ACQUISITIONS

Moda Nicola International, LLC

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 $35.7 million. Under the terms of the agreement, we made cash payments of $16.9 million to the selling members of Moda. 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. At the acquisition date, we recorded an acquisition consideration liability for $18.8 million, based on probability-weighted projected revenues and gross margins of the acquired business and a discount factor based on an estimated weighted average cost of capital. Adjustments to this liability are recorded as an SG&A expense in our domestic wholesale sportswear segment. At December 31, 2012, the fair value of the liability was $7.4 million, with $3.9 million and $8.1 million recorded as reductions to SG&A expenses during 2012 and 2011, respectively, and $4.1 million recorded as an increase to SG&A expenses in 2010. We recorded $3.5 million of payments during 2012 to the selling members of Moda. Projected payments amount to $2.5 million in 2013, $2.9 million in 2014, and $3.2 million in 2015.

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 is reported as part of our domestic wholesale sportswear segment.

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

(In millions)	Weighted-average amortization life (in months)		Fair Value
Current assets			$	3.2
Property, plant and equipment				0.2
Intangible assets:
Goodwill				6.6
Customer relationships		120		7.9
Trademarks		240		17.0
Covenants not to compete		59		0.2
Order backlog		3		1.7
Total assets acquired				36.8
Current liabilities				(1.1	)
Total purchase price			$	35.7

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

The fair values of the acquired intangibles were determined using discounted cash flow models using a discount factor based on an estimated risk-adjusted weighted average cost of capital. The customer relationships and covenants not to compete were valued using a "with and without" model, the trademarks using a relief-from-royalty model, and the order backlog using a multi-period excess earnings model.

The acquisition resulted in the recognition of $6.6 million of goodwill, which will 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 for 2010 subsequent to the acquisition.

(In millions)
Total revenues	$	17.0
Loss before provision for income taxes		(6.9	)

Stuart Weitzman Holdings, LLC

On June 2, 2010, we acquired 55% of the membership interests in Stuart Weitzman Holdings, LLC ("SWH"), a privately-held designer and manufacturer of women's salon footwear and accessories under the Stuart Weitzman label. SWH markets its products in fine specialty and department stores worldwide and in its own chain of retail stores in the U.S. and abroad.

Under the terms of the agreement, the acquisition occurred in two stages. We made an initial cash payment of $180.3 million for a 55% interest in SWH and a payment for the acquisition of the remaining 45% interest on December 31, 2012 (subject to a final true-up adjustment in early 2013 based upon the financial results of SWH for 2012). We recorded all SWH's identifiable assets, SWH's liabilities assumed and the noncontrolling interest at fair value under the acquisition method. Due to our obligation to purchase the remaining 45% interest, the noncontrolling interest was classified as a liability, with adjustments to the liability recorded as interest expense. We recorded a liability of $181.8 million for the initial value of the projected payments for the remaining 45% interest, based on probability-weighted projected earnings before interest, taxes, depreciation and amortization (as defined in the agreement) of the acquired business and cash distributions that are required by the agreement to be disbursed for the years 2010 through 2012, using a discount factor based on an estimated weighted average cost of capital. At December 31, 2012, the fair value of the remaining liability was $28.9 million, with $88.3 million, $20.0 million and $14.9 million recorded as interest expense during 2012, 2011 and 2010, respectively, with $255.0 million, $15.4 million and $5.7 million of payments recorded during 2012, 2011 and 2010, respectively. The remaining liability will be paid in 2013, except for $1.0 million which will be paid at a future date when certain conditions are met.

We pursued the acquisition of SWH to increase our presence in the contemporary footwear market and to further develop a business portfolio with significant growth opportunities. SWH's wholesale footwear business is reported in our domestic wholesale footwear and accessories and international wholesale segments, its retail business is reported in our domestic retail and international retail segments, and its licensing business is reported in our licensing, eliminations and other segment.

The following table summarizes the fair values of the assets acquired and liabilities assumed from SWH on June 2, 2010.

(In millions)	Weighted-average amortization life (in months)		Fair Value
Cash			$	21.0
Accounts receivable				20.1
Inventories				18.9
Other current assets				1.5
Property, plant and equipment				19.4
Intangible assets:
Trademarks				154.1
Goodwill				115.1
Customer relationships		120		20.2
Covenant not to compete		55		3.5
Order backlog		9		10.5
Favorable lease agreements		139		6.1
Licensing agreements		55		3.6
Other noncurrent assets				0.7
Total assets acquired				394.7
Cash distributions payable				19.0
Current liabilities				10.6
Unfavorable lease agreements		73		2.7
Other long-term liabilities				0.3
Total liabilities assumed				32.6
Total purchase price			$	362.1

The gross contractual accounts receivable acquired from SWH was $24.4 million.

The fair values of the acquired intangibles were determined using discounted cash flow models using a discount factor based on an estimated risk-adjusted weighted average cost of capital. The customer relationships were valued using an opportunity cost model, the covenant not to compete using a "with and without" model, the trademarks using a relief-from-royalty model, the order backlog using a multi-period excess earnings model and the license agreements and lease agreements using incremental cash flow income approach models.

The acquisition resulted in the recognition of $115.1 million of goodwill, which will be deductible for tax purposes. Goodwill largely consists of expected synergies resulting from the acquisition, such as 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 apparel.

The following table provides total revenues and results of operations from the acquired SWH business included in our results for 2010 subsequent to the acquisition.

(In millions)
Total revenues	$	129.2
Loss before provision for income taxes		(7.5	)

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, 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 £6.2 million ($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 on or before April 16, 2016 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'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 fair values of the acquired intangibles were determined using discounted cash flow models using a discount factor based on an estimated risk-adjusted weighted average cost of capital. The customer relationships and order backlog were valued using multi-period excess earnings models, the trademarks using a relief-from-royalty model and the lease agreements using an incremental cash flow income approach model.

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 total revenues and results of operations from the acquired Kurt Geiger business included in our results for 2011 subsequent to the acquisition.

(In millions)
Total revenues	$	214.4
Loss before provision for income taxes		(5.4	)

Brian Atwood

On July 2, 2012, we acquired an 80% interest in Brian Atwood-related intellectual property (the "intellectual property") from BA Holding Group, Inc., BKA International, Inc. and Brian Atwood, we acquired 100% of the equity interests in Atwood Italia S.r.l., and we acquired certain assets and assumed certain liabilities of Brian Atwood, Ltd. (collectively, "Brian Atwood"). The purchase price was $5.5 million, of which $5.0 million was paid in 2012. We deferred $0.5 million of the purchase price, with payment subject to an indemnification holding period as set forth in the acquisition agreement.

The remaining 20% interest in the intellectual property was recorded as a noncontrolling interest, with the fair value based on projected cash flows related to that property. Brian Atwood has the right, under certain conditions, to require us to repurchase a portion of his noncontrolling ownership interest at a predetermined multiple of the previous year's distributable cash flows generated by the intellectual property.

We pursued the acquisition of Brian Atwood to increase our international presence and further extend our reach into the designer footwear business. Brian Atwood's luxury wholesale footwear business is reported in our international wholesale segment.

The following table summarizes the fair values of the assets acquired and liabilities assumed from Brian Atwood on July 2, 2012.

(In millions)	Weighted-average amortization life (in months)		Fair Value
Cash			$	0.6
Accounts receivable				0.5
Other current assets				0.4
Property, plant and equipment				0.1
Intangible assets:
Trademarks		240		7.5
Goodwill				3.2
Customer relationships		6		0.4
Order backlog		3		0.7
Total assets acquired				13.4
Accounts payable				1.7
Notes payable				2.8
Other current liabilities				1.8
Deferred taxes				0.3
Other long-term liabilities				0.1
Total liabilities assumed				6.7
Fair value of noncontrolling interest				1.2
Total purchase price			$	5.5

The gross contractual accounts receivable acquired from Brian Atwood was $0.5 million, all of which we expect to collect.

The fair values of the acquired intangibles were determined using discounted cash flow models using a discount factor based on an estimated risk-adjusted weighted average cost of capital. The customer relationships were valued using a "with and without" model, the trademarks using a relief-from-royalty model and the order backlog using multi-period excess earnings model.

The acquisition resulted in the recognition of $3.2 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 customer 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 both product extensions, such as apparel, and the introduction of Brian Atwood retail locations. The goodwill has been assigned to our domestic wholesale footwear and accessories segment, as we pursued the acquisition to acquire majority ownership interest in the Brian Atwood-related trademarks, under which our existing B Brian Atwood domestic footwear business is licensed.

The following table provides total revenues and results of operations from the acquired Brian Atwood business included in our results for 2012 subsequent to the acquisition.

(In millions)
Total revenues	$	4.3
Loss before provision for income taxes		(5.6	)

Pro Forma Information

The following table provides pro forma total revenues and results of operations for 2011 as if Kurt Geiger had been acquired on January 1, 2010. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as amortization expense on intangible assets acquired 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 acquisition been completed on January 1, 2010, nor are they indicative of the future operating results of the combined companies.

Pro forma total revenues and results of operations reflecting the acquisition of Brian Atwood are not presented, as the acquisition is not material to our financial position or our results of operations.

(In millions, except per share amounts)
	2011
Total revenues	$	3,915.5
Net income		50.0
Earnings per share attributable to Jones
Basic	$	0.60
Diluted		0.59

The pro forma earnings for 2011 were adjusted to exclude $4.9 million of acquisition-related expenses incurred related to the acquisition of Kurt Geiger and $2.7 million of nonrecurring expense related to the fair value of Kurt Geiger acquisition-date order backlogs.

Acquisition Expenses

During 2010, pretax charges totaling $0.6 million and $5.4 million were recorded for legal expenses and other transactions related to the Moda and SWH acquisitions, respectively. During 2011, pretax charges totaling $4.9 million were recorded for legal expenses and other transactions related to the Kurt Geiger acquisition. During 2012, pretax charges totaling $0.7 million were recorded for legal expenses and other transactions related to the Brian Atwood acquisition. These charges, which were expensed in accordance with the accounting guidance for business combinations, were recorded as SG&A costs in our licensing, other and eliminations segment.