Form 10-Q

10-Q 1 tenq10_1q.htm FORM 10-Q Form 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 3, 2010

OR

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

For the transition period from __________ to __________

Commission File Number 1-10746

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

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

(212) 642-3860
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

Large accelerated filer [X]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [ ]

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

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

Class of Common Stock
$.01 par value

Outstanding at April 27, 2010
87,133,436

JONES APPAREL GROUP, INC.

Index		Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
	Consolidated Balance Sheets April 3, 2010, April 4, 2009 and December 31, 2009	3
	Consolidated Statements of Operations Fiscal Quarters ended April 3, 2010 and April 4, 2009	4
	Consolidated Statements of Changes in Equity Fiscal Quarters ended April 3, 2010 and April 4, 2009	5
	Consolidated Statements of Cash Flows Fiscal Quarters ended April 3, 2010 and April 4, 2009	6
	Notes to Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures About Market Risk		26
Item 4. Controls and Procedures		26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		27
Item 5. Other Information		27
Item 6. Exhibits		28
Signatures		29
Exhibit Index		30

DEFINITIONS

As used in this Report, unless the context requires otherwise, "Jones," "our," "us" and "we" means Jones Apparel Group, Inc. and consolidated subsidiaries, "GRI" means GRI Group Limited, "FASB" means the Financial Accounting Standards Board, "ASC" means the "FASB Accounting Standards Codification^TM", "ASU" means "Accounting Standards Update" and "SEC" means the United States Securities and Exchange Commission.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

			April 3, 2010			April 4, 2009			December 31, 2009
ASSETS			(Unaudited	)		(Unaudited	)
CURRENT ASSETS:
	Cash and cash equivalents	$	222.2		$	194.3		$	333.4
	Accounts receivable		441.4			479.4			303.1
	Inventories, primarily finished goods		353.6			473.9			375.0
	Prepaid and refundable income taxes		0.2			11.7			-
	Deferred taxes		30.4			29.6			28.1
	Prepaid expenses and other current assets		35.1			47.4			25.6
	TOTAL CURRENT ASSETS		1,082.9			1,236.3			1,065.2
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization of $544.8, $470.1 and $539.4			231.7			270.1			239.0
GOODWILL			46.8			160.7			40.1
OTHER INTANGIBLES, at cost, less accumulated amortization			584.5			590.3			559.8
PREPAID AND REFUNDABLE INCOME TAXES			-			-			4.7
DEFERRED TAXES			-			15.5			3.9
INVESTMENT IN AND LOANS TO UNCONSOLIDATED AFFILIATE			39.7			19.4			42.1
OTHER ASSETS			69.7			36.9			70.2
	TOTAL ASSETS	$	2,055.3		$	2,329.2		$	2,025.0
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
	Short-term borrowings	$	-		$	9.0		$	-
	Current portion of long-term debt		-			250.0			-
	Current portion of capital lease obligations		2.3			2.9			2.6
	Accounts payable		160.4			149.6			185.3
	Income taxes payable		11.3			-			11.8
	Accrued employee compensation and benefits		27.5			23.8			42.7
	Accrued expenses and other current liabilities		77.3			85.7			81.7
	TOTAL CURRENT LIABILITIES		278.8			521.0			324.1
NONCURRENT LIABILITIES:
	Long-term debt		499.5			499.5			499.5
	Obligations under capital leases		26.5			28.8			26.9
	Deferred taxes		9.3			-			-
	Income taxes payable		8.4			21.2			-
	Other noncurrent liabilities		97.1			77.7			82.0
	TOTAL NONCURRENT LIABILITIES		640.8			627.2			608.4
	TOTAL LIABILITIES		919.6			1,148.2			932.5
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 158.5, 156.8 and 156.8		1.6			1.6			1.6
	Additional paid-in capital		1,367.8			1,353.9			1,360.3
	Retained earnings		1,599.3			1,664.1			1,564.4
	Accumulated other comprehensive loss		(6.9	)		(12.3	)		(7.6	)
	Treasury stock, 71.4 shares for all periods, at cost		(1,826.3	)		(1,826.3	)		(1,826.3	)
	TOTAL JONES STOCKHOLDERS' EQUITY		1,135.5			1,181.0			1,092.4
	Noncontrolling interest		0.2			-			0.1
	TOTAL EQUITY		1,135.7			1,181.0			1,092.5
	TOTAL LIABILITIES AND EQUITY	$	2,055.3		$	2,329.2		$	2,025.0

See accompanying notes to consolidated financial statements

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

	Fiscal Quarter Ended
		April 3, 2010		April 4, 2009
Net sales	$	876.1	$	879.4
Licensing income		11.0		11.5
Other revenues		0.2		0.2
Total revenues		887.3		891.1
Cost of goods sold		561.1		597.8
Gross profit		326.2		293.3
Selling, general and administrative expenses		249.9		279.6
Operating income		76.3		13.7
Interest income		0.4		0.9
Interest expense and financing costs		12.4		13.8
Equity in loss of unconsolidated affiliate		1.8		0.3
Income before provision for income taxes		62.5		0.5
Provision for income taxes		23.1		0.2
Net income		39.4		0.3
Less: income attributable to noncontrolling interest		0.2		-
Income attributable to Jones	$	39.2	$	0.3
Earnings per common share attributable to Jones
Basic	$	0.46	$	0.00
Diluted		0.45		0.00
Weighted average common shares and share equivalents outstanding
Basic		82.0		81.7
Diluted		82.4		81.7
Dividends declared per share	$	0.05	$	0.05

See accompanying notes to consolidated financial statements

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

		Number of common shares outstanding		Total equity			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Treasury stock			Non-controlling interest
Balance, January 1, 2009		83.4	$	1,182.2		$	1.5	$	1,350.7		$	1,668.0		$	(11.7	)	$	(1,826.3	)	$	-
Fiscal quarter ended April 4, 2009:
Comprehensive loss:
	Net income	-		0.3			-		-			0.3			-			-			-
	Change in fair value of cash flow hedges	-		0.1			-		-			-			0.1			-			-
	Reclassification adjustment for hedge gains and losses included in net income, net of $0.1 tax	-		(0.2	)		-		-			-			(0.2	)		-			-
	Foreign currency translation adjustments	-		(0.5	)		-		-			-			(0.5	)		-			-
	Total comprehensive loss			(0.3	)
Issuance of restricted stock to employees, net of forfeitures		2.0		-			-		-			-			-			-			-
Amortization expense in connection with employee stock options and restricted stock		-		4.2			0.1		4.1			-			-			-			-
Tax effects from vesting of restricted stock		-		(0.9	)		-		(0.9	)		-			-			-			-
Dividends on common stock ($0.05 per share)		-		(4.2	)		-		-			(4.2	)		-			-			-
Balance, April 4, 2009		85.4	$	1,181.0		$	1.6	$	1,353.9		$	1,664.1		$	(12.3	)	$	(1,826.3	)	$	-
Balance, January 1, 2010		85.4	$	1,092.5		$	1.6	$	1,360.3		$	1,564.4		$	(7.6	)	$	(1,826.3	)	$	0.1
Fiscal quarter ended April 3, 2010:
Comprehensive income:
	Net income	-		39.4			-		-			39.2			-			-			0.2
	Change in fair value of cash flow hedges	-		(0.1	)		-		-			-			(0.1	)		-			-
	Reclassification adjustment for hedge gains and losses included in net income	-		0.1			-		-			-			0.1			-			-
	Foreign currency translation adjustments	-		0.7			-		-			-			0.7			-			-
	Total comprehensive income			40.1
Issuance of restricted stock to employees, net of forfeitures		1.7		-			-		-			-			-			-			-
Amortization expense in connection with employee stock options and restricted stock		-		9.2			-		9.2			-			-			-			-
Distributions to noncontrolling interest		-		(0.1	)		-		-			-			-			-			(0.1	)
Tax effects from vesting of restricted stock		-		(1.6	)		-		(1.6	)		-			-			-			-
Tax effects of expired employee stock options		-		(0.1	)		-		(0.1	)		-			-			-			-
Dividends on common stock ($0.05 per share)		-		(4.3	)		-		-			(4.3	)		-			-			-
Balance, April 3, 2010		87.1	$	1,135.7		$	1.6	$	1,367.8		$	1,599.3		$	(6.9	)	$	(1,826.3	)	$	0.2

See accompanying notes to consolidated financial statements

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

			Fiscal Quarter Ended
				April 3, 2010			April 4, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	39.4		$	0.3
Adjustments to reconcile net income to net cash used in operating activities, net of acquisitions:
	Amortization of employee stock options and restricted stock			9.2			4.2
	Depreciation and other amortization			20.9			18.6
	Impairment losses on property, plant and equipment			0.7			20.4
	Equity in loss of unconsolidated affiliate			1.8			0.3
	(Recovery of) provision for losses on accounts receivable			(0.3	)		1.9
	Deferred taxes			11.1			(3.0	)
	Other items, net			0.2			0.6
	Changes in operating assets and liabilities:
		Accounts receivable		(136.2	)		(111.0	)
		Inventories		23.0			35.4
		Prepaid expenses and other current assets		(9.2	)		(4.9	)
		Other assets		(2.7	)		(1.3	)
		Accounts payable		(25.2	)		(81.7	)
		Income taxes payable/prepaid income taxes		10.8			4.6
		Accrued expenses and other current liabilities		(23.3	)		(17.7	)
		Other liabilities		(6.4	)		(6.0	)
		Total adjustments		(125.6	)		(139.6	)
	Net cash used in operating activities			(86.2	)		(139.3	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital expenditures			(8.7	)		(8.3	)
	Acquisition of Moda Nicola International, LLC			(11.5	)		-
	Net cash used in investing activities			(20.2	)		(8.3	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net increase in short-term borrowings			-			9.0
	Dividends paid			(4.3	)		(4.2	)
	Principal payments on capital leases			(0.7	)		(0.9	)
	Distributions to noncontrolling interest			(0.1	)		-
	Net cash (used in) provided by financing activities			(5.1	)		3.9
EFFECT OF EXCHANGE RATES ON CASH				0.3			(0.3	)
NET DECREASE IN CASH AND CASH EQUIVALENTS				(111.2	)		(144.0	)
CASH AND CASH EQUIVALENTS, BEGINNING				333.4			338.3
CASH AND CASH EQUIVALENTS, ENDING			$	222.2		$	194.3

See accompanying notes to consolidated financial statements

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

BASIS OF PRESENTATION

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

In our opinion, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature. The foregoing interim results are not necessarily indicative of the results of operations for the full year ending December 31, 2010.

EARNINGS PER SHARE

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

Fiscal Quarter Ended		April 3, 2010		April 4, 2009
(In millions except per share amounts)
Net income	$	39.4	$	0.3
Less: income attributable to noncontrolling interest		0.2		-
Income attributable to Jones		39.2		0.3
Less: income allocated to participating securities		1.7		-
Income available to common stockholders of Jones	$	37.5	$	0.3
Weighted-average common shares outstanding - basic		82.0		81.7
Effect of dilutive employee stock options and restricted stock		0.4		-
Weighted-average common shares and share equivalents outstanding - diluted		82.4		81.7
Earnings per share attributable to Jones
Basic	$	0.46	$	0.00
Diluted		0.45		0.00

ACQUISITIONS

On February 4, 2010, we acquired 100% of the membership interests in Moda Nicola International, LLC ("Moda"), a privately held designer, marketer and wholesaler of women's contemporary eveningwear and sportswear, and owner of the Robert Rodriguez Collection, for $35.8 million. Under the terms of the agreement, we made an initial cash payment of $11.5 million to the selling members of Moda. We deferred $5.5 million of the purchase price, with payment subject to a working capital adjustment and an indemnification holding period as set forth in the acquisition agreement. The selling members of Moda are also entitled to receive future cash payments upon achievement of certain financial targets set within the agreement for the years 2011 through 2014. We have recorded a contingent consideration liability for $18.8 million, based on projected revenues and gross margins of the acquired business and a discount factor based on an estimated weighted average cost of capital.

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We pursued the acquisition of Moda to increase our presence in the contemporary apparel market and to further develop a business portfolio with significant growth opportunities. Moda will be reported as part of our wholesale better apparel segment.

The following table summarizes the fair values of the assets acquired and liabilities assumed from Moda on February 4, 2010.

(In millions)	Amortization life (in months)		Fair Value
Current assets		$	3.2
Property, plant and equipment			0.2
Intangible assets:
Goodwill			6.7
Customer relationships	120		7.9
Trademarks	240		17.0
Covenants not to compete	59		0.2
Order backlog	3		1.7
Total assets acquired			36.9
Current liabilities			(1.1	)
Total purchase price		$	35.8

The fair value of receivables acquired from Moda was $2.2 million, with gross contractual amounts receivable amounting to $2.7 million.

The acquisition resulted in the recognition of $6.7 million of goodwill, which is expected to be deductible for tax purposes. Goodwill largely consists of expected synergies resulting from the acquisition, such as manufacturing and supply chain work process improvements and the elimination of redundant corporate overhead for shared services and governance, the acquired assembled workforce, which does not qualify as an amortizable intangible asset, and the potential for product extensions, such as footwear.

The following table provides total revenues and results of operations from the acquired Moda business included in our results since the acquisition.

Fiscal Quarter Ended		April 3, 2010
(In millions)
Total revenues	$	4.4
Loss before provision for taxes		(0.7	)

The following table provides pro forma total revenues and results of operations for the fiscal quarters ended April 3, 2010 and April 4, 2009 as if Moda had been acquired on January 1, 2009. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as amortization expense on assets acquired from Moda resulting from the fair valuation of assets acquired. The pro forma results do not include any anticipated cost synergies or other effects of the planned integration of Moda. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed at the beginning of 2009, nor are they indicative of the future operating results of the combined company.

Fiscal Quarter Ended		April 3, 2010		April 4, 2009
(In millions except per share amounts)
Total revenues	$	889.1	$	895.8
Net income (loss)		39.9		(0.1	)
Earnings (loss) per share attributable to Jones
Basic	$	0.47	$	(0.00	)
Diluted		0.46		(0.00	)

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Acquisition Expenses
During the fiscal quarter ended April 3, 2010, pretax charges totaling $0.6 were recorded for legal expenses and other transactions related to the Moda acquisition. These charges, which were expensed in accordance with the accounting guidance for business combinations, were recorded as selling, general and administrative costs in our licensing, other and eliminations segment.

ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

(In millions)		April 3, 2010			April 4, 2009			December 31, 2009
Trade accounts receivable	$	476.4		$	514.0		$	327.9
Allowances for doubtful accounts, returns, discounts and co-op advertising		(35.0	)		(34.6	)		(24.8	)
	$	441.4		$	479.4		$	303.1

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 $35.1 million, $50.1 million and $40.7 million at April 3, 2010, April 4, 2009 and December 31, 2009, respectively. Net revenues from GRI amounted to $15.1 million and $12.3 million for the fiscal quarters ended April 3, 2010 and April 4, 2009, respectively. On April 23, 2009, we converted $10.0 million of the 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.

ACCRUED RESTRUCTURING COSTS

Moderate Apparel Restructuring
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. These closings were substantially complete by the end of February 2008. Prior to 2009, we had recorded $7.4 million of one-time termination benefits and associated employee costs for approximately 440 employees and $0.9 million of lease obligations as selling, general and administrative expenses in our wholesale jeanswear segment. During the fiscal quarter ended April 4, 2009, we recorded $1.9 million of additional lease obligation costs as selling, general and administrative expenses in our wholesale jeanswear segment relating to one of the warehouse facilities. During the fiscal quarter ended April 3, 2010, we reversed $1.3 million of lease obligation costs as selling, general and administrative ("SG&A") expenses in our wholesale jeanswear segment relating to a sublease of one of the warehouse facilities.

The details of the moderate apparel restructuring accruals are as follows:

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(In millions)		One-time termination benefits			Lease obligations			Total moderate apparel restructuring
Balance, January 1, 2009	$	0.9		$	0.3		$	1.2
Additions		-			1.9			1.9
Payments and reductions		(0.2	)		(0.4	)		(0.6	)
Balance, April 4, 2009	$	0.7		$	1.8		$	2.5
Balance, January 1, 2010	$	-		$	2.0		$	2.0
Net reversal		-			(1.3	)		(1.3	)
Payments and reductions		-			(0.2	)		(0.2	)
Balance, April 3, 2010	$	-		$	0.5		$	0.5

During the fiscal quarter ended April 4, 2009, $0.2 million of the termination benefits accrual were utilized (relating to partial or full severance for one employee). The net accrual of $0.5 million at April 3, 2010 is reported as $0.1 million of accrued expenses and other current liabilities and $0.4 million of other noncurrent liabilities. The net accrual of $2.5 million at April 4, 2009 is reported as $1.8 million of accrued expenses and other current liabilities and $0.7 million of other noncurrent liabilities.

Other Restructurings
Retail Stores. We have decided to close approximately 270 underperforming retail locations by the end of 2010, of which 160 have closed as of April 3, 2010. Total termination benefits and associated employee costs are expected to be $4.7 million for approximately 1,200 employees, including both store employees and administrative support personnel. Of this amount, we recorded $0.1 million and $3.1 million for the fiscal quarters ended April 3, 2010 and April 4, 2009, respectively. We also recorded $0.7 million and $20.4 million of impairment losses on leasehold improvements and furniture and fixtures located in the stores to be closed for the fiscal quarters ended April 3, 2010 and April 4, 2009, respectively. 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 termination benefits and associated employee costs are expected to be $6.6 million for approximately 148 employees. Of this amount, we recorded $0.1 million for the fiscal quarter ended April 3, 2010. 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 termination benefits and associated employee costs are expected to be $3.2 million for approximately 220 employees. Of this amount, we recorded $0.1 million for the fiscal quarter ended April 3, 2010. 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.

Acquisition Restructuring. In connection with the acquisition of Kasper, Ltd. (in 2003), we assessed and formulated plans to restructure certain operations. These plans involved the closure of certain facilities 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.

The details of these restructuring accruals are as follows:

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(In millions)		Retail stores			Jewelry			Texas warehouse			Edison warehouse			Acquisition restructuring
Balance, January 1, 2009	$	-		$	-		$	-		$	0.4		$	0.8
Additions		3.1			-			-			-			-
Payments and reductions		(0.7	)		-			-			(0.4	)		(0.1	)
Balance, April 4, 2009	$	2.4		$	-		$	-		$	-		$	0.7
Balance, January 1, 2010	$	1.9		$	2.9		$	3.1		$	-		$	0.5
Additions		0.1			0.1			0.1			-			-
Payments and reductions		(0.5	)		(1.2	)		(0.2	)		-			(0.1	)
Balance, April 3, 2010	$	1.5		$	1.8		$	3.0		$	-		$	0.4

During the fiscal quarters ended April 3, 2010 and April 4, 2009, $1.9 million and $0.7 million of the termination benefits accrual were utilized (relating to partial or full severance for 306 and 45 employees, respectively). The net accrual of $6.7 million at April 3, 2010 is reported as $6.3 million of accrued expenses and other current liabilities and $0.4 million of other noncurrent liabilities. The net accrual of $3.1 million at April 4, 2009 is reported as $1.5 million of accrued expenses and other current liabilities and $1.6 million of other noncurrent liabilities.

GOODWILL

The following table presents, by segment and in total, changes in the carrying amount of goodwill for the fiscal quarter ended April 3, 2010. There were no changes to our goodwill balances for the fiscal quarter ended April 4, 2009.

(In millions)		Wholesale Better Apparel		Wholesale Jeanswear			Wholesale Footwear & Accessories			Retail			Total
Balance, January 1, 2010
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
Addition from acquisition of Moda		6.7		-			-			-			6.7
Balance, April 3, 2010
Goodwill		46.8		519.2			813.2			120.6			1,499.8
Accumulated impairment losses		-		(519.2	)		(813.2	)		(120.6	)		(1,453.0	)
Net goodwill	$	46.8	$	-		$	-		$	-		$	46.8

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 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. Our financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows:

Level 1 - inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;

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Level 2 - inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and
Level 3 - unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing assets or liabilities based on the best information available.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

We have certain financial assets and liabilities that are required to be measured at fair value. These include:

the assets and liabilities of the Jones Apparel Group, Inc. Deferred Compensation Plan (the "Rabbi Trust"), which represent deferred employee compensation invested in mutual funds and which fall within Level 1 of the fair value hierarchy;
deferred director fees, which represent phantom units of our common stock that have a fair value based on the market price of our common stock and which fall within Level 1 of the fair value hierarchy;
foreign currency forward contracts, which have fair values based on observable inputs including foreign exchange forward and spot rates and which fall within Level 2 of the fair value hierarchy; and
contingent consideration recorded as a result of the acquisition of Moda, which has a fair value based on our projection of revenues and gross margins for the acquired business and a discount factor based on our weighted average cost of capital, and which falls within Level 3 of the fair value hierarchy.

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 April 4, 2009 and April 3, 2010.

(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)
April 4, 2009:
Rabbi Trust assets	Other current assets	$	8.9	$	8.9	$	-	$	-
	Total assets	$	8.9	$	8.9	$	-	$	-
Rabbi Trust liabilities	Accrued employee compensation and benefits	$	8.9	$	8.9	$	-	$	-
Foreign currency forward contracts	Accrued expenses and other current liabilities		0.6		-		0.6		-
Deferred director fees	Accrued expenses and other current liabilities		0.4		0.4		-		-
	Total liabilities	$	9.9	$	9.3	$	0.6	$	-

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(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)
April 3, 2010:
Rabbi Trust assets	Other current assets	$	8.2	$	8.2	$	-	$	-
	Total assets	$	8.2	$	8.2	$	-	$	-
Rabbi Trust liabilities	Accrued employee compensation and benefits	$	8.2	$	8.2	$	-	$	-
Foreign currency forward contracts	Accrued expenses and other current liabilities		0.2		-		0.2		-
Deferred director fees	Accrued expenses and other current liabilities		1.4		1.4		-		-
Contingent consideration	Other long-term liabilities		19.6		-		-		19.6
	Total liabilities	$	29.4	$	9.6	$	0.2	$	19.6

The following table presents the changes in Level 3 contingent consideration liability for the fiscal quarter ended April 3, 2010.

(In millions)
Beginning balance, January 1, 2010	$	-
Acquisition of Moda		18.8
Total adjustments included in earnings		0.8
Balance, April 3, 2010	$	19.6

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 required to be measured at fair value on a nonrecurring basis at April 4, 2009 and April 3, 2010, and the total losses recorded as a result of the remeasurement process.

(In millions)			Fair Value Measurements Using
Description		Carrying Value		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 the fiscal quarter
At April 4, 2009:
Property and equipment	$	-	$	-	$	-	$	-	$	20.4
At April 3, 2010:
Property and equipment		-		-		-		-		0.7

During the fiscal quarters ended April 3, 2010 and April 4, 2009, property and equipment utilized in our retail operations with a carrying amount of $0.7 million and $20.4 million, respectively, were written down to a fair value of zero, primarily as a result of our decision to close approximately 270 underperforming retail locations. These losses were recorded as SG&A expenses in the retail segment. We consider long-term assets utilized in a retail location to be impaired when a pattern of operating losses at the location indicate that future operating losses are probable and that the resulting cash flows will not be sufficient to recover the carrying value of the associated long-term assets.

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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 April 3, 2010, we had outstanding foreign exchange contracts to exchange Canadian Dollars for a total notional value of US $5.0 million at a weighted-average exchange rate of $1.05 maturing through August 2010.

At April 3, 2010 and April 4, 2009, 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:

	April 3, 2010				April 4, 2009
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	499.5		445.3	$	749.5	$	542.5
Foreign currency exchange contracts, net liability		0.2		0.2		-		-

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, diversification of counterparties 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.

CREDIT FACILITIES

We have a secured revolving credit agreement expiring on March 13, 2012 (the "Credit Facility") with several lending institutions to borrow an aggregate principal amount of up to $650 million. Under the 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 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 Credit Facility, or based on Eurocurrency rates, each with a margin that depends on the availability remaining under the Credit Facility. The Credit Facility contains customary events of default.

Availability under the 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 April 3, 2010, we had no cash borrowings and $34.1 million of letters of credit outstanding, and our remaining availability was $473.9 million. If availability under the Credit Facility falls below a stated level, we will be required to comply with a minimum fixed charge coverage ratio. The 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)

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enter into transactions with affiliates, (10) enter into restrictive agreements, and (11) amend material documents. The Credit Facility is secured by a first priority lien on substantially all of our personal property.

DERIVATIVES

We 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 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 each hedging agreement's contractual exchange rate with the currency exchange forward and spot rates 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 are classified as cash flow hedges. The contracts outstanding at April 3, 2010 mature at various dates through August 2010.

(In millions)	April 3, 2010				April 4, 2009
		Notional amount		Fair value - other current liabilities		Notional amount		Fair value - other current liabilities
Canadian Dollar - U.S. Dollar	$	5.0	$	0.2	$	6.7	$	-

The effect of our cash flow hedges on the statement of operations was as follows:

(In millions)	Amount of Pretax Gain (Loss) Recognized in Other Comprehensive Income					Amount of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income
Derivative type	Fiscal Quarter Ended April 3, 2010		Fiscal Quarter Ended April 4, 2009		Location of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income	Fiscal Quarter Ended April 3, 2010		Fiscal Quarter Ended April 4, 2009

Foreign currency forward contracts

(0.1

)

0.1

Cost of sales

(0.1

)

0.3

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 April 3, 2010 amounts, we estimate that any reclassifications from other comprehensive income to earnings within the next 12 months will not be material.

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STATEMENT OF CASH FLOWS

Fiscal Quarter Ended		April 3, 2010		April 4, 2009
(In millions)
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest	$	2.3	$	1.6
Net income tax payments (refunds)		0.2		(2.1	)

Supplemental disclosures of non-cash investing and financing activities:
Restricted stock issued to employees		27.5		7.0

EQUITY METHOD INVESTMENTS

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.

PENSION PLANS

Components of Net Periodic Benefit Cost

(In millions)	Fiscal Quarter Ended
		April 3, 2010			April 4, 2009
Interest cost	$	0.7		$	0.7
Expected return on plan assets		(0.6	)		(0.6	)
Amortization of net loss		0.4			0.4
Net periodic benefit cost	$	0.5		$	0.5

Employer Contributions

During the fiscal quarter ended April 3, 2010, we contributed $0.8 million to our defined benefit pension plans. We anticipate contributing $5.0 million during 2010.

We previously participated in a multi-employer defined benefit plan that covered 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.

SEGMENT 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

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e-commerce web sites, and income and expenses related to trademarks, licenses and general corporate functions are reported under "licensing, other and eliminations." We define segment income 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 the fiscal quarters ended April 3, 2010 and April 4, 2009. We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, we do not represent that these segments, if operated independently, would report the operating profit and other financial information shown below.

(In millions)			Wholesale Better Apparel		Wholesale Jeanswear		Wholesale Footwear & Accessories		Retail			Licensing, Other & Eliminations			Consolidated
For the fiscal quarter ended April 3, 2010
	Revenues from external customers	$	284.3	$	219.8	$	230.3	$	141.9		$	11.0		$	887.3
	Intersegment revenues		35.5		1.2		12.1		-			(48.8	)		-
	Total revenues		319.8		221.0		242.4		141.9			(37.8	)		887.3
	Segment income (loss)	$	57.2	$	36.9	$	24.2	$	(22.7	)	$	(19.3	)		76.3
	Net interest expense														(12.0	)
	Equity in loss of unconsolidated affiliate														(1.8	)
	Income before provision for income taxes													$	62.5
For the fiscal quarter ended April 4, 2009
	Revenues from external customers	$	291.8	$	228.2	$	218.4	$	141.2		$	11.5		$	891.1
	Intersegment revenues		39.2		1.0		18.5		-			(58.7	)		-
	Total revenues		331.0		229.2		236.9		141.2			(47.2	)		891.1
	Segment income (loss)	$	49.6	$	17.3	$	15.9	$	(58.4	)	$	(10.7	)		13.7
	Net interest expense														(12.9	)
	Equity in loss of unconsolidated affiliate														(0.3	)
	Income before provision for income taxes													$	0.5

SUPPLEMENTAL 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 Apparel Group, USA, Inc. ("Jones USA"), Jones Apparel Group Holdings, Inc. ("Jones Holdings") and JAG Footwear, Accessories and Retail Corporation ("JAG Footwear").

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, JAG Footwear, 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 or JAG Footwear to Jones.

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Condensed Consolidating Balance Sheets
(In millions)

		April 3, 2010											December 31, 2009
			Issuers			Others		Elim- inations			Cons- olidated			Issuers			Others		Elim- inations			Cons- olidated
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents	$	212.0		$	10.2	$	-		$	222.2		$	322.1		$	11.3	$	-		$	333.4
	Accounts receivable		298.0			143.4		-			441.4			189.5			113.6		-			303.1
	Inventories		261.7			92.0		(0.1	)		353.6			259.7			115.1		0.2			375.0
	Prepaid and refundable income taxes		-			-		0.2			0.2			0.7			0.1		(0.8	)		-
	Deferred taxes		15.7			14.7		-			30.4			13.3			14.8		-			28.1
	Prepaid expenses and other current assets		24.8			10.3		-			35.1			18.2			7.4		-			25.6
	TOTAL CURRENT ASSETS		812.2			270.6		0.1			1,082.9			803.5			262.3		(0.6	)		1,065.2
Property, plant and equipment - net			89.9			141.8		-			231.7			93.4			145.6		-			239.0
Due from affiliates			-			1,400.3		(1,400.3	)		-			-			1,382.9		(1,382.9	)		-
Goodwill			46.8			-		-			46.8			40.1			-		-			40.1
Other intangibles - net			8.8			575.7		-			584.5			0.5			559.3		-			559.8
Prepaid and refundable income taxes			-			-		-			-			5.4			-		(0.7	)		4.7
Deferred taxes			84.6			-		(84.6	)		-			83.3			-		(79.4	)		3.9
Investments in and loans to subsidiaries			2,170.3			39.7		(2,170.3	)		39.7			2,125.2			42.1		(2,125.2	)		42.1
Other assets			58.2			11.5		-			69.7			60.2			10.0		-			70.2
	TOTAL ASSETS	$	3,270.8		$	2,439.6	$	(3,655.1	)	$	2,055.3		$	3,211.6		$	2,402.2	$	(3,588.8	)	$	2,025.0
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
	Current portion of capital lease obligations	$	-		$	2.3	$	-		$	2.3		$	-		$	2.6	$	-		$	2.6
	Accounts payable		116.5			43.9		-			160.4			129.8			55.5		-			185.3
	Income taxes payable		21.1			8.3		(18.1	)		11.3			23.1			7.8		(19.1	)		11.8
	Accrued expenses and other current liabilities		65.8			39.0		-			104.8			75.7			48.7		-			124.4
	TOTAL CURRENT LIABILITIES		203.4			93.5		(18.1	)		278.8			228.6			114.6		(19.1	)		324.1
NONCURRENT LIABILITIES:
	Long-term debt		499.5			-		-			499.5			499.5			-		-			499.5
	Obligations under capital leases		0.1			26.4		-			26.5			-			26.9		-			26.9
	Deferred taxes		-			76.0		(66.7	)		9.3			-			203.5		(203.5	)		-
	Income taxes payable		7.6			0.8		-			8.4			-			0.7		(0.7	)		-
	Due to affiliates		1,400.3			-		(1,400.3	)		-			1,382.9			-		(1,382.9	)		-
	Other		79.2			17.9		-			97.1			63.3			18.7		-			82.0
	TOTAL NONCURRENT LIABILITIES		1,986.7			121.1		(1,467.0	)		640.8			1,945.7			249.8		(1,587.1	)		608.4
	TOTAL LIABILITIES		2,190.1			214.6		(1,485.1	)		919.6			2,174.3			364.4		(1,606.2	)		932.5
EQUITY:
	Common stock and additional paid-in capital		1,369.4			1,682.2		(1,682.2	)		1,369.4			1,361.9			1,540.5		(1,540.5	)		1,361.9
	Retained earnings		1,544.5			537.6		(482.8	)		1,599.3			1,509.3			493.3		(438.2	)		1,564.4
	Accumulated other comprehensive (loss) income		(6.9	)		5.0		(5.0	)		(6.9	)		(7.6	)		3.9		(3.9	)		(7.6	)
	Treasury stock		(1,826.3	)		-		-			(1,826.3	)		(1,826.3	)		-		-			(1,826.3	)
	Total Jones stockholders' equity		1,080.7			2,224.8		(2,170.0	)		1,135.5			1,037.3			2,037.7		(1,982.6	)		1,092.4
	Noncontrolling interest		-			0.2		-			0.2			-			0.1		-			0.1
	TOTAL EQUITY		1,080.7			2,225.0		(2,170.0	)		1,135.7			1,037.3			2,037.8		(1,982.6	)		1,092.5
	TOTAL LIABILITIES AND EQUITY	$	3,270.8		$	2,439.6	$	(3,655.1	)	$	2,055.3		$	3,211.6		$	2,402.2	$	(3,588.8	)	$	2,025.0

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Condensed Consolidating Statements of Operations
(In millions)

	Fiscal Quarter Ended April 3, 2010											Fiscal Quarter Ended April 4, 2009
		Issuers			Others			Elim- inations			Cons- olidated		Issuers			Others			Elim- inations			Cons- olidated
Net sales	$	625.9		$	253.8		$	(3.6	)	$	876.1	$	628.1		$	255.1		$	(3.8	)	$	879.4
Licensing income		-			11.0			-			11.0		-			11.5			-			11.5
Other revenues		0.2			-			-			0.2		0.2			-			-			0.2
Total revenues		626.1			264.8			(3.6	)		887.3		628.3			266.6			(3.8	)		891.1
Cost of goods sold		391.2			170.8			(0.9	)		561.1		411.2			188.6			(2.0	)		597.8
Gross profit		234.9			94.0			(2.7	)		326.2		217.1			78.0			(1.8	)		293.3
Selling, general and administrative expenses		224.0			28.4			(2.5	)		249.9		249.4			32.9			(2.7	)		279.6
Operating income (loss)		10.9			65.6			(0.2	)		76.3		(32.3	)		45.1			0.9			13.7
Net interest expense (income) and financing costs		13.4			(1.4	)		-			12.0		14.2			(1.3	)		-			12.9
Equity in loss of unconsolidated affiliate		-			1.8			-			1.8		-			0.3			-			0.3
(Loss) income before provision (benefit) for income taxes and equity in earnings of subsidiaries		(2.5	)		65.2			(0.2	)		62.5		(46.5	)		46.1			0.9			0.5
Provision (benefit) for income taxes		2.5			20.6			-			23.1		(19.0	)		16.0			3.2			0.2
Equity in earnings of subsidiaries		44.5			-			(44.5	)		-		30.7			-			(30.7	)		-
Net income	$	39.5		$	44.6		$	(44.7	)	$	39.4	$	3.2		$	30.1		$	(33.0	)	$	0.3

Condensed Consolidating Statements of Cash Flows
(In millions)

		Fiscal Quarter Ended April 3, 2010											Fiscal Quarter Ended April 4, 2009
			Issuers			Others			Elim- inations		Cons-olidated			Issuers			Others			Elim-inations		Cons- olidated
Net cash (used in) provided by operating activities		$	(90.4	)	$	4.2		$	$ -	$	(86.2	)	$	(125.5	)	$	(13.8	)	$	$ -	$	(139.3	)
Cash flows from investing activities:
	Capital expenditures		(3.9	)		(4.8	)		-		(8.7	)		(4.8	)		(3.5	)		-		(8.3	)
	Acquisition of Moda Nicola International, LLC		(11.5	)		-			-		(11.5	)		-			-			-		-
	Net cash used in investing activities		(15.4	)		(4.8	)		-		(20.2	)		(4.8	)		(3.5	)		-		(8.3	)
Cash flows from financing activities:
	Net increase in short-term borrowings		-			-			-		-			9.0			-			-		9.0
	Dividends paid		(4.3	)		-			-		(4.3	)		(4.2	)		-			-		(4.2	)
	Principal payments on capital leases		-			(0.7	)		-		(0.7	)		-			(0.9	)		-		(0.9	)
	Distributions to noncontrolling interest		-			(0.1	)		-		(0.1	)		-			-			-			-
	Net cash (used in) provided by financing activities		(4.3	)		(0.8	)		-		(5.1	)		4.8			(0.9	)		-		3.9
Effect of exchange rates on cash			-			0.3			-		0.3			-			(0.3	)		-		(0.3	)
Net decrease in cash and cash equivalents			(110.1	)		(1.1	)		-		(111.2	)		(125.5	)		(18.5	)		-		(144.0	)
Cash and cash equivalents, beginning			322.1			11.3			-		333.4			318.4			19.9			-		338.3
Cash and cash equivalents, ending		$	212.0		$	10.2		$	-	$	222.2		$	192.9		$	1.4		$	-	$	194.3

NEW ACCOUNTING STANDARDS

In February 2010, the FASB issued ASU 2010-09, "Subsequent Events (Topic 855) - Amendments to Certain Recognition and Disclosure Requirements." ASU 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement that an SEC filer disclose the date through which subsequent events have been evaluated. ASC 2010-09 was effective upon issuance. The adoption of this standard had no effect on our results of operation or our financial position.

In April 2010, the FASB issued ASU 2010-13, "Compensation - Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades." ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in ASU 2010-

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13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this standard will not have an effect on our results of operation or our financial position.

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

The following discussion provides information and analysis of our results of operations for the 13 week periods ended April 3, 2010 (hereinafter referred to as the "first fiscal quarter of 2010") and April 4, 2009 (hereinafter referred to as the "first fiscal quarter of 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 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 and men's apparel and accessories worldwide.

During 2010 to date, the following significant events took place:

in January 2010, we announced that GLO jeans will be carried exclusively at Kmart stores nationwide;
in January 2010, we announced that we entered into an exclusive licensing agreement with VCJS LLC to design, develop, produce and distribute Jessica Simpson jeanswear under the Jessica Simpson Collection;
on February 4, 2010, we announced that we had acquired Moda Nicola International, LLC ("Moda"), owner of the Robert Rodriguez Collection, a privately held designer, marketer and wholesaler of women's contemporary eveningwear and sportswear; and
on March 24, 2010, we launched our shoewoo.com e-commerce site.

Retail store closings

We have decided to close approximately 270 underperforming retail locations by the end of 2010, of which 160 have closed as of April 3, 2010. Total termination benefits and associated employee costs are expected to be $4.7 million for approximately 1,200 employees, including both store employees and administrative support personnel. Of this amount, we recorded $0.1 million and $3.1 million during the first fiscal quarters of 2010 and 2009, respectively. We also recorded $0.7 million and $20.4 million of impairment losses on leasehold improvements and furniture and fixtures located in the stores to be closed during the first quarters of 2010 and 2009, respectively. These costs are reported as selling, general and administrative ("SG&A") expenses in the retail 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 goodwill, intangible assets with indefinite lives and contingent consideration. Estimates related to accounts receivable and inventory affect our wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories and retail segments. Estimates related to goodwill affect our wholesale better apparel segment. Estimates related to intangible assets with indefinite lives affect our licensing, other and eliminations segment.

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For accounts receivable, we estimate the net collectibility, considering both historical and anticipated trends of trade discounts and co-op advertising deductions given to 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 indefinite-lived trademarks for impairment on an annual basis (during our fourth fiscal quarter) and between annual tests if an event occurs or circumstances change that would reduce the fair value of an asset below its carrying value. These tests utilize discounted cash flow models to estimate fair values. These cash flow models involve several assumptions. Changes in our assumptions could materially impact our fair value estimates, and material impairment losses could result where the estimated fair values of these assets become less than their carrying amounts. 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 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 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.

Contingent consideration is recorded as a result of acquisitions, where a portion of the purchase price is payable at the end of a specific future period, with the amount of payment based on the financial results of the acquired business during that period. The fair values of contingent consideration are based on our projection of the financial results of the acquired business and a discount factor based on our weighted average cost of capital. Changes in our assumptions could materially impact our fair value estimates, and material gains and losses could result where the estimated fair value of these liabilities differ from their carrying amounts.

Results of Operations

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

(In millions)	Fiscal Quarter Ended
	April 3, 2010				April 4, 2009
Net sales	$	876.1	98.7	%	$	879.4	98.7	%
Licensing income		11.0	1.2			11.5	1.3
Other revenues		0.2	0.0			0.2	0.0
Total revenues		887.3	100.0			891.1	100.0
Cost of goods sold		561.1	63.2			597.8	67.1
Gross profit		326.2	36.8			293.3	32.9
Selling, general and administrative expenses		249.9	28.2			279.6	31.4
Operating income		76.3	8.6			13.7	1.5
Net interest expense and financing costs		12.0	1.4			12.9	1.4
Equity in loss of unconsolidated affiliate		1.8	0.2			0.3	0.0
Income before provision for income taxes		62.5	7.0			0.5	0.1
Provision for income taxes		23.1	2.6			0.2	0.0
Net income		39.4	4.4			0.3	0.0
Less: income attributable to noncontrolling interest		0.2	-			-	-
Income attributable to Jones	$	39.2	4.4	%	$	0.3	0.0	%

Percentage totals may not add due to rounding.

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Fiscal Quarter Ended April 4, 2010 Compared to Fiscal Quarter Ended April 4, 2009

Revenues. Total revenues for the first fiscal quarter of 2010 were $887.3 million, compared with $891.1 million for the first fiscal quarter of 2009, a decrease of 0.4%. Revenues by segment were as follows:

(In millions)		First Fiscal Quarter of 2010		First Fiscal Quarter of 2009		Increase (Decrease	)	Percent Change
Wholesale better apparel	$	284.3	$	291.8	$	(7.5	)	(2.6%	)
Wholesale jeanswear		219.8		228.2		(8.4	)	(3.7%	)
Wholesale footwear and accessories		230.3		218.4		11.9		5.4%
Retail		141.9		141.2		0.7		0.5%
Licensing and other		11.0		11.5		(0.5	)	(4.3%	)
Total revenues	$	887.3	$	891.1	$	(3.8	)	(0.4%	)

Wholesale better apparel revenues decreased $7.5 million, primarily due to reduced shipments of our Anne Klein and Jones New York Sport products as a result of the general economic downturn and the discontinuance of our Nine West sportswear product line due to the performance of this product line at retail, and also due to decreased orders for nearly all of our other better apparel product lines. These decreases were partially offset by shipments of our Rachel Rachel Roy products that were introduced for Fall 2009, initial shipments of our Rachel Roy Signature product line and by $4.4 million of revenues for the Robert Rodriguez and Robbi and Nikki product lines acquired through the acquisition of Moda.

Wholesale jeanswear revenues decreased $8.4 million. Revenues decreased due to lower shipments of our l.e.i. products to Wal-Mart Stores Inc. due to competing new product initiatives and price compression, lower shipments of our Energie product line as a result of the general economic downturn and product assortment issues, lower shipments of our Erika product line due to the repositioning of the brand and the discontinuance of the Jeanstar product line based on a review of its long-term growth potential. These decreases were partially offset by increased shipments of our Gloria Vanderbilt products due to the performance of the products at retail and new product extensions.

Wholesale footwear and accessories revenues increased $11.9 million, primarily due to increased shipments of our Easy Spirit footwear and our handbag and accessories products as a result of the performance of these products at retail, an increase in our international business due to improved global economic conditions and initial shipments of our Rachel Rachel Roy footwear products.

Retail revenues increased $0.7 million, primarily due to a 7.9% increase in comparable store sales ($9.7 million) resulting from product performance, the closure of underperforming locations and the positive impact of a shift in the Easter holiday, partially offset by 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. A 10.5% increase in comparable store sales for our footwear stores ($7.6 million) and a 25.6% increase in our comparable e-commerce business ($2.7 million) were partially offset by a 1.4% decrease in comparable store sales for our apparel stores ($0.6 million). We began 2010 with 938 retail locations and had a net decrease of 61 locations to end the period with 877 locations, compared with 1,005 at the end of the prior period.

Gross Profit. The gross profit margins were 36.8% and 32.9% for the first fiscal quarters of 2010 and 2009, respectively.

Wholesale better apparel gross profit margins were 38.2% and 35.3% for the first fiscal quarters of 2010 and 2009, respectively. The increase was due to the product mix and lower sales to off-price retailers in the current period.

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Wholesale jeanswear gross profit margins were 30.5% and 23.4% for the first fiscal quarters of 2010 and 2009, respectively. The increase was primarily due to lower levels of off-price sales and discontinued products in the current period and increased sales of our higher-margin Gloria Vanderbilt products.

Wholesale footwear and accessories gross profit margins were 28.1% and 26.3% for the first fiscal quarters of 2010 and 2009, respectively. The increase was primarily due to lower levels of discounting in the current period as a result of better inventory management and the performance of our products at retail, partially offset by increased transportation costs.

Retail gross profit margins were 50.2% and 44.9% for the first fiscal quarters of 2010 and 2009, respectively. The increase was primarily due to the performance of our products, requiring a lower level of markdowns in the current period to clear inventory, partially offset by increased transportation costs.

Selling, General and Administrative Expenses. SG&A expenses were $249.9 million in the first fiscal quarter of 2010 and $279.6 million in the first fiscal quarter of 2009.

Wholesale better apparel SG&A expenses decreased $2.2 million, primarily due to $1.2 million in cost savings due to headcount reductions, a $1.1 million reduction in bad debt expense as the result of a customer bankruptcy in the prior period, a $1.0 million reduction in marketing and advertising spending and $2.8 million of other net cost reductions. These decreases were offset by $3.3 million of expenses added as a result of the Moda acquisition and a $0.6 million effect of unfavorable changes in exchange rates between the U.S. and Canadian Dollars.

Wholesale jeanswear SG&A expenses decreased $5.9 million, primarily due to a $3.2 million decrease in restructuring charges, a $0.8 million reduction in administrative costs, a $0.6 million reduction in royalties due to the discontinuance of the Taylor Swift dress program under the l.e.i. label and $1.3 million of other cost reductions.

Wholesale footwear and accessories SG&A expenses decreased $2.4 million, primarily due to a $1.2 million reduction in severance costs in the current period and prior period costs of $1.6 million related to the bankruptcy of our former United Kingdom footwear licensee, $1.5 million of settlements of sales and use tax audits and $1.4 million of loss accruals related to certain leased property. These decreases were offset by a $1.7 million increase in administrative costs, a $1.1 million increase in salaries and benefits and $0.5 million of other net cost increases in the current period.

Retail SG&A expenses decreased $27.9 million, primarily due to a $22.7 million reduction in restructuring and asset impairment charges from the prior period related to the closing of approximately 270 stores through the end of 2010 and an $8.3 million reduction in salaries, occupancy and depreciation expenses due to operating fewer stores in the current period, partially offset by a $1.1 million increase in administrative costs and $2.0 million of other cost increases in the current period.

SG&A expenses for the licensing, other and eliminations segment increased $8.7 million, primarily due to a $5.0 million increase in amortization of equity-based compensation, a $1.2 million increase in professional fees (including $0.6 million related to the acquisition of Moda) and $2.5 million of other cost increases.

Operating Income. The resulting operating income for the first fiscal quarter of 2010 was $76.3 million, compared with $13.7 million for the first fiscal quarter of 2009, due to the factors described above.

Net Interest Expense. Net interest expense was $12.0 million in the first fiscal quarter of 2010, compared with $12.9 million in the first fiscal quarter of 2009. The decrease was primarily the result of the repurchase of our 4.250% Senior Notes due 2009 in May 2009, partially offset by higher amortization of deferred financing fees related to the secured revolving credit facility we entered into during May 2009.

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Income Taxes. The effective income tax rate was 37.0% and 34.0% for the first fiscal quarters of 2010 and 2009, respectively. The increase is primarily due to the impact of the foreign income tax differential on higher pre-tax income in the first fiscal quarter of 2010 compared with the first fiscal quarter of 2009.

Net Income and Earnings Per Share. Net income was $39.4 million in the first fiscal quarter of 2010, compared with $0.3 million in the first fiscal quarter of 2009. Diluted earnings per share for the first fiscal quarter of 2010 was $0.45, compared with $0.00 for the first fiscal quarter of 2009, with 0.9% more 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. 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 as needed. As of April 3, 2010, total cash and cash equivalents were $222.2 million, a seasonal decrease of $111.2 million from the $333.4 million reported as of December 31, 2009.

Cash flows from operating activities used $86.2 million and $139.3 million in the fiscal quarters ended April 3, 2010 and April 4, 2009, respectively. The change from the prior period was primarily due to higher net income in the current period and changes in working capital. Accounts receivable increased more in the current period due to the timing of shipments and collections compared with the prior period. Inventory experienced less seasonal decreases in the current period primarily due to both the timing of receipts and the clearance of excess inventories in our footwear business during the prior period. Accounts payable decreased less in the current period primarily due to the timing of inventory payments during the prior period.

Cash flows from investing activities used $20.2 million and $8.3 million in the first fiscal quarters of 2010 and 2009, respectively, primarily for the purchases of property and equipment and the acquisition of Moda in 2010.

Cash flows from financing activities used $5.1 million and provided $3.9 million in the first fiscal quarters of 2010 and 2009, respectively, with the difference due to a $9.0 million increase in short-term borrowings during the first fiscal quarter of 2009.

We repurchased no common stock during the first fiscal quarters of 2010 and 2009. As of April 3, 2010, $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.

We have a secured revolving credit agreement expiring on March 13, 2012 (the "Credit Facility") with several lending institutions to borrow an aggregate principal amount of up to $650 million. Under the 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 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 Credit Facility, or based on Eurocurrency (LIBOR) rates, each with a margin that depends on the availability remaining under the Credit Facility. The Credit Facility contains customary events of default.

Availability under the Credit Facility is determined with 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 April 3, 2010, we had no cash borrowings and $34.1 million of letters of credit outstanding, and our remaining availability was $473.9 million. If

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availability under the Credit Facility falls below a stated level, we will be required to comply with a minimum fixed charge coverage ratio. The 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 Credit Facility is secured by a first priority lien on substantially all of our personal property.

On April 28, 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 May 14, 2010 for payment on May 28, 2010.

Economic Outlook
Due to the current and expected future economic relationship between the United States and China, we may experience increased risk related to changes in foreign currency exchange rates should China allow the Yuan to rise in value against the Dollar. Should this occur, increased production costs for our goods manufactured in China could result.

The recent economic environment has resulted in lower consumer confidence. This trend may lead to reduced consumer spending which could affect our net sales and our future profitability. Additionally, reduced consumer spending, combined with the potential for rising costs related to changes in exchange rates between the U.S. Dollar and the Chinese Yuan, may reduce our gross profit margins. Should these factors occur, they could have a material adverse effect on our business.

When adverse economic conditions exist in the United States or abroad, 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 on our financial condition, results of operations and/or liquidity.

The economic turmoil in the credit markets over the past 18 months and the negative effects of the economic environment on our business may negatively impact our ability to borrow funds in the future. However, we believe that available cash and cash equivalents, funds generated by operations and the 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 assurances, we believe that the participating banks will be willing and able to loan funds to us in accordance with their legal obligations under the Credit Facility.

New Accounting Standards

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December 15, 2010. The adoption of this standard will not have an effect on our results of operation or our financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

The primary interest rate exposures on floating rate financing arrangements are with respect to United States and Canadian short-term interest rates. We had $650.0 million in variable rate credit facilities available at April 3, 2010, under which no cash borrowings and $34.1 million of letters of credit were outstanding at April 3, 2010.

We are exposed to market risk related to changes in foreign currency exchange rates. We have assets and liabilities denominated in certain foreign currencies, and our Canadian subsidiary purchases a portion of its inventory from suppliers who require payment in U.S. Dollars. To minimize our exposure to changes in exchange rates between the Canadian Dollar and the U.S. Dollar, we hedge a portion of our forecasted Canadian U.S. Dollar-denominated inventory purchases. 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 offset losses and gains on the assets, liabilities, and transactions being hedged, up to the notional amount of such contracts. We are exposed to credit-related losses if the counterparty to a financial instrument fails to perform its obligation. However, we do not expect the counterparties, which presently have satisfactory credit ratings, to fail to meet their obligations, if any.

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

Item 4. Controls and Procedures

As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, our 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 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. SAP will integrate our operational and financial systems and expand the functionality of our financial reporting processes. We began the process of implementing SAP throughout Jones Apparel Group, Inc. and our consolidated subsidiaries during the fourth quarter of 2006. During the first fiscal quarter of 2010, our licensing business and our administrative services 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 implementation 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.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 5. Other information

STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

This Report includes, and incorporates by reference, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding our expected financial position, business and financing plans are forward-looking statements. The words "believes," "expects," "plans," "intends," "anticipates" and similar expressions identify forward-looking statements. Forward-looking statements also include representations of our expectations or beliefs concerning future events that involve risks and uncertainties, including:

those associated with the effect of national, regional and international economic conditions;
lowered levels of consumer spending resulting from a general economic downturn or lower levels of consumer confidence;
the tightening of the credit markets and our ability to obtain capital on satisfactory terms;
given the uncertain economic environment, the possible unwillingness of committed lenders to meet their obligations to lend to borrowers, in general;
the performance of our products within the prevailing retail environment;
customer acceptance of both new designs and newly-introduced product lines;
our reliance on a few department store groups for large portions of our business;
our ability to identify acquisition candidates and, in a competitive environment for such acquisitions, acquire such businesses on reasonable financial and other terms;
the integration of the organizations and operations of any acquired business into our existing organization and operations;
consolidation of our retail customers;
financial difficulties encountered by our customers;
the effects of vigorous competition in the markets in which we operate;
our ability to attract and retain qualified executives and other key personnel;
our reliance on independent foreign manufacturers;
changes in the costs of raw materials, labor, advertising and transportation;
the general inability to obtain higher wholesale prices for our products that we have experienced for many years;

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the uncertainties of sourcing associated with an environment in which general quota has expired on apparel products but litigation and political activity seeking to re-impose quotas have been initiated;
our ability to successfully implement new operational and financial computer systems; and
our ability to secure and protect trademarks and other intellectual property rights.

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

Item 6. Exhibits

See Exhibit Index.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JONES APPAREL GROUP, INC.
(Registrant)

Date: April 28, 2010

By /s/ Wesley R. Card
WESLEY R. CARD
Chief Executive Officer

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

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1*	Jones Apparel Group, Inc. Deferred Compensation Plan, as amended and restated effective January 1, 2010.+
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.
32^o	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.

____________
+ Management contract or compensatory plan or arrangement.
* Filed herewith.
^o Furnished herewith.

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