The following condensed consolidating balance sheets, statements of operations, statements of consolidated comprehensive income 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.

Condensed Consolidating Balance Sheets

(In millions)

	June 30, 2012												December 31, 2011
	Issuers			Others			Elim- inations			Cons- olidated			Issuers			Others			Elim- inations			Cons- olidated
ASSETS
Current assets:
Cash and cash equivalents	$	210.6		$	66.5		$	-		$	277.1		$	195.8		$	43.0		$	-		$	238.8
Accounts receivable		173.0			154.2			-			327.2			182.9			156.7			-			339.6
Inventories		258.7			210.1			(1.3	)		467.5			270.5			220.9			(0.3	)		491.1
Prepaid and refundable income taxes		16.8			3.9			(19.3	)		1.4			5.3			4.9			1.7			11.9
Deferred taxes		14.5			13.2			-			27.7			13.2			13.2			-			26.4
Prepaid expenses and other current assets		37.5			21.6			-			59.1			21.5			26.2			-			47.7
Total current assets		711.1			469.5			(20.6	)		1,160.0			689.2			464.9			1.4			1,155.5
Property, plant and equipment		60.0			211.4			-			271.4			64.9			206.5			-			271.4
Due from affiliates		-			288.3			(288.3	)		-			-			1,604.4			(1,604.4	)		-
Goodwill		46.7			209.6			-			256.3			46.7			208.6			-			255.3
Other intangibles		6.4			885.4			-			891.8			6.9			890.5			-			897.4
Deferred taxes		92.3			-			(92.3	)		-			80.6			-			(80.6	)		-
Investments in and loan to subsidiaries		1,713.9			38.4			(1,713.9	)		38.4			3,047.9			35.6			(3,047.9	)		35.6
Other assets		70.2			20.8			-			91.0			79.3			20.8			-			100.1
Total assets	$	2,700.6		$	2,123.4		$	(2,115.1	)	$	2,708.9		$	4,015.5		$	3,431.3		$	(4,731.5	)	$	2,715.3
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	-		$	2.1		$	-		$	2.1		$	-		$	2.0		$	-		$	2.0
Current portion of acquisition consideration payable		216.7			-			-			216.7			192.7			1.4			-			194.1
Accounts payable		130.2			102.5			-			232.7			139.7			96.5			-			236.2
Income taxes payable		16.6			27.6			(39.6	)		4.6			11.2			8.3			(18.1	)		1.4
Accrued expenses and other current liabilities		71.3			63.8			-			135.1			79.0			67.3			-			146.3
Total current liabilities		434.8			196.0			(39.6	)		591.2			422.6			175.5			(18.1	)		580.0
Long-term debt		834.1			0.1			-			834.2			831.3			0.1			-			831.4
Obligations under capital leases		-			22.3			-			22.3			-			23.3			-			23.3
Income taxes payable		0.5			-			-			0.5			6.7			-			-			6.7
Deferred taxes		-			167.9			(98.3	)		69.6			-			160.0			(86.6	)		73.4
Acquisition consideration payable		4.8			-			-			4.8			17.7			-			-			17.7
Due to affiliates		288.3			-			(288.3	)		-			1,604.4			-			(1,604.4	)		-
Other		87.8			24.6			-			112.4			67.7			25.7			-			93.4
Total liabilities		1,650.3			410.9			(426.2	)		1,635.0			2,950.4			384.6			(1,709.1	)		1,625.9
Equity:
Common stock and additional paid-in capital		522.1			947.8			(947.8	)		522.1			522.6			2,352.4			(2,352.4	)		522.6
Retained earnings		556.5			771.7			(748.4	)		579.8			572.1			704.3			(680.2	)		596.2
Accumulated other comprehensive (loss) income		(28.3	)		(7.3	)		7.3			(28.3	)		(29.6	)		(10.2	)		10.2			(29.6	)
Total Jones stockholders' equity		1,050.3			1,712.2			(1,688.9	)		1,073.6			1,065.1			3,046.5			(3,022.4	)		1,089.2
Noncontrolling interest		-			0.3			-			0.3			-			0.2			-			0.2
Total equity		1,050.3			1,712.5			(1,688.9	)		1,073.9			1,065.1			3,046.7			(3,022.4	)		1,089.4
Total liabilities and equity	$	2,700.6		$	2,123.4		$	(2,115.1	)	$	2,708.9		$	4,015.5		$	3,431.3		$	(4,731.5	)	$	2,715.3

Condensed Consolidating Statements of Operations

(In millions)

	Fiscal Quarter Ended June 30, 2012											Fiscal Quarter Ended July 2, 2011
	Issuers			Others			Elim- inations			Cons- olidated		Issuers			Others			Elim- inations			Cons- olidated
Net sales	$	516.6		$	333.7		$	(6.0	)	$	844.3	$	557.3		$	324.1		$	(4.7	)	$	876.7
Licensing income		-			10.2			-			10.2		0.1			10.3			-			10.4
Other revenues		0.3			-			-			0.3		0.3			-			-			0.3
Total revenues		516.9			343.9			(6.0	)		854.8		557.7			334.4			(4.7	)		887.4
Cost of goods sold		333.8			198.6			(3.8	)		528.6		356.3			210.2			(2.2	)		564.3
Gross profit		183.1			145.3			(2.2	)		326.2		201.4			124.2			(2.5	)		323.1
Selling, general and administrative expenses		216.2			90.3			(2.0	)		304.5		227.2			53.3			(2.3	)		278.2
Operating (loss) income		(33.1	)		55.0			(0.2	)		21.7		(25.8	)		70.9			(0.2	)		44.9
Net interest expense (income) and financing costs		9.2			(0.4	)		-			8.8		38.0			(1.0	)		-			37.0
Equity in income of unconsolidated affiliate		-			0.4			-			0.4		-			0.7			-			0.7
(Loss) income before (benefit) provision for income taxes and equity in earnings of subsidiaries		(42.3	)		55.8			(0.2	)		13.3		(63.8	)		72.6			(0.2	)		8.6
(Benefit) provision for income taxes		(12.2	)		17.1			-			4.9		(17.5	)		20.7			-			3.2
Equity in earnings of subsidiaries		38.4			-			(38.4	)		-		51.5			-			(51.5	)		-
Net income		8.3			38.7			(38.6	)		8.4		5.2			51.9			(51.7	)		5.4
Less: income attributable to noncontrolling interest		-			0.3			-			0.3		-			0.2			-			0.2
Income attributable to Jones	$	8.3		$	38.4		$	(38.6	)	$	8.1	$	5.2		$	51.7		$	(51.7	)	$	5.2

	Fiscal Six Months Ended June 30, 2012											Fiscal Six Months Ended July 2, 2011
	Issuers			Others			Elim- inations			Cons- olidated		Issuers			Others			Elim- inations			Cons- olidated
Net sales	$	1,087.2		$	693.3		$	(12.8	)	$	1,767.7	$	1,174.9		$	660.3		$	(9.5	)	$	1,825.7
Licensing income		-			22.5			-			22.5		0.1			22.4			-			22.5
Other revenues		0.5			-			-			0.5		0.5			-			-			0.5
Total revenues		1,087.7			715.8			(12.8	)		1,790.7		1,175.5			682.7			(9.5	)		1,848.7
Cost of goods sold		711.1			417.5			(7.5	)		1,121.1		764.5			434.1			(3.7	)		1,194.9
Gross profit		376.6			298.3			(5.3	)		669.6		411.0			248.6			(5.8	)		653.8
Selling, general and administrative expenses		422.8			189.1			(4.2	)		607.7		447.9			105.4			(5.6	)		547.7
Operating (loss) income		(46.2	)		109.2			(1.1	)		61.9		(36.9	)		143.2			(0.2	)		106.1
Net interest expense (income) and financing costs		52.4			(0.9	)		-			51.5		60.6			(2.4	)		-			58.2
Equity in income of unconsolidated affiliate		-			1.3			-			1.3		-			2.0			-			2.0
(Loss) income before (benefit) provision for income taxes and equity in earnings of subsidiaries		(98.6	)		111.4			(1.1	)		11.7		(97.5	)		147.6			(0.2	)		49.9
(Benefit) provision for income taxes		(28.1	)		32.8			(0.4	)		4.3		(23.4	)		42.1			-			18.7
Equity in earnings of subsidiaries		78.3			-			(78.3	)		-		105.0			-			(105.0	)		-
Net income		7.8			78.6			(79.0	)		7.4		30.9			105.5			(105.2	)		31.2
Less: income attributable to noncontrolling interest		-			0.5			-			0.5		-			0.4			-			0.4
Income attributable to Jones	$	7.8		$	78.1		$	(79.0	)	$	6.9	$	30.9		$	105.1		$	(105.2	)	$	30.8

Condensed Consolidating Statements of Other Comprehensive Income

(In millions)

	Fiscal Quarter Ended June 30, 2012												Fiscal Quarter Ended July 2, 2011
	Issuers			Others			Elim- inations			Cons- olidated			Issuers			Others			Elim- inations			Cons- olidated
Net income	$	8.3		$	38.7		$	(38.6	)	$	8.4		$	5.2		$	51.9		$	(51.7	)	$	5.4
Other comprehensive income:
Change in fair value of cash flow hedges, net of tax		0.2			0.2			(0.2	)		0.2			(0.1	)		(0.1	)		0.1			(0.1	)
Reclassification adjustment for hedge gains and losses included in net income, net of tax		-			-			-			-			0.2			0.2			(0.2	)		0.2
Foreign currency translation adjustments		(8.2	)		(8.2	)		8.2			(8.2	)		(4.6	)		(4.6	)		4.6			(4.6	)
Total other comprehensive income		(8.0	)		(8.0	)		8.0			(8.0	)		(4.5	)		(4.5	)		4.5			(4.5	)
Comprehensive income	$	0.3		$	30.7		$	(30.6	)	$	0.4		$	0.7		$	47.4		$	(47.2	)	$	0.9

	Fiscal Six Months Ended June 30, 2012									Fiscal Six Months Ended July 2, 2011
	Issuers		Others		Elim- inations			Cons- olidated		Issuers			Others			Elim- inations			Cons- olidated
Net income	$	7.8	$	78.6	$	(79.0	)	$	7.4	$	30.9		$	105.5		$	(105.2	)	$	31.2
Other comprehensive income:
Change in fair value of cash flow hedges, net of tax		0.1		0.1		(0.1	)		0.1		(0.4	)		(0.4	)		0.4			(0.4	)
Reclassification adjustment for hedge gains and losses included in net income, net of tax		0.1		0.1		(0.1	)		0.1		0.3			0.3			(0.3	)		0.3
Foreign currency translation adjustments		1.1		1.1		(1.1	)		1.1		(1.4	)		(1.4	)		1.4			(1.4	)
Total other comprehensive income		1.3		1.3		(1.3	)		1.3		(1.5	)		(1.5	)		1.5			(1.5	)
Comprehensive income	$	9.1	$	79.9	$	(80.3	)	$	8.7	$	29.4		$	104.0		$	(103.7	)	$	29.7

Condensed Consolidating Statements of Cash Flows

(In millions)

	Fiscal Six Months Ended June 30, 2012												Fiscal Six Months Ended July 2, 2011
	Issuers			Others			Elim- inations			Cons- olidated			Issuers			Others			Elim- inations			Cons- olidated
Net cash provided by operating activities	$	58.7		$	71.2		$	(5.9	)	$	124.0		$	21.3		$	57.8		$	(13.5	)	$	65.6
Cash flows from investing activities:
Capital expenditures		(9.0	)		(29.2	)		-			(38.2	)		(24.5	)		(25.0	)		-			(49.5	)
Contingent consideration paid related to investment in GRI		-			(3.5	)		-			(3.5	)		-			-			-			-
Acquisition of KG Group Holdings Limited, net of cash acquired		-			-			-			-			(150.0	)		6.9			-			(143.1	)
Other		-			(0.1	)		-			(0.1	)		-			-			-			-
Net cash used in investing activities		(9.0	)		(32.8	)		-			(41.8	)		(174.5	)		(18.1	)		-			(192.6	)
Cash flows from financing activities:
Issuance of 6.875% Senior Notes due 2019		-			-			-			-			300.0			-			-			300.0
Debt issuance costs		-			-			-			-			(6.8	)		-			-			(6.8	)
Costs related to revolving credit agreement		(0.3	)		-			-			(0.3	)		(2.9	)		-			-			(2.9	)
Repayment of acquired debt of KG Group Holdings Limited		-			-			-			-			(174.1	)		-			-			(174.1	)
Dividends paid		(7.9	)		(5.9	)		5.9			(7.9	)		(8.5	)		(13.5	)		13.5			(8.5	)
Repurchase of common shares		(29.0	)		-			-			(29.0	)		(28.0	)		-			-			(28.0	)
Payments of acquisition consideration payable		-			(7.5	)		-			(7.5	)		-			(6.2	)		-			(6.2	)
Other items, net		2.3			(1.3	)		-			1.0			1.5			(1.2	)		-			0.3
Net cash (used in) provided by financing activities		(34.9	)		(14.7	)		5.9			(43.7	)		81.2			(20.9	)		13.5			73.8
Effect of exchange rates on cash		-			(0.2	)		-			(0.2	)		-			(1.2	)		-			(1.2	)
Net increase (decrease) in cash and cash equivalents		14.8			23.5			-			38.3			(72.0	)		17.6			-			(54.4	)
Cash and cash equivalents, beginning		195.8			43.0			-			238.8			163.0			37.8			-			200.8
Cash and cash equivalents, ending	$	210.6		$	66.5		$	-		$	277.1		$	91.0		$	55.4		$	-		$	146.4