of unconsolidated affiliates
0.5
5.6
2.0
8.1
(Loss)
income from continuing
operations before (benefit) provision for income taxes
(521.9
)
62.9
400.5
(58.5
)
(Benefit)
provision for
income taxes
(147.4
)
43.1
(0.1
)
(104.4
)
(Loss) income from continuing operations
(374.5
)
19.8
400.6
45.9
Income
(loss) from
discontinued operations, including gain on sale of Barneys, net of tax
291.8
(26.6
)
-
265.2
Equity
in loss of subsidiaries
(155.8
)
-
155.8
-
Net (loss) income
$
(238.5
)
$
(6.8
)
$
556.4
$
311.1
(In millions)
Year Ended December 31, 2009
Issuers
Others
Eliminations
Consolidated
Net cash
provided by operating activities
$
325.5
$
23.5
$
-
$
349.0
Cash flows from investing activities
Capital expenditures
(15.3
)
(14.7
)
-
(30.0
)
Investment in GRI Group Limited
-
(15.2
)
-
(15.2
)
Net cash used in investing activities
(15.3
)
(29.9
)
-
(45.2
)
Cash flows from financing activities
Repurchase of 4.250% Senior
Notes
(237.7
)
-
-
(237.7
)
Redemption at maturity of 4.250% Senior Notes
(7.5
)
-
-
(7.5
)
Payment of consent fees
(12.9
)
-
-
(12.9
)
Costs
associated with consent fees and repurchase of notes
(1.8
)
-
-
(1.8
)
Costs related to secured
revolving credit agreement
(29.6
)
(0.5
)
-
(30.1
)
Dividends paid
(17.0
)
-
-
(17.0
)
Other items
-
(3.3
)
-
(3.3
)
Net cash used in financing activities
(306.5
)
(3.8
)
-
(310.3
)
Effect of exchange rates on cash
-
1.6
-
1.6
Net increase (decrease) in cash and cash equivalents
3.7
(8.6
)
-
(4.9
)
Cash and cash equivalents, beginning
318.4
19.9
-
338.3
Cash and cash equivalents, ending
$
322.1
$
11.3
$
-
$
333.4
Year Ended December 31, 2008
Issuers
Others
Eliminations
Consolidated
Net cash
provided by operating activities
$
141.1
$
35.2
$
(0.8
)
$
175.5
Cash flows from investing activities
Proceeds from sale of interest in Australian joint venture
-
0.8
-
0.8
Proceeds from sale of Mexican operations
-
5.9
-
5.9
Investment in GRI Group Limited
-
(20.2
)
-
(20.2
)
Capital expenditures
(39.9
)
(31.3
)
-
(71.2
)
Proceeds from sales of property, plant and equipment
0.4
0.1
-
0.5
Other
(0.2
)
-
-
(0.2
)
Net cash used in investing activities
(39.7
)
(44.7
)
-
(84.4
)
Cash flows from financing activities
Purchases of treasury stock
1.0
-
-
1.0
Proceeds from exercise of employee stock options
0.1
-
-
0.1
Dividends paid
(47.4
)
(0.8
)
0.8
(47.4
)
Other items
(0.7
)
(4.4
)
-
(5.1
)
Net cash used in financing activities
(47.0
)
(5.2
)
0.8
(51.4
)
Effect of exchange rates on cash
-
(4.2
)
-
(4.2
)
Net increase (decrease) in cash and cash equivalents
54.4
(18.9
)
-
35.5
Cash and cash equivalents, beginning
264.0
38.8
-
302.8
Cash and cash equivalents, ending
$
318.4
$
19.9
$
-
$
338.3
Year Ended December 31, 2007
Issuers
Others
Eliminations
Consolidated
Cash flows from operating activities:
Net cash provided by operating activities of continuing operations
$
105.9
$
37.3
$
(23.7
)
$
119.5
Net cash provided by operating activities of discontinued operations
-
39.0
-
39.0
Net cash provided by operating activities
105.9
76.3
(23.7
)
158.5
Cash flows from investing activities
Proceeds from sale of Barneys, net of cash sold and selling costs
845.5
-
-
845.5
Proceeds from sale of interest in Australian joint venture
-
20.7
-
20.7
Capital expenditures
(59.5
)
(51.7
)
-
(111.2
)
Proceeds from sales of property, plant and equipment
0.2
2.8
-
3.0
Net cash provided by (used in) investing activities of continuing operations
786.2
(28.2
)
-
758.0
Net cash used in investing activities of discontinued operations
-
(40.5
)
-
(40.5
)
Net cash provided by (used in) investing activities
786.2
(68.7
)
-
717.5
Cash flows from financing activities
Net repayment under credit facilities
(100.0
)
-
-
(100.0
)
Purchases of treasury stock
(496.9
)
-
-
(496.9
)
Proceeds from exercise of employee stock options
11.1
-
-
11.1
Dividends paid
(57.2
)
(23.7
)
23.7
(57.2
)
Net cash transferred to discontinued operations
(21.7
)
-
-
(21.7
)
Excess tax benefits from share-based payments
2.4
-
-
2.4
Other items
(0.8
)
(3.3
)
-
(4.1
)
Net cash used in financing activities of continuing operations
(663.1
)
(27.0
)
23.7
(666.4
)
Net cash provided by financing activities of discontinued operations
-
17.9
-
17.9
Net cash used in financing activities
(663.1
)
(9.1
)
23.7
(648.5
)
Effect of exchange rates on cash
-
3.8
-
3.8
Net increase in cash and cash equivalents
229.0
2.3
-
231.3
Cash and cash equivalents, beginning, including cash reported under assets held for sale
35.0
36.5
-
71.5
Cash and cash equivalents, ending
$
264.0
$
38.8
$
-
$
302.8
(In millions except per share data)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2009
Net sales
$
879.4
$
793.4
$
843.9
$
762.8
Total revenues
891.1
803.9
855.7
776.7
Gross profit
293.3
282.1
304.4
266.1
Operating income (loss)(1)
13.7
42.1
60.9
(128.8
)
Net income (loss)
0.3
13.1
30.6
(130.3
)
Basic earnings (loss) per share
$
0.00
$
0.15
$
0.36
$
(1.53
)
Diluted earnings (loss) per share
0.00
0.15
0.36
(1.53
)
Dividends declared per share
$
0.05
$
0.05
$
0.05
$
0.05
2008
Net sales
$
963.4
$
820.2
$
948.6
$
830.5
Total revenues
975.4
829.4
964.7
846.9
Gross profit
320.7
282.4
323.3
249.9
Operating income (loss)(2)
39.9
25.5
51.8
(848.6
)
Income (loss) from continuing operations
19.5
10.6
26.3
(822.8
)
Income (loss) from discontinued operations
-
-
1.0
(0.1
)
Net income (loss)
19.5
10.6
27.3
(822.9
)
Basic earnings (loss) per share from continuing operations
$
0.23
$
0.12
$
0.32
$
(9.86
)
Basic earnings per share from discontinued operations
-
-
0.01
-
Basic earnings (loss) per share
0.23
0.12
0.33
(9.86
)
Diluted earnings (loss)
per share from continuing operations
$
0.23
$
0.12
$
0.32
$
(9.86
)
Diluted earnings
per share from discontinued operations
-
-
0.01
-
Diluted earnings (loss) per share
0.23
0.12
0.33
(9.86
)
Dividends declared per share
$
0.14
$
0.14
$
0.14
$
0.14
(1)
Includes goodwill impairment
of $120.6 million and trademark impairments of $28.7 million in the
fourth fiscal quarter of 2009.
(2)
Includes goodwill impairment
of $813.2 million and trademark impairments of $25.2 million in the
fourth fiscal quarter of 2008.
(a) The following documents are filed as part of this report:
1.
Financial Statements.
The following financial statements are included in Item
8 of this report:
Report of Independent
Registered Public Accounting Firm
Consolidated Balance Sheets - December 31,
2009 and 2008
Consolidated Statements of
Operations - Years ended December 31, 2009, 2008 and 2007
Consolidated Statements of Changes in Equity - Years ended December 31, 2009, 2008
and 2007
Consolidated Statements of Cash Flows - Years ended
December 31, 2009, 2008 and 2007
Notes to Consolidated Financial Statements (includes
certain supplemental financial information required by Item 8 of Form
10-K)
2.
The schedule and report of independent
registered public accounting firm thereon, listed in the Index to Financial Statement
Schedules attached hereto.
3.
The exhibits listed in the Exhibit Index attached hereto.
February 16, 2010
(Registrant)
/s/ Wesley R. Card
Wesley R. Card
Chief Executive Officer
Signature
Title
Date
/s/ Wesley R. Card
Wesley R. CardChief Executive Officer and Director
(Principal Executive Officer)February 16, 2010
/s/ Sidney Kimmel
Sidney Kimmel
February 16, 2010
/s/ John T. McClain
John T. McClainChief Financial Officer
(Principal Financial Officer)February 16, 2010
/s/ Christopher R. Cade
Christopher R. CadeExecutive Vice President, Chief Accounting
Officer and Controller
(Principal Accounting Officer)February 16, 2010
/s/ Matthew H. Kamens
Matthew H. KamensDirector
February 16, 2010
/s/ J. Robert Kerrey
J. Robert KerreyDirector
February 16, 2010
/s/ Ann N. Reese
Ann N. ReeseDirector
February 16, 2010
/s/ Gerald C. Crotty
Gerald C. CrottyDirector
February 16, 2010
/s/ Lowell W. Robinson
Lowell W. RobinsonDirector
February 16, 2010
/s/ Donna F. Zarcone
Donna F. ZarconeDirector
February 16, 2010
/s/ Margaret H. Georgiadis
Margaret H. GeorgiadisDirector
February 16, 2010
/s/ Robert L. Mettler
Robert L. MettlerDirector
February 16, 2010
Description of Exhibit1
2.1
Agreement and
Plan of Merger dated September 10, 1998, among Jones Apparel Group, Inc.,
SAI Acquisition Corp., Sun Apparel, Inc. and the selling shareholders
(incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K
dated September 24, 1998).
2.2
Agreement and Plan of Merger
dated as of March 1, 1999, among Jones Apparel Group, Inc., Jill Acquisition
Sub Inc. and Nine West Group Inc. (incorporated by reference to Exhibit 2.1
of our Current Report on Form 8-K dated March 2, 1999).
2.3
Securities
Purchase and Sale Agreement dated as of July 31, 2000, among Jones Apparel
Group, Inc., Jones Apparel Group Holdings, Inc., Victoria + Co Ltd. and the
Shareholders and Warrantholders of Victoria + Co Ltd (incorporated by
reference to Exhibit 2.1 of our Quarterly Report on Form 10-Q for the three
months ended April 2, 2000).
2.4
Agreement and Plan of Merger
dated as of April 13, 2001, among Jones Apparel Group, Inc., MCN Acquisition
Corp. and McNaughton Apparel Group Inc. (incorporated by reference to
Exhibit 2.1 of our Current Report on Form 8-K dated April 13, 2001).
2.5
Purchase
Agreement dated as of August 7, 2003 between Kasper A.S.L., Ltd. and Jones
Apparel Group, Inc. (incorporated by reference to Exhibit 2.1 of our
Quarterly Report on Form 10-Q for the nine months ended October 4, 2003).
2.6
Agreement and Plan of Merger
dated as of June 18, 2004, among Jones Apparel Group, Inc., MSC Acquisition
Corp. and Maxwell Shoe Company Inc. (incorporated by reference to Exhibit
99.D.3 of Amendment No. 16 to our Schedule TO dated June 21, 2004).
3.1
Articles of
Incorporation, as amended (incorporated by reference to Exhibit 3.1 of our
Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
3.2*
Amended and Restated By-Laws.
4.1
Form of
Certificate evidencing shares of common stock of Jones Apparel Group, Inc.
(incorporated by reference to Exhibit 4.1 of our Shelf Registration
Statement on Form S-3, filed on October 28, 1998 (Registration No.
333-66223)).
4.2
Exchange and Note Registration
Rights Agreement dated June 15, 1999, among Jones Apparel Group, Inc., Bear,
Stearns & Co. Inc., Chase Securities Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc., BancBoston Robertson Stephens
Inc., Banc of America Securities LLC, ING Baring Furman Selz LLC, Lazard
Freres & Co. LLC, Tucker Anthony Cleary Gull, Brean Murray & Co., Inc. and
The Buckingham Research Group Incorporated (incorporated by reference to
Exhibit 4.5 of our Quarterly Report on Form 10-Q for the six months ended
July 4, 1999).
Description of Exhibit1
4.3
Indenture
dated as of November 22, 2004, among Jones Apparel Group, Inc., Jones
Apparel Group Holdings, Inc., Jones Apparel Group USA, Inc., Nine West
Footwear Corporation and Jones Retail Corporation, as Issuers and SunTrust
Bank, as Trustee, including Form of 4.250% Senior Notes due 2009, Form of
5.125% Senior Notes due 2014 and Form of 6.125% Senior Notes due 2034
(incorporated by reference to Exhibit 4.14 of our Annual Report on Form
10-K/A for the fiscal year ended December 31, 2004).
4.4
Form of Exchange and Note
Registration Rights Agreement dated November 22, 2004 among Jones Apparel
Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA,
Inc., Nine West Footwear Corporation and Jones Retail Corporation, and
Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., as
Representatives of the Several Initial Purchasers listed in Schedule I
thereto, with respect to 4.250% Senior Notes due 2009, 5.125% Senior Notes
due 2014 and 6.125% Senior Notes due 2034 (incorporated by reference to
Exhibit 4.15 of our Annual Report on Form 10-K/A for the fiscal year ended
December 31, 2004).
4.5
First
Supplemental Indenture dated as of December 31, 2006, by and among Jones
Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group
USA, Inc., Nine West Footwear Corporation, Jones Retail Corporation, Kasper,
Ltd., as Issuers, and U.S. Bank National Association (as successor in
interest to SunTrust Bank), as Trustee, relating to the 4.250% Senior Notes
Due 2009, 5.125% Senior Notes due 2014 and 6.125% Senior Notes due 2034
(incorporated by reference to Exhibit 4.7 of our Annual Report on Form 10-K
for the fiscal year ended December 31, 2006).
10.1
1991 Stock Option Plan
(incorporated by reference to Exhibit 10.5 of our Registration Statement on
Form S-1 filed on April 3, 1991 (Registration No. 33-39742)).+
10.2
1996 Stock
Option Plan (incorporated by reference to Exhibit 10.33 of our Annual Report
on Form 10-K for the fiscal year ended December 31, 1996).+
10.3
1999 Stock Incentive Plan
(incorporated by reference to Exhibit 10.3 of our Annual Report on Form 10-K
for the fiscal year ended December 31, 2005).+
10.4
Form of
Agreement Evidencing Stock Option Awards Under the 1999 Stock Incentive Plan
(incorporated by reference to Exhibit 10.4 of our Annual Report on Form
10-K/A for the fiscal year ended December 31, 2004).+
10.5
Form of Agreement Evidencing
Restricted Stock Awards Under the 1999 Stock Incentive Plan (incorporated by
reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the three
months ended April 2, 2005).+
10.6
Employment
Agreement dated as of July 1, 2000, between Jones Apparel Group, Inc. and
Sidney Kimmel (incorporated by reference to Exhibit 10.1 of our Quarterly
Report on Form 10-Q for the nine months ended October 1, 2000).+
10.7
Amended and Restated Employment Agreement dated March 11, 2002, between
Jones Apparel Group, Inc. and Wesley R. Card (incorporated by reference to
Exhibit 10.1 of our Quarterly Report on Form 10-Q for the three months ended
April 6, 2002).+
10.8
Amended and
Restated Employment Agreement dated April 4, 2002, between Jones Apparel
Group, Inc. and Ira M. Dansky (incorporated by reference to Exhibit 10.2 of
our Quarterly Report on Form 10-Q for the three months ended April 6,
2002).+
10.9
Buying Agency Agreement dated August 31, 2001, between Nine
West Group Inc. and Bentley HSTE Far East Services Limited (incorporated by
reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the nine
months ended October 6, 2001).
10.10
Buying Agency
Agreement dated November 30, 2001, between Nine West Group Inc. and Bentley
HSTE Far East Services, Limited (incorporated by reference to Exhibit 10.22
of our Annual Report on Form 10-K for the fiscal year ended December 31,
2001).
Description of Exhibit1
10.11
Amendment dated February 28, 2003 to the Amended and Restated
Employment Agreement between Jones Apparel Group, Inc. and Wesley R. Card
(incorporated by reference to Exhibit 10.22 of our Annual Report on Form
10-K for the fiscal year ended December 31, 2002).+
10.12
Amendment dated February 28, 2003 to the Amended and Restated
Employment Agreement between Jones Apparel Group, Inc. and Ira M. Dansky
(incorporated by reference to Exhibit 10.24 of our Annual Report on Form
10-K for the fiscal year ended December 31, 2002).+
10.13
Amendment No. 2 dated March 8, 2006 to Amended and Restated
Employment Agreement between Jones Apparel Group, Inc. and Wesley R. Card
(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K
dated March 8, 2006).+
10.14
Jones Apparel Group, Inc.
Deferred Compensation Plan for Outside Directors, as amended and restated
(incorporated by reference to Exhibit 10.14 our Annual Report on Form 10-K
for the fiscal year ended December 31, 2008).+
10.15
Form of
Agreement Evidencing Restricted Stock Awards for Outside Directors Under the
1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of our
Quarterly Report on Form 10-Q for the three months ended April 2, 2005).+
10.16
Amended and Restated Five-Year Credit Agreement dated as of
June 15, 2004, by and among Jones Apparel Group USA, Inc., the Additional
Obligors referred to therein, the Lenders referred to therein, Citigroup
Global Markets Inc. and J.P. Morgan Securities Inc., as Joint Lead Arrangers
and Joint Bookrunners, Wachovia Bank, National Association, as
Administrative Agent, Citibank, N.A. and JPMorgan Chase Bank, as Syndication
Agents, and Bank of America, N.A., Barclays Bank PLC and Suntrust Bank as
Documentation Agents (incorporated by reference to Exhibit 10.1 of our
Quarterly Report on Form 10-Q for the six months ended July 3, 2004).
10.17
Amendment to
the Amended and Restated Five-Year Credit Agreement dated as of November 17,
2004 among Jones Apparel Group USA, Inc., the Additional Obligors referred
to therein, the Lenders referred to therein and Wachovia Bank, National
Association as agent for the Lenders (incorporated by reference to Exhibit
10.31 of our Annual Report on Form 10-K/A for the fiscal year ended December
31, 2004).
10.18
Amended and Restated Five-Year Credit Agreement dated as of
May 16, 2005, by and among Jones Apparel Group USA, Inc., the Additional
Obligors referred to therein, the Lenders referred to therein, J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc., as Co-Lead Arrangers and
Joint Bookrunners, Wachovia Bank, National Association, as Administrative
Agent, JPMorgan Chase Bank and Citibank, N.A., as Syndication Agents, and
Bank of America, N.A., Barclays Bank PLC and Suntrust Bank as Documentation
Agents (incorporated by reference to Exhibit 10.26 of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2005).
10.19
Jones Apparel
Group, Inc. Deferred Compensation Plan (incorporated by reference to Exhibit
10.32 of our Annual Report on Form 10-K/A for the fiscal year ended December
31, 2004).+
10.20
Amendment No. 3 dated April 17,
2007 to Amended and Restated Employment Agreement between Jones Apparel
Group, Inc. and Wesley R. Card (incorporated by reference to Exhibit 10.1 of
our Current Report on Form 8-K dated April 17, 2007).+
10.21
Summary Sheet
of Compensation of Non-Management Directors of Jones Apparel Group, Inc.
(incorporated by reference to Exhibit 10.1 of our Quarterly Report on Form
10-Q for the fiscal quarter ended April 5, 2008).+
10.22
Jones Apparel Group, Inc.
Severance Plan, as amended, and Summary Plan Description (incorporated by
reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the
fiscal quarter ended October 4, 2008).+
10.23
Jones Apparel
Group, Inc. 2007 Executive Annual Cash Incentive Plan (incorporated by
reference to Annex C of our Proxy Statement for our 2007 Annual Meeting of
Stockholders).+
Description of Exhibit1
10.24
Stock Purchase Agreement dated June 22, 2007 among Jones
Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Barneys New York,
Inc., Istithmar Bentley Holding Co. and Istithmar Bentley Acquisition Co.
(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K
dated June 22, 2007).
10.25
Amendment No. 4 dated July 12,
2007 to Amended and Restated Employment Agreement between Jones Apparel
Group, Inc. and Wesley R. Card (incorporated by reference to Exhibit 10.1 of
our Current Report on Form 8-K dated July 11, 2007).+
10.26
Employment Agreement dated as of July 11, 2007 between Jones
Apparel Group, Inc. and John T. McClain (incorporated by reference to
Exhibit 10.2 of our Current Report on Form 8-K dated July 11, 2007).+
10.27
Letter Amendment and Waiver dated July 27, 2007, by and among
Jones Apparel Group USA, Inc., the Additional Obligors referred to therein,
the Lenders referred to therein, and Wachovia Bank, National Association, as
Administrative Agent (incorporated by reference to Exhibit 10.1 of our
Current Report on Form 8-K dated July 27, 2007).
10.28
Letter
Amendment and Waiver dated July 27, 2007, by and among Jones Apparel Group
USA, Inc., the Additional Obligors referred to therein, the Lenders referred
to therein, and Wachovia Bank, National Association, as Administrative
Agent. (incorporated by reference to Exhibit 10.2 of our Current Report on
Form 8-K dated July 27, 2007).
10.29
Amended and Restated Stock Purchase Agreement dated August 8,
2007 among Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc.,
Barneys New York, Inc., Istithmar Bentley Holding Co. and Istithmar Bentley
Acquisition Co. (incorporated by reference to Exhibit 10.1 of our Current
Report on Form 8-K dated August 8, 2007).
10.30
Master
Confirmation dated September 6, 2007 between Jones Apparel Group, Inc. and
Goldman, Sachs & Co. relating to accelerated stock repurchase agreement
(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K
dated September 6, 2007).
10.31
Supplemental Confirmation dated September 6, 2007 between
Jones Apparel Group, Inc. and Goldman, Sachs & Co. relating to accelerated
stock repurchase agreement (incorporated by reference to Exhibit 10.2 of our
Current Report on Form 8-K dated September 6, 2007).#
10.32
Amendment No. 2 dated December 10, 2007 to Amended and
Restated Employment Agreement between Jones Apparel Group, Inc. and Ira M.
Dansky (incorporated by reference to Exhibit 10.39 of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2007).+
10.33
Amended and Restated Employment Agreement dated February 20,
2008 between Nine West Footwear Corporation and Andrew Cohen (incorporated
by reference to Exhibit 10.40 of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2007).+
10.34
Amendment No. 3 dated as of June 6, 2008 to the Amended and
Restated Five- Year Credit Agreement dated as of June 15, 2004 by and among
Jones Apparel Group USA, Inc., the Additional Obligors referred to therein,
the Lenders referred to therein and Wachovia Bank, National Association, as
agent for the Lenders (incorporated by reference to Exhibit 10.1 of our
Current Report on Form 8-K dated June 5, 2008).
10.35
Amendment No. 2 dated as of June 6, 2008 to the Amended and
Restated Five- Year Credit Agreement dated as of May 16, 2005 by and among
Jones Apparel Group USA, Inc., the Additional Obligors referred to therein,
the Lenders referred to therein and Wachovia Bank, National Association, as
agent for the Lenders (incorporated by reference to Exhibit 10.2 of our
Current Report on Form 8-K dated June 5, 2008).
10.36
Amendment No. 3 dated as of January 5, 2009 to the Amended
and Restated Five- Year Credit Agreement dated as of May 16, 2005 by and
among Jones Apparel Group USA, Inc., the Additional Obligors referred to
therein, the Lenders referred to therein and Wachovia Bank, National
Association, as agent for the Lenders (incorporated by reference to Exhibit
10.1 of our Current Report on Form 8-K dated December 24, 2008).
Description of Exhibit1
10.37
Security Agreement dated as of January 5, 2009 by and among
Jones Apparel Group USA, Inc., the other Grantors referred to therein and
Wachovia Bank, National Association, as Administrative Agent (incorporated
by reference to Exhibit 10.2 of our Current Report on Form 8-K dated
December 24, 2008).
10.38
Assumption Agreement dated as of January 20, 2009 by and
among Energie Knitwear, Inc., Jones Apparel Group Canada, LP, Jones Canada,
Inc., Jones Apparel Group Canada ULC, Jones Investment Co. Inc., Jones
Jeanswear Group, Inc., L.E.I. Group, Inc., Nine West Development
Corporation, Victoria + Co. Ltd and Wachovia Bank, National Association, as
Administrative Agent (incorporated by reference to Exhibit 10.38 our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008).
10.39
Second Supplemental Indenture dated as of April 15, 2009
between Jones Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones
Apparel Group USA, Inc., Nine West Footwear Corporation and Jones Retail
Corporation, as Issuers, and U.S. Bank National Association, as Trustee
(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K
dated April 15, 2009).
10.40
Credit Agreement, dated as of May 13, 2009, among Jones
Apparel Group, Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group
USA, Inc., Jones Retail Corporation, Nine West Footwear Corporation, Energie
Knitwear, Inc., Jones Investment Co. Inc., Jones Jeanswear Group, Inc.,
L.E.I. Group, Inc., Nine West Development Corporation and Victoria + Co
Ltd., as U.S. Borrowers, Jones Apparel Group Canada, LP, as Canadian
Borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as
administrative agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian
administrative agent, JPMorgan Chase Bank, N.A. and General Electric Capital
Corporation, as joint collateral agents, Citibank, N.A., as syndication
agent, and Bank of America, N.A., Wachovia Bank, National Association and
SunTrust Bank, as documentation agents (incorporated by reference to Exhibit
10.1 of our Current Report on Form 8-K dated May 13, 2009).
10.41
Amendment No. 1, dated as of June 2, 2009, to Buying Agency
Agreement between Nine West Footwear Corporation and Bentley HSTE Far East
Services Limited (incorporated by reference to Exhibit 10.1 of our Quarterly
Report on Form 10-Q for the fiscal quarter ended July 4, 2009).
10.42
Jones Apparel Group, Inc. 2009 Long Term Incentive Plan
(incorporated by reference to Annex B of our Proxy Statement for our 2009
Annual Meeting of Stockholders).+
10.43*
Form of Section 409A Amendment to Employment Agreement.+
10.44
Amendment No. 2 dated December 8, 2009 to Employment
Agreement between Jones Apparel Group, Inc. and John T. McClain dated as of
July 11, 2007 (incorporated by reference to Exhibit 10.1 of our Current
Report on Form 8-K dated December 8, 2009).+
10.45*
Form of Agreement Evidencing Restricted Stock Awards Under
the 2009 Long Term Incentive Plan.+
10.46*
Form of Agreement Evidencing Restricted Stock Awards for
Outside Directors Under the 2009 Long Term Incentive Plan.+
10.47
Employment Agreement dated as of January 31, 2000, between
Jones Apparel Group, Inc. and Richard Dickson (incorporated by reference to
Exhibit 10.1 of our Current Report on Form 8-K dated January 31, 2010).+
10.48
Amendment No. 6 dated as of February 9, 2010 to the Amended
and Restated Employment Agreement between Jones Apparel Group, Inc. and
Wesley R. Card (incorporated by reference to Exhibit 10.1 of our Current
Report on Form 8-K dated February 9, 2010).+
10.49
Amendment No. 4 dated as of February 9, 2010 to the Amended
and Restated Employment Agreement between Jones Apparel Group, Inc. and Ira
M. Dansky (incorporated by reference to Exhibit 10.2 of our Current Report
on Form 8-K dated February 9, 2010).+
12*
Computation of Ratio of Earnings to Fixed Charges.
21*
List of Subsidiaries.
Exhibit No.
Description of Exhibit
23*
Consent of BDO Seidman, LLP.
24*
Powers of Attorney.
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.
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase
101.DEF*
XBRL Taxonomy Extension Definition Linkbase
101.LAB*
XBRL Taxonomy Extension Label Linkbase
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase
1
Exhibits filed with Forms 10-K, 10-Q, 8-K or
Schedule 14A of Jones Apparel Group, Inc. were filed under SEC File No.
001-10746.
*
Filed herewith.
o
Furnished herewith.
#
Portions deleted pursuant to application for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934.
+
Management
contract or compensatory plan or arrangement.
**
Pursuant to Rule 406T of Regulation S-T,
these interactive data files are deemed not filed or part of a
registration statement or prospectus for purposes of Sections 11 or 12
of the Securities Act of 1933 or Section 18 of the Securities Exchange
Act of 1934 and otherwise are not subject to liability under those
sections.
BDO Seidman, LLP
Accountants and Consultants100 Park Ave
New York, NY 10017
Telephone: (212) 885-8000
Fax: (212) 697-1299
Jones Apparel Group, Inc.
New York, New York
February 16, 2010
JONES APPAREL GROUP, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
(In Millions)
Column A
Column B
Column C
Column D
Column E
Additions
Balance at
beginning of period
Charged
against revenues or to costs and expenses
Charged to
other accounts
Deductions
Balance at
end of period
Accounts receivable allowances
Allowance for doubtful accounts
For the year ended December 31:
2007
$ 2.5
$ 0.2
$ -
$ 0.7
(1)
$ 2.0
2008
2.0
10.3
(0.1)
(2)
9.4
(1)
2.8
2009
2.8
1.7
-
1.3
(1)
3.2
Allowance for sales returns
For the year ended December 31:
2007
6.8
27.4
0.3
(2)
26.7
(3)
7.8
2008
7.8
31.9
(0.4)
(2)
31.3
(3)
8.0
2009
8.0
24.2
0.2
(2)
26.7
(3)
5.7
Allowance for sales discounts
For the year ended December 31:
2007
11.3
90.0
-
92.0
(3)
9.3
2008
9.3
84.1
-
85.4
(3)
8.0
2009
8.0
71.2
-
73.0
(3)
6.2
Allowance for co-op advertising
For the year ended December 31:
2007
10.0
25.7
0.1
(2)
26.4
(3)
9.4
2008
9.4
26.2
(0.2)
(2)
26.8
(3)
8.6
2009
8.6
21.6
0.1
(2)
20.6
(3)
9.7
Deferred tax valuation allowance
For the year ended December 31:
2007
112.4
1.2
-
108.4
(4)
5.2
2008
5.2
-
-
-
5.2
2009
5.2
0.6
-
-
5.8
(1)
Doubtful accounts written off against accounts receivable.
(2)
Represents effects of foreign currency translation.
(3)
Deductions taken by customers written off against accounts receivable.
(4)
Deferred tax asset written off against the deferred tax valuation allowance.
BY-LAWSJune 14, 2007February
8, 2010)
. Until May 22,
2002, the Chairman shall be the chief executive officer of the corporation.PresidentChief Executive
Officer. The PresidentChief
Executive Officer 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 PresidentChief
Executive Officer 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 sheThe
Chief Executive Officer may execute on
Effective May 22, 2002, the President shall be the chief
executive officer of the corporationIf no
Chief Executive Officer has been elected by the Board, the President shall also
exercise the powers and perform the duties of the Chief Executive Officer.7.57.6 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 officerChief Executive Officer.7.67.7 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 officerChief Executive Officer.7.77.8 Vice
Presidents. The Vice Presidents, if any, shall perform such duties as
may be delegated to any of them by the Board of Directors,
Chief Executive Officer or the President.
7.87.9 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 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. 7.97.10 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 PresidentChief
Executive Officer. 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.7.107.11 Assistant
Officers. Assistant officers, who may include a controller, shall
perform such functions and have such responsibilities as the Board of Directors
may determine.
{THE COMPANY}
{Name and title}
{Employee}
Employee
Wes Card
Ira Dansky
Andrew Cohen
John McClainDate of Signature
July 14, 2008
July 14, 2008
July 18, 2008
July 18, 2008
RESTRICTED STOCK AGREEMENT
JONES APPAREL GROUP, INC.
By: _________________
Ira M. Dansky
Executive Vice President
_________________
Employee
(Non-Management Director)
JONES APPAREL GROUP, INC.
Ira M. Dansky
Executive Vice President
[Name]
EXHIBIT 12
JONES APPAREL GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions)
Year Ended December 31,
----------------------------------------------------
2009 2008 2007 2006 2005
-------- -------- ------- -------- --------
(Loss) income from continuing
operations before provision
for income taxes.............. $ (70.1) $ (772.9) $ (58.5) $ (245.1) $ 425.3
-------- -------- -------- -------- --------
Fixed charges
Interest expense and
amortization of
financing costs............... 55.6 49.1 51.5 50.5 76.2
Portion of rent expense
representing interest......... 39.5 41.0 42.0 41.0 50.1
-------- -------- -------- -------- --------
Total fixed charges............... 95.1 90.1 93.5 91.5 126.3
-------- -------- -------- -------- --------
Income (loss) from continuing
operations before income taxes
and fixed charges............... $ 25.0 $ (682.8) $ 35.0 $ (153.6) $ 551.6
======== ======== ======== ======== ========
Ratio of earnings to
fixed charges (1)............... 0.3(2) N/A(2) 0.4(2) N/A(2) 4.4
======== ======== ======== ======== ========
(1) For purposes of the computation, the ratio of earnings to fixed charges has been
calculated by dividing (a) income from continuing operations before income
taxes and fixed charges by (b) fixed charges. Fixed charges are equal to
interest expense plus the portion of the rent expense estimated to represent interest.
(2) Earnings were insufficient to cover fixed charges for the years 2009, 2008, 2007 and
2006 by $70.1 million, $772.9 million, $58.5 million and $245.1 million, respectively.
SUBSIDIARIES OF JONES APPAREL GROUP, INC.
Name
|
State or Country of Incorporation
|
Other Names Under Which Subsidiary Does
Business
|
Jones Apparel Group Canada ULC | Canada | N/A |
Jones Apparel Group Canada, LP | Canada | JNY Blue Jones New York Factory Store Jones New York |
Jones Apparel Group Holdings, Inc. | Delaware | N/A |
Jones Apparel Group USA, Inc. | Delaware | Jones Apparel Group USA (DE), Inc. (New York only) |
Jones Canada, Inc. | Canada | N/A |
Jones Distribution Corporation | Delaware | N/A |
Jones Holding Inc. | Delaware | N/A |
Jones International Limited | Hong Kong | N/A |
Jones Investment Co. Inc. | Delaware | N/A |
Jones Jeanswear Group, Inc. | New York | N/A |
Jones Jewelry Group, Inc. | Rhode Island | N/A |
Jones Management Service Company | Delaware | Apparel Management
Service Company (New Hampshire only) JAG Management Service Company (Rhode Island and Maine only) |
JAG Footwear, Accessories and Retail Corporation | New Jersey |
Anne Klein |
Nine West Development Corporation | Delaware | N/A |
Rachel Roy IP Company LLC | Delaware | N/A |
Certain non-significant subsidiaries were omitted pursuant to Item 601(b)(21)(ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended.
EXHIBIT 23
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BDO Seidman, LLP Accountants and Consultants |
100 Park Ave New York, NY 10017 Telephone: (212) 885-8000 Fax: (212) 697-1299 |
Consent of Independent Registered Public Accounting Firm
Jones Apparel Group, Inc.
New York, New York
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of Jones Apparel Group, Inc. filed on May 15, 1996, June
16, 1999, August 23, 1999, August 2, 2001, June 12, 2003, June 2, 2004, June 3,
2005 and May 25, 2009 of our reports dated February 16, 2010, relating to the
consolidated financial statements and financial statement schedule, and the
effectiveness of Jones Apparel Group, Inc.'s internal control over financial
reporting, which appear in this Annual Report on Form 10-K for the year ended
December 31, 2009.
New York, New York
February 16, 2010
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Ira M. Dansky and John T. McClain, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Except as otherwise specifically provided herein, the Power of Attorney granted herein shall not in any manner revoke in whole or in part any power of attorney that I previously have executed. This Power of Attorney shall not be revoked by any subsequent power of attorney that I may execute, unless such subsequent power specifically refers to this Power of Attorney or specifically states that the instrument is intended to revoke all prior general powers of attorney or all prior powers of attorney.
CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority.
When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities.
Your agent can act on your behalf only after signing the Power of Attorney before a notary public.
You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located.
You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly.
1
Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this.
The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us.
If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 9, 2010.
/s/ Wesley R. Card Wesley R. Card |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Wesley R. Card, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
2
IMPORTANT INFORMATION FOR THE AGENT:
When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must:
(1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest;
(2) avoid conflicts that would impair your ability to act in the principal's best interest;
(3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law;
(4) keep a record or all receipts, payments, and transactions conducted for the principal; and
(5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name).
You may not use the principal's assets to benefit yourself or
give major gifts to yourself or anyone else unless the principal has
specifically granted you that authority in this Power of Attorney or in a
Statutory Major Gifts Rider attached to this Power of Attorney. If you have that
authority, you must act according to any instructions of the principal or, where
there are no such instructions, in the principal's best interest. You may resign
by giving written notice to the principal and to any co-agent, successor agent,
monitor if one has been named in this document, or the principal's guardian if
one has been appointed. If there is anything about this document or your
responsibilities that you do not understand, you should seek legal advice.
Liability of agent:
The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you have violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation.
[Signature Pages Follow]
3
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, John T. McClain, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ John T. McClain John T. McClain February 9, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared John T. McClain, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
4
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Ira M. Dansky, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Ira M. Dansky Ira M. Dansky February 9, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Ira M. Dansky, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 9, 2010.
/s/ Sidney Kimmel Sidney Kimmel |
6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Except as otherwise specifically provided herein, the Power of Attorney granted herein shall not in any manner revoke in whole or in part any power of attorney that I previously have executed. This Power of Attorney shall not be revoked by any subsequent power of attorney that I may execute, unless such subsequent power specifically refers to this Power of Attorney or specifically states that the instrument is intended to revoke all prior general powers of attorney or all prior powers of attorney.
CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority.
When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities.
Your agent can act on your behalf only after signing the Power of Attorney before a notary public.
You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located.
You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly.
7
Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this.
The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us.
If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 9, 2010.
/s/ John T. McClain John T. McClain |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared John T. McClain, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
8
IMPORTANT INFORMATION FOR THE AGENT:
When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must:
(1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest;
(2) avoid conflicts that would impair your ability to act in the principal's best interest;
(3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law;
(4) keep a record or all receipts, payments, and transactions conducted for the principal; and
(5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name).
You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian if one has been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice.
Liability of agent:
The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you have violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation.
[Signature Pages Follow]
9
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Wesley R. Card, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Wesley R. Card Wesley R. Card February 9, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Wesley R. Card, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
10
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Ira M. Dansky, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Ira M. Dansky Ira M. Dansky February 9, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Ira M. Dansky, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February
9th, 2010.
/s/ Christopher R. Cade Christopher R. Cade |
12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 9, 2010.
/s/ Matthew H. Kamens Matthew H. Kamens |
13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Except as otherwise specifically provided herein, the Power of Attorney granted herein shall not in any manner revoke in whole or in part any power of attorney that I previously have executed. This Power of Attorney shall not be revoked by any subsequent power of attorney that I may execute, unless such subsequent power specifically refers to this Power of Attorney or specifically states that the instrument is intended to revoke all prior general powers of attorney or all prior powers of attorney.
CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority.
When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities.
Your agent can act on your behalf only after signing the Power of Attorney before a notary public.
You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located.
You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly.
14
Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this.
The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us.
If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 9, 2010.
/s/ J. Robert Kerrey J. Robert Kerrey |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared J. Robert Kerrey, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Elizabeth Palombo Notary Public Elizabeth Palombo |
15
IMPORTANT INFORMATION FOR THE AGENT:
When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must:
(1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest;
(2) avoid conflicts that would impair your ability to act in the principal's best interest;
(3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law;
(4) keep a record or all receipts, payments, and transactions conducted for the principal; and
(5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name).
You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian if one has been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice.
Liability of agent:
The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you have violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation.
[Signature Pages Follow]
16
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Wesley R. Card, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Wesley R. Card Wesley R. Card February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Wesley R. Card, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
17
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, John T. McClain, have read the foregoing Power of Attorney. I am the
person identified therein as agent for the principal named therein. I
acknowledge my legal responsibilities.
/s/ John T. McClain John T. McClain February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared John T. McClain, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
18
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Ira M. Dansky, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Ira M. Dansky Ira M. Dansky February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Ira M. Dansky, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
19
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Except as otherwise specifically provided herein, the Power of Attorney granted herein shall not in any manner revoke in whole or in part any power of attorney that I previously have executed. This Power of Attorney shall not be revoked by any subsequent power of attorney that I may execute, unless such subsequent power specifically refers to this Power of Attorney or specifically states that the instrument is intended to revoke all prior general powers of attorney or all prior powers of attorney.
CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority.
When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities.
Your agent can act on your behalf only after signing the Power of Attorney before a notary public.
You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located.
You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly.
20
Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this.
The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us.
If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 12, 2010.
/s/ Ann N. Reese Ann N. Reese |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF WESTCHESTER | ) |
On the 12th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Ann N. Reese, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Maria Silva Notary Public MARIA SILVA |
21
IMPORTANT INFORMATION FOR THE AGENT:
When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must:
(1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest;
(2) avoid conflicts that would impair your ability to act in the principal's best interest;
(3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law;
(4) keep a record or all receipts, payments, and transactions conducted for the principal; and
(5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name).
You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian if one has been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice.
Liability of agent:
The meaning of the authority given to you is defined in New York's General Obligations Law, Article 5, Title 15. If it is found that you have violated the law or acted outside the authority granted to you in the Power of Attorney, you may be liable under the law for your violation.
[Signature Pages Follow]
22
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Wesley R. Card, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Wesley R. Card Wesley R. Card February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Wesley R. Card, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
23
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, John T. McClain, have read the foregoing Power of Attorney. I am the
person identified therein as agent for the principal named therein. I
acknowledge my legal responsibilities.
/s/ John T. McClain John T. McClain February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared John T. McClain, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
24
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Ira M. Dansky, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Ira M. Dansky Ira M. Dansky February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Ira M. Dansky, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
25
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 12, 2010.
/s/ Gerald C. Crotty Gerald C. Crotty |
26
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Except as otherwise specifically provided herein, the Power of Attorney granted herein shall not in any manner revoke in whole or in part any power of attorney that I previously have executed. This Power of Attorney shall not be revoked by any subsequent power of attorney that I may execute, unless such subsequent power specifically refers to this Power of Attorney or specifically states that the instrument is intended to revoke all prior general powers of attorney or all prior powers of attorney.
CAUTION TO THE PRINCIPAL: Your Power of Attorney is an important document. As the "principal," you give the person whom you choose (your "agent") authority to spend your money and sell or dispose of your property during your lifetime without telling you. You do not lose your authority to act even though you have given your agent similar authority.
When your agent exercises this authority, he or she must act according to any instructions you have provided or, where there are no specific instructions, in your best interest. "Important Information for the Agent" at the end of this document describes your agent's responsibilities.
Your agent can act on your behalf only after signing the Power of Attorney before a notary public.
You can request information from your agent at any time. If you are revoking a prior Power of Attorney by executing this Power of Attorney, you should provide written notice of the revocation to your prior agent(s) and to the financial institutions where your accounts are located.
You can revoke or terminate your Power of Attorney at any time for any reason as long as you are of sound mind. If you are no longer of sound mind, a court can remove an agent for acting improperly.
27
Your agent cannot make health care decisions for you. You may execute a "Health Care Proxy" to do this.
The law governing Powers of Attorney is contained in the New York General Obligations Law, Article 5, Title 15. This law is available at a law library, or online through the New York State Senate or Assembly websites, www.senate.state.ny.us or www.assembly.state.ny.us.
If there is anything about this document that you do not understand, you should ask a lawyer of your own choosing to explain it to you.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February
9, 2010.
/s/ Lowell W. Robinson Lowell W. Robinson |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 9th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Lowell W. Robinson, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Kisha Kingston Notary Public KISHA KINGSTON |
28
IMPORTANT INFORMATION FOR THE AGENT:
When you accept the authority granted under this Power of Attorney, a special legal relationship is created between you and the principal. This relationship imposes on you legal responsibilities that continue until you resign or the Power of Attorney is terminated or revoked. You must:
(1) act according to any instructions from the principal, or, where there are no instructions, in the principal's best interest;
(2) avoid conflicts that would impair your ability to act in the principal's best interest;
(3) keep the principal's property separate and distinct from any assets you own or control, unless otherwise permitted by law;
(4) keep a record or all receipts, payments, and transactions conducted for the principal; and
(5) disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in either of the following manner: (Principal's Name) by (Your Signature) as Agent, or (your signature) as Agent for (Principal's Name).
You may not use the principal's assets to benefit yourself or give major gifts to yourself or anyone else unless the principal has specifically granted you that authority in this Power of Attorney or in a Statutory Major Gifts Rider attached to this Power of Attorney. If you have that authority, you must act according to any instructions of the principal or, where there are no such instructions, in the principal's best interest. You may resign by giving written notice to the principal and to any co-agent, successor agent, monitor if one has been named in this document, or the principal's guardian if one has been appointed. If there is anything about this document or your responsibilities that you do not understand, you should seek legal advice.
Liability of agent:
The meaning of the authority given to you is defined in New York's General
Obligations Law, Article 5, Title 15. If it is found that you have violated the
law or acted outside the authority granted to you in the Power of Attorney, you
may be liable under the law for your violation.
[Signature Pages Follow]
29
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Wesley R. Card, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Wesley R. Card Wesley R. Card February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Wesley R. Card, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
30
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, John T. McClain, have read the foregoing Power of Attorney. I am the
person identified therein as agent for the principal named therein. I
acknowledge my legal responsibilities.
/s/ John T. McClain John T. McClain February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared John T. McClain, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
31
AGENT'S SIGNATURE AND ACKNOWLEDGEMENT OF APPOINTMENT
I, Ira M. Dansky, have read the foregoing Power of Attorney. I am the person
identified therein as agent for the principal named therein. I acknowledge my
legal responsibilities.
/s/ Ira M. Dansky Ira M. Dansky February 16, 2010 |
STATE OF NEW YORK | ) | |
) | SS.: | |
COUNTY OF NEW YORK | ) |
On the 16th day of February in the year 2010, before me, the undersigned, a Notary Public in and for said State, personally appeared Ira M. Dansky, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual executed the instrument and such individual made such appearance before the undersigned in the situs indicated above.
/s/ Katherine Blaukopf Notary Public KATHERINE BLAUKOPF |
32
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 11, 2010.
/s/ Donna F. Zarcone Donna F. Zarcone |
33
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 9, 2010.
/s/ Margaret H. Georgiadis Margaret H. Georgiadis |
34
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Wesley R. Card, John T. McClain and Ira M. Dansky, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to the Form 10-K for the fiscal year ended December 31, 2009, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto each said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might and could do in person, and hereby ratifies and confirms all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE AND ACKNOWLEDGEMENT
In Witness Whereof, I have hereunto signed my name on February 10, 2010.
/s/ Robert L. Mettler Robert L. Mettler |
35
EXHIBIT 31
CERTIFICATION
I, Wesley R. Card, certify that:
1. | I have reviewed this
Annual Report on Form 10-K 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: February 16, 2010 |
|
/s/ Wesley R. Card Wesley R. Card Chief Executive Officer |
I, John T. McClain, certify that:
1. | I have reviewed this
Annual Report on Form 10-K 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: February 16, 2010 |
|
/s/ John T. McClain John T. McClain Chief Financial Officer |
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 Annual Report of Jones Apparel Group, Inc. on Form 10-K for the fiscal year ended December 31, 2009 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 Annual Report on Form 10-K 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: 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 Annual Report of Jones Apparel Group, Inc. on Form 10-K for the fiscal year ended December 31, 2009 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 Annual Report on Form 10-K 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.
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