The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
Jones Apparel Group Completes Sale of Barneys New York and Enters Into Accelerated Share Repurchase Agreement
NEW YORK, Sept. 7 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc.
(NYSE: JNY; the "Company" or "Jones") today announced that it has completed
the sale of its indirect wholly owned subsidiary Barneys New York, Inc.
("Barneys") and has entered into an accelerated share repurchase ("ASR")
agreement with Goldman, Sachs & Co. ("Goldman") to utilize a portion of the
proceeds from the sale.
Jones received an aggregate of approximately $945 million in cash at
closing from the sale of Barneys to an affiliate of Istithmar PJSC, a Dubai
based private equity and alternative investment house. The purchase price is
subject to certain post-closing adjustments. Jones expects to realize
estimated after-tax proceeds, net of transaction expenses, of approximately
$840 million from the sale. The proceeds of the sale will be used to fund the
ASR program, to repay short term borrowings and for other corporate purposes.
Under the ASR agreement, Jones will repurchase $400 million of its
outstanding common stock, with approximately 15.5 million shares to be
received by September 12, 2007 and the remaining shares to be received at the
end of an initial valuation period and upon final settlement of the ASR
program. Final settlement of the ASR program is scheduled for no later than
July 19, 2008, and may occur earlier at the option of Goldman or later under
certain circumstances. The initial shares repurchased by Jones are subject to
adjustment if Jones were to enter into or announce certain types of
Wesley R. Card, President and Chief Executive Officer, stated, "The
repurchase of our stock is a compelling investment opportunity and reflects
the Board's confidence in the future of Jones. We received substantial value
for our investment in Barneys, and we are pleased to return that value to our
shareholders through this ASR program. On behalf of Jones Apparel Group, its
Directors, employees and shareholders, I want to thank Howard Socol, his
management team and associates at Barneys for their hard work and dedication
as part of Jones. We wish them the best of luck in the future."
John T. McClain, Chief Financial Officer, added, "We believe that the ASR
program is an effective way to execute a meaningful repurchase in a single
transaction. This use of the net proceeds from the Barneys transaction will
enhance present shareholder value, while at the same time adding greater
strength to our balance sheet and providing the Company with the financial
flexibility to strategically invest in growing our brands for the future
benefit of our shareholders."
The final number of shares Jones is repurchasing under the terms of the
ASR agreement and the timing of the final settlement will depend on prevailing
market conditions and the volume weighted average price per share of Jones
common stock over the term of the ASR program, within a maximum and minimum
established during an initial valuation period and subject to adjustment if
Jones were to enter into or announce certain types of transactions. Goldman
is expected to purchase Jones common stock in the open market in connection
with the ASR program. As of September 5, 2007, before giving effect to the ASR
transaction, Jones had 103.9 million shares of its common stock outstanding.
Jones has repurchased nearly 5.1 million shares of its common stock for
approximately $95 million under the Company's current repurchase
authorization, and approximately $205 million remains available for stock
repurchases under this authorization, passed by the Board of Directors in
February 2007. The Board of Directors has authorized an additional $500
million of share repurchases, in order to facilitate the ASR program and other
possible future repurchases. The Company will have approximately $305 million
of stock repurchase authority after giving effect to the repurchases under the
ASR program, assuming no adjustments to the initial shares repurchased by
Jones become necessary. During the term of the ASR program and for
approximately two weeks after final settlement, Jones may only make
repurchases of its common stock with the consent of Goldman.
J.P. Morgan and Citibank, N.A. are acting as advisors to Jones in
connection with the ASR program.
About Jones Apparel Group, Inc.
Jones Apparel Group, Inc. (www.jny.com), a Fortune 500 company, is a
leading designer, marketer and wholesaler of branded apparel, footwear and
accessories. The Company also markets directly to consumers through its chain
of specialty retail and value-based stores. The Company's nationally
recognized brands include Jones New York, Nine West, Anne Klein, Gloria
Vanderbilt, Kasper, Bandolino, Easy Spirit, Evan-Picone, l.e.i., Energie,
Enzo Angiolini, Joan & David, Mootsies Tootsies, Sam & Libby, Napier, Judith
Jack, Albert Nipon and Le Suit. The Company also markets costume jewelry
under the Givenchy brand licensed from Givenchy Corporation and footwear under
the Dockers Women brand licensed from Levi Strauss & Co. Each brand is
differentiated by its own distinctive styling, pricing strategy, distribution
channel and target consumer. The Company contracts for the manufacture of its
products through a worldwide network of quality manufacturers. The Company
has capitalized on its nationally known brand names by entering into various
licenses for several of its trademarks, including Jones New York, Evan-Picone,
Anne Klein New York, Nine West, Gloria Vanderbilt and l.e.i., with select
manufacturers of women's and men's products which the Company does not
manufacture. For more than 30 years, the Company has built a reputation for
excellence in product quality and value, and in operational execution.
Forward Looking Statements
Certain statements contained herein are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
All statements regarding the Company's expected financial position, business
and financing plans are forward-looking statements. The words "believes,"
"expect," "plans," "intends," "anticipates" and similar expressions identify
forward-looking statements. Forward-looking statements also include
representations of the Company's expectations or beliefs concerning future
events that involve risks and uncertainties, including:
- the impact of changes in the market value of the Company's common stock
on the final number and price of shares repurchased under the
accelerated share repurchase agreement;
the Company's ability to effectively deploy the proceeds received by it
from the sale of Barneys, and the timing of the use of those proceeds;
those associated with the effect of national and regional economic
lowered levels of consumer spending resulting from a general economic
downturn or lower levels of consumer confidence;
the performance of the Company's products within the prevailing retail
customer acceptance of both new designs and newly-introduced product
the Company's reliance on a few department store groups for large
portions of the Company's business;
consolidation of the Company's retail customers;
financial difficulties encountered by customers;
the effects of vigorous competition in the markets in which the Company
the Company's ability to attract and retain qualified executives and
other key personnel;
the Company's reliance on independent foreign manufacturers;
changes in the costs of raw materials, labor, advertising and
the general inability to obtain higher wholesale prices for the
Company's products that the Company has experienced for many years;
the uncertainties of sourcing associated with the new environment in
which general quota has expired on apparel products (while China has
agreed to safeguard quota on certain classes of apparel products
through 2008, political pressure will likely continue for restraint on
importation of apparel);
the Company's ability to successfully implement new operational and
financial computer systems; and
the Company's ability to secure and protect trademarks and other
intellectual property rights.
A further description of these risks and uncertainties and other important
factors that could cause actual results to differ materially from the
Company's expectations can be found in the Company's Quarterly Report on Form
10-Q for the quarter ended July 7, 2007, including, but not limited to, the
Statement Regarding Forward-Looking Disclosure and Item 1A-Risk Factors
therein, and in the Company's other filings with the Securities and Exchange
Commission. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, such expectations may prove to
be incorrect. The Company does not undertake to publicly update or revise its
forward-looking statements as a result of new information, future events or
SOURCE Jones Apparel Group, Inc.
CONTACT: Joele Frank, or Sharon Stern, both of Joele Frank, Wilkinson
Brimmer Katcher, +1-212-355-4449, for Jones Apparel Group, Inc.
Web site: http://www.jny.com