ACQUISITIONS

KG Group Holdings Limited

On June 2, 2011, we acquired 100% of the equity interests in KG Group Holdings Limited ("Kurt Geiger"), a privately-held wholesaler and retailer of luxury footwear and accessories, for $150.0 million in cash and the assumption of $174.1 million of debt, which was immediately repaid following the transaction. Kurt Geiger markets products under four of its own brands - Kurt Geiger, KG by Kurt Geiger, Carvela and Miss KG - and over 100 other luxury brands in more than 200 retail locations, including concessions in Europe's leading department stores, including Harrods, Selfridges, Liberty, House of Fraser, Fenwick John Lewis and Brown Thomas, as well as company-operated stores.

Approximately $10.2 million of the purchase price payable to certain selling shareholders who are senior managers of Kurt Geiger has been rolled over into 5% Loan Notes (the "Loan Notes"), which are payable in approximately four years and are subject to forfeiture in the event of termination of employment under certain circumstances. This amount is recorded as compensation expense over the term of the Loan Notes and is not reported as a component of the cost of the acquisition.

We pursued the acquisition of Kurt Geiger to increase our international presence and further extend our reach into the designer footwear business. Kurt Geiger will serve as our hub in Europe. Kurt Geiger's wholesale footwear business is reported in our international wholesale segment and its retail business is reported in our international retail segment.

The following table summarizes the fair values of the assets acquired and liabilities assumed from Kurt Geiger on June 2, 2011.

(In millions)	Weighted-average amortization life (in months)		Fair Value
Cash			$	6.9
Accounts receivable				19.7
Inventories				55.1
Other current assets				9.5
Property, plant and equipment				27.0
Intangible assets:
Trademarks - nonamortized				95.1
Trademarks - amortized		120		0.1
Goodwill				99.3
Customer relationships		232		125.7
Order backlog		9		2.8
Favorable lease agreements		99		6.8
Total assets acquired				448.0
Accounts payable				30.6
Other current liabilities				28.5
Long-term debt				174.1
Unfavorable lease agreements		100		0.2
Deferred taxes				64.6
Total liabilities assumed				298.0
Total purchase price			$	150.0

The gross contractual accounts receivable acquired from Kurt Geiger was $19.8 million.

The acquisition resulted in the recognition of $99.3 million of goodwill, which is not expected to be deductible for tax purposes. Goodwill largely consists of expected synergies resulting from the leveraging of the combined networks of partners, infrastructure and strong department store relationships to expand product distribution worldwide, as well as the acquired assembled workforce, which does not qualify as an amortizable intangible asset, and the potential for product extensions, such as apparel.

The following table provides pro forma total revenues and results of operations for the fiscal quarter ended July 2, 2011 as if Kurt Geiger had been acquired on January 1, 2010. The unaudited pro forma results reflect certain adjustments related to the acquisitions, such as amortization expense on intangible assets acquired from Kurt Geiger 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 Kurt Geiger. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on January 1, 2010, nor are they indicative of the future operating results of the combined companies.

(In millions, except per share amounts)	Fiscal Quarter Ended July 2, 2011		Fiscal Six Months Ended July 2, 2011
Total revenues	$	942.6	$	1,978.9
Net income		8.9		28.1
Earnings per share attributable to Jones
Basic	$	0.10	$	0.33
Diluted		0.10		0.32

The pro forma earnings for the fiscal quarter and six months ended July 2, 2011 were adjusted to exclude $4.7 million of acquisition-related expenses incurred related to the acquisition of Kurt Geiger and $0.5 million of nonrecurring expense related to the fair value of Kurt Geiger acquisition-date order backlogs.