The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
13-Feb-2008
Jones Apparel Group, Inc. Reports 2007 Fourth Quarter and Full Year Financial Results NEW YORK, Feb. 13 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc.
(NYSE: JNY) today reported results for the fourth quarter and year ended
December 31, 2007. Revenues for the fourth quarter of 2007 totaled
$839 million versus revenues of $1,007 million for the fourth quarter of 2006.
Revenues for the full year 2007 were $3,849 million versus $4,087 million for
the full year 2006. The year over year changes reflect the planned exit of the
moderate sportswear lines, which was substantially complete by
December 31, 2007.
The Company reported a loss per share of ($1.06) for the fourth quarter of
2007, as compared with a loss per share of ($2.51) in the same period last
year. Earnings per share for the full year 2007 were $3.07, as compared with a
loss per share of ($1.30) in the prior year. 2007 results included the gain on
the sale of Barneys New York and the costs associated with our strategic
restructuring plans.
Excluding the effects of Barneys New York and its related results, the
impairments of goodwill and trademarks in our moderate sportswear businesses,
the impact of severance and other expenses related to our strategic
restructuring activities and certain other charges, adjusted earnings per
share from continuing operations for the fourth quarter of 2007 were in line
with the Company's expectations at $0.09, as compared with $0.32 for the same
period last year. Adjusted earnings per share from continuing operations for
the full year 2007 were also in line with the Company's expectations at $1.26,
as compared with $1.94 for the full year 2006 (as detailed in the accompanying
schedule).
Wesley R. Card, Jones Apparel Group President and Chief Executive Officer,
stated, "While we accomplished a great deal during the second half of the year
that will help position us for future success, the fourth quarter proved to be
particularly challenging across our operating segments, largely due to the
disappointing holiday retail season and the overall macroeconomic environment.
Our wholesale businesses were negatively impacted by higher than planned
markdowns to support our retail partners, and our retail operations continued
to trend negatively during the quarter consistent with the overall climate.
Comparable store sales in our own stores were down 4.8% for the fourth
quarter. Despite these challenges, we were gratified to meet expectations for
the quarter and full year."
Cash provided by continuing operating activities during 2007 was
$121 million, compared with $386 million in the prior year. Similar to the
effect on earnings results, the decrease in cash from continuing operations
resulted from lower earnings due both to the exiting of the moderate
sportswear lines and the difficult retail environment, costs related to our
strategic initiatives, the timing of shipments and payments for inventory, and
the absence of the positive impact from the exit of Polo Jeans Company.
John T. McClain, Jones Apparel Group Chief Financial Officer, commented,
"Our financial position remains strong. We ended the year with $303 million of
cash and $783 million of total debt, which is $107 million less debt than at
year-end 2006. This translates into a debt to total capitalization ratio, net
of cash, of 19.4%. We will continue to review our cost structure for
additional improvements as we move into 2008."
Mr. McClain continued, "Our guidance for 2008 full year adjusted earnings
per share from continuing operations is a range of $1.25 to $1.50, compared
with 2007 adjusted earnings per share from continuing operations of $1.26. The
fairly large range in guidance for 2008 reflects the current uncertainty in
general economic conditions."
Mr. Card concluded, "As we enter 2008, we expect to begin to realize the
benefits of many of the turnaround and recovery initiatives that have been
implemented throughout the Company, including enhancing our product offerings,
streamlining of our supply chain and distribution networks, as well as
jettisoning several of our marginally profitable businesses. We have the
people, products and operational excellence to reestablish Jones Apparel Group
as best in class among our peers. Taking into account the challenges of the
overall macroeconomic environment, however, we remain cautious on our outlook
for 2008."
The Company's Board of Directors has declared a regular quarterly cash
dividend of $0.14 per share to all common stockholders of record as of
February 29, 2008 for payment on March 14, 2008.
The Company will host a conference call with management to discuss these
results at 8:30 a.m. eastern time today, which is accessible by dialing
412-858-4600 or through a web cast at www.jny.com. The call will be recorded
and made available through February 21 and may be accessed by dialing
877-344-7529. Enter account number 415270. A slide presentation will accompany
the prepared remarks and has been posted on the investor relations section on
the Company's website.
Presentation of Information in the Press Release
In an effort to provide investors with additional information regarding
the Company's consolidated operating results as determined by generally
accepted accounting principles (GAAP), the Company has also disclosed in this
press release non-GAAP financial information regarding the effect on earnings
per share from continuing operations of the sale of our Barneys retail
operations, goodwill and trademark impairments, impairments recorded as a
result from the shutdown of certain of our moderate sportswear brands, the
gain recorded in the sale of our interest in an Australian joint venture, the
gain on the sale of stock in an unrelated company, severance and other
expenses related to the strategic operating initiatives, expenses related to
the settlement of litigation concerning certain licensing agreements, the loss
on the sale of the Polo Jeans Company business, the cumulative effect of the
change in accounting principle, restructuring costs and certain other items.
The Company believes that providing this further information will allow
investors to better analyze its ongoing results. The Company has also provided
a reconciliation of its GAAP results to adjusted results. The Company has not
provided a reconciliation with respect to 2008 targeted earnings per share
growth given that it is an estimate derived from projected results.
About Jones Apparel Group, Inc.
Jones Apparel Group, Inc. (www.jny.com) 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
conditions;
- 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
environment;
- customer acceptance of both new designs and newly-introduced product
lines;
- 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
operates;
- 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
transportation;
- 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 an 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 October 6, 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
otherwise.
JONES APPAREL GROUP, INC.
CONSOLIDATED OPERATING RESULTS
All amounts in millions except
per share data
FOURTH QUARTER (Unaudited)
2007 2006
Net sales $822.4 98.1% $983.2 97.6%
Licensing income 15.2 1.8% 15.6 1.5%
Service and other revenue 0.9 0.1% 8.2 0.8%
Total revenues 838.5 100.0% 1,007.0 100.0%
Cost of goods sold 580.9 69.3% 691.7 68.7%
Gross profit 257.6 30.7% 315.3 31.3%
SG&A expenses 269.2 32.1% 280.7 27.9%
Trademark impairments 7.5 0.9% 50.2 5.0%
Goodwill impairments 78.0 9.3% 441.2 43.8%
Loss on sale of Polo Jeans Company
business - - - -
Loss from operations (97.1) (11.6%) (456.8) (45.4%)
Net interest expense and financing
costs (7.7) (0.9%) (12.9) (1.3%)
Gain on sale of interest in
Australian joint venture 8.2 1.0% - -
Gain on sale of stock in Rubicon
Retail Limited - - 17.4 1.7%
Equity in earnings of unconsolidated
affiliates 5.0 0.6% 1.6 0.2%
Loss from continuing operations
before taxes (91.6) (10.9%) (450.7) (44.8%)
Benefit for income taxes (5.8) (0.7%) (166.3) (16.5%)
(Loss) income from continuing
operations (85.8) (10.2%) (284.4) (28.2%)
(Loss) income from discontinued
operations, net of tax (4.0) (0.5%) 14.9 1.5%
Cumulative effect of change in
accounting for share-based payments,
net of tax - - - -
Net (loss) income $(89.8) (10.7%) $(269.5) (26.8%)
Shares outstanding - diluted 84.8 107.4
(Loss) earnings per share - diluted
(Loss) income from continuing
operations $(1.01) $(2.65)
(Loss) income from discontinued
operations $(0.05) $0.14
Cumulative effect of change in
accounting principle $- $-
Net (loss) income $(1.06) $(2.51)
JONES APPAREL GROUP, INC.
CONSOLIDATED OPERATING RESULTS
All amounts in millions except
per share data
FULL YEAR
2007 2006
Net sales $3,793.3 98.6% $4,014.8 98.2%
Licensing income 52.0 1.4% 51.1 1.3%
Service and other revenue 3.2 0.1% 21.1 0.5%
Total revenues 3,848.5 100.0% 4,087.0 100.0%
Cost of goods sold 2,609.1 67.8% 2,674.2 65.4%
Gross profit 1,239.4 32.2% 1,412.8 34.6%
SG&A expenses 1,100.4 28.6% 1,096.3 26.8%
Trademark impairments 88.0 2.3% 50.2 1.2%
Goodwill impairments 78.0 2.0% 441.2 10.8%
Loss on sale of Polo Jeans Company
business - - 45.1 1.1%
Loss from operations (27.0) (0.7%) (220.0) (5.4%)
Net interest expense and financing
costs (47.8) (1.2%) (47.0) (1.1%)
Gain on sale of interest in Australian
joint venture 8.2 0.2% - -
Gain on sale of stock in Rubicon
Retail Limited - - 17.4 0.4%
Equity in earnings of unconsolidated
affiliates 8.1 0.2% 4.5 0.1%
Loss from continuing operations before
taxes (58.5) (1.5%) (245.1) (6.0%)
Benefit for income taxes (104.4) (2.7%) (70.1) (1.7%)
(Loss) income from continuing
operations 45.9 1.2% (175.0) (4.3%)
(Loss) income from discontinued
operations, net of tax 265.2 6.9% 29.0 0.7%
Cumulative effect of change in
accounting for share-based payments,
net of tax - - 1.9 0.0%
Net (loss) income $311.1 8.1% $(144.1) (3.5%)
Shares outstanding - diluted 101.3 110.6
(Loss) earnings per share - diluted
(Loss) income from continuing
operations $0.45 $(1.58)
(Loss) income from discontinued
operations $2.62 $0.26
Cumulative effect of change in
accounting principle $- $0.02
Net (loss) income $3.07 $(1.30)
Percentages may not add due to rounding.
JONES APPAREL GROUP, INC.
CONSOLIDATED OPERATING RESULTS
As required by the Securities and Exchange Commission Regulation G, the
following table contains information regarding the non-GAAP adjustments
used by the Company in the presentation of its financial results:
All amounts in millions
except per share data FOURTH QUARTER (Unaudited) FULL YEAR
2007 2006 2007 2006
(Loss) income from
continuing operations (as
reported) $(85.8) $(284.4) $45.9 $(175.0)
Benefit for income taxes (5.8) (166.3) (104.4) (70.1)
Loss on sale of Polo Jeans
Company business (a) - - - 45.1
Items affecting segment
income:
Gain on sale of stock in
Rubicon Retail Limited (b) - (17.4) - (17.4)
Gain on sale of interest
in Australian joint
venture (c) (8.2) - (8.2) -
Goodwill impairments (d) 78.0 441.2 78.0 441.2
Trademark impairments
(d)(e) 7.5 50.2 88.0 50.2
Denim/manufacturing
restructuring (f) - 15.4 - 16.4
Severance and other
expenses related to
strategic review of
operations, and certain
other items (g) 23.3 20.3 93.7 60.7
Adjusted income from
continuing operations
before taxes 9.0 59.0 193.0 351.1
Adjusted provision for
income taxes 1.2 24.2 64.9 132.3
Adjusted income from
continuing operations $7.8 $34.8 $128.1 $218.8
(Loss) earnings per share
from continuing operations
- diluted (as reported) $(1.01) $(2.65) $0.45 $(1.58)
Benefit for income taxes (0.07) (1.55) (1.03) (0.63)
Loss on sale of Polo Jeans
Company business (a) - - - 0.41
Items affecting segment
income:
Gain on sale of stock in
Rubicon Retail Limited (b) - (0.16) - (0.16)
Gain on sale of interest
in Australian joint
venture (c) (0.10) - (0.08) -
Goodwill impairments (d) 0.92 4.11 0.77 3.99
Trademark
impairments (d)(e) 0.09 0.47 0.87 0.45
Denim/manufacturing
restructuring (f) - 0.14 - 0.15
Severance and other
expenses related to
strategic review of
operations, and certain
other items (g) 0.27 0.19 0.92 0.55
Adjusted income from
continuing operations
before taxes 0.10 0.55 1.90 3.18
Adjusted provision for
income taxes 0.01 0.22 0.64 1.20
Adjustment for using diluted
share count (h) - (0.01) - (0.04)
Adjusted earnings per share
from continuing
operations - diluted $0.09 $0.32 $1.26 $1.94
Breakdown of items affecting
segment revenue by segment:
Wholesale better apparel $- $- $- $-
Wholesale moderate apparel 9.3 - 32.7 -
Wholesale footwear and
accessories - - - 0.4
Retail - (1.9) - (1.9)
Licensing, other &
eliminations - - - -
Total $9.3 $(1.9) $32.7 $(1.5)
Breakdown of items affecting
segment income by segment:
Wholesale better apparel $4.3 $6.7 $13.8 $23.6
Wholesale moderate apparel 16.7 24.0 54.7 25.8
Wholesale footwear and
accessories 0.4 3.7 1.8 18.6
Retail 1.2 1.2 3.6 5.9
Licensing, other &
eliminations 8.2 50.3 107.8 53.4
Total $30.8 $85.9 $181.7 $127.3
Adjusted segment margins
Wholesale better apparel 0.2% 5.2% 11.1% 13.1%
Wholesale moderate apparel (2.7%) 4.4% 4.9% 8.5%
Wholesale footwear and
accessories 7.1% 9.5% 10.8% 11.6%
Retail (1.5%) 7.9% (5.3%) 5.2%
Total 1.4% 7.0% 6.0% 9.6%
(a) Represents the net loss recorded in relation to the settlement of
the litigation with Polo Ralph Lauren Corporation and sale of our
Polo Jeans Company operations to Polo Ralph Lauren Corporation in
February 2006.
(b) Represents the gain recorded in relation to the exercise of third-
party stock warrants and the subsequent sale of the related stock in
Rubicon Retail Limited in October 2006.
(c) Represents the gain recorded in relation to the sale of our interest
of the Nine West Australia joint venture in December 2007.
(d) Represents the impairments recorded as a result of the annual
valuation of the fair value of our indefinite-lived intangible
assets and goodwill in accordance with GAAP.
(e) Also includes the impairments recorded in accordance with GAAP
resulting from the shutdown of certain of our moderate sportswear
brands in the second quarter of 2007.
(f) Charges incurred in relation to the closure of our El Paso and
Mexican denim production facilities (inclusive of $8.6 million of
losses on the impairment of fixed assets) as announced in September
2006.
(g) Represents certain items and charges incurred in relation to the
overall strategic review of operations, inclusive of the charges
related to the closure of our Stein Mart leased shoe departments as
announced in May 2006 and the shutdown of certain moderate
sportswear brands announced in May 2007.
(h) In accordance with SFAS No. 128, the calculation of diluted shares
for the purpose of generating GAAP EPS does not include any
antidilutive items (options and restricted stock) that would result
in a lower loss per share. Since the non-GAAP adjustments would
result in projected adjusted net income, these items would become
dilutive to EPS. This adjustment represents the impact of including
these dilutive items in the calculation of diluted shares for
generating the projected adjusted EPS.
JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
All amounts in millions
Wholesale Wholesale Wholesale
Better Moderate Footwear &
Apparel Apparel Accessories
For the fiscal quarter ended
December 31, 2007 (Unaudited)
Revenues from external customers $210.6 $177.6 $222.8
Intersegment revenues 30.7 1.5 19.8
Total revenues 241.3 179.1 242.6
Segment (loss) income $(3.9) $(21.8) $16.8
Segment margin (1.6%) (12.2%) 6.9%
Net interest expense
Goodwill impairment
Gain on sale of interest in
Australian joint venture
Equity in earnings of unconsolidated
affiliates
Loss from continuing operations before
benefit for income taxes
Segment revenues $241.3 $179.1 $242.6
Adjustments affecting segment
revenues - 9.3 -
Adjusted segment revenues $241.3 $188.4 $242.6
Segment (loss) income $(3.9) $(21.8) $16.8
Adjustments affecting segment income 4.3 16.7 0.4
Adjusted segment income (loss) $0.4 $(5.1) $17.2
Adjusted segment margin 0.2% (2.7%) 7.1%
For the fiscal quarter ended
December 31, 2006 (Unaudited)
Revenues from external customers $239.7 $254.6 $250.0
Intersegment revenues 32.7 0.8 15.4
Total revenues 272.4 255.4 265.4
Segment income (loss) $7.6 $(12.7) $21.5
Segment margin 2.8% (5.0%) 8.1%
Net interest expense
Goodwill impairment
Gain on sale of stock in Rubicon
Retail Limited
Equity in earnings of
unconsolidated affiliates
Loss from continuing operations
before benefit for income taxes
Segment revenues $272.4 $255.4 $265.4
Adjustments affecting segment
revenues - - -
Adjusted segment revenues $272.4 $255.4 $265.4
Segment income (loss) $7.6 $(12.7) $21.5
Adjustments affecting segment
income 6.7 24.0 3.7
Adjusted segment income $14.3 $11.3 $25.2
Adjusted segment margin 5.2% 4.4% 9.5%
JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
All amounts in millions
Licensing,
Other &
Retail Eliminations Consolidated
For the fiscal quarter ended
December 31, 2007 (Unaudited)
Revenues from external customers $211.8 $15.7 $838.5
Intersegment revenues - (52.0) -
Total revenues 211.8 (36.3) 838.5
Segment (loss) income $(4.3) $(5.9) (19.1)
Segment margin (2.0%) (2.3%)
Net interest expense (7.7)
Goodwill impairment (78.0)
Gain on sale of interest in
Australian joint venture 8.2
Equity in earnings of
unconsolidated affiliates 5.0
Loss from continuing operations
before benefit for income taxes $(91.6)
Segment revenues $211.8 $(36.3) $838.5
Adjustments affecting segment
revenues - - 9.3
Adjusted segment revenues $211.8 $(36.3) $847.8
Segment (loss) income $(4.3) $(5.9) $(19.1)
Adjustments affecting segment
income 1.2 8.2 30.8
Adjusted segment income (loss) $(3.1) $2.3 $11.7
Adjusted segment margin (1.5%) 1.4%
For the fiscal quarter ended
December 31, 2006 (Unaudited)
Revenues from external customers $246.4 $16.3 $1,007.0
Intersegment revenues - (48.9) -
Total revenues 246.4 (32.6) 1,007.0
Segment income (loss) $18.1 $(50.1) (15.6)
Segment margin 7.3% (1.5%)
Net interest expense (12.9)
Goodwill impairment (441.2)
Gain on sale of stock in Rubicon
Retail Limited 17.4
Equity in earnings of
unconsolidated affiliates 1.6
Loss from continuing operations
before benefit for income taxes $(450.7)
Segment revenues $246.4 $(32.6) $1,007.0
Adjustments affecting segment
revenues (1.9) - (1.9)
Adjusted segment revenues $244.5 $(32.6) $1,005.1
Segment income (loss) $18.1 $(50.1) $(15.6)
Adjustments affecting segment
income 1.2 50.3 85.9
Adjusted segment income $19.3 $0.2 $70.3
Adjusted segment margin 7.9% 7.0%
JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
All amounts in millions
Wholesale Wholesale Wholesale
Better Moderate Footwear &
Apparel Apparel Accessories
For the year ended December 31, 2007
Revenues from external customers $1,101.0 $985.0 $955.8
Intersegment revenues 155.8 10.7 72.6
Total revenues 1,256.8 995.7 1,028.4
Segment income (loss) $126.0 $(4.2) $109.2
Segment margin 10.0% (0.4%) 10.6%
Net interest expense
Goodwill impairment
Gain on sale of interest in
Australian joint venture
Equity in earnings of
unconsolidated affiliates
Loss from continuing operations
before benefit for income taxes
Segment revenues $1,256.8 $995.7 $1,028.4
Adjustments affecting segment
revenues - 32.7 -
Adjusted segment revenues $1,256.8 $1,028.4 $1,028.4
Segment income (loss) $126.0 $(4.2) $109.2
Adjustments affecting segment
income 13.8 54.7 1.8
Adjusted segment income (loss) $139.8 $50.5 $111.0
Adjusted segment margin 11.1% 4.9% 10.8%
For the year ended December 31, 2006
Revenues from external customers $1,127.4 $1,142.0 $941.1
Intersegment revenues 145.4 3.8 53.9
Total revenues 1,272.8 1,145.8 995.0
Segment income $143.1 $71.8 $96.8
Segment margin 11.2% 6.3% 9.7%
Loss on sale of Polo Jeans
Company business
Net interest expense
Goodwill impairment
Gain on sale of stock in Rubicon
Retail Limited
Equity in earnings of
unconsolidated affiliates
Loss from continuing operations
before benefit for income taxes
Segment revenues $1,272.8 $1,145.8 $995.0
Adjustments affecting segment
revenues - - 0.4
Adjusted segment revenues $1,272.8 $1,145.8 $995.4
Segment income $143.1 $71.8 $96.8
Adjustments affecting segment
income 23.6 25.8 18.6
Adjusted segment income $166.7 $97.6 $115.4
Adjusted segment margin 13.1% 8.5% 11.6%
JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
All amounts in millions
Licensing,
Other &
Retail Eliminations Consolidated
For the year ended December 31, 2007
Revenues from external customers $753.7 $53.0 $3,848.5
Intersegment revenues - (239.1) -
Total revenues 753.7 (186.1) 3,848.5
Segment income (loss) $(43.2) $(136.8) 51.0
Segment margin (5.7%) 1.3%
Net interest expense (47.8)
Goodwill impairment (78.0)
Gain on sale of interest in
Australian joint venture 8.2
Equity in earnings of
unconsolidated affiliates 8.1
Loss from continuing operations
before benefit for income taxes $(58.5)
Segment revenues $753.7 $(186.1) $3,848.5
Adjustments affecting segment
revenues - - 32.7
Adjusted segment revenues $753.7 $(186.1) $3,881.2
Segment income (loss) $(43.2) $(136.8) $51.0
Adjustments affecting segment
income 3.6 107.8 181.7
Adjusted segment income (loss) $(39.6) $(29.0) $232.7
Adjusted segment margin (5.3%) 6.0%
For the year ended December 31, 2006
Revenues from external customers $822.7 $53.8 $4,087.0
Intersegment revenues - (203.1) -
Total revenues 822.7 (149.3) 4,087.0
Segment income $37.1 $(82.5) 266.3
Segment margin 4.5% 6.5%
Loss on sale of Polo Jeans
Company business (45.1)
Net interest expense (47.0)
Goodwill impairment (441.2)
Gain on sale of stock in Rubicon
Retail Limited 17.4
Equity in earnings of
unconsolidated affiliates 4.5
Loss from continuing operations
before benefit for income taxes $(245.1)
Segment revenues $822.7 $(149.3) $4,087.0
Adjustments affecting segment
revenues (1.9) - (1.5)
Adjusted segment revenues $820.8 $(149.3) $4,085.5
Segment income $37.1 $(82.5) $266.3
Adjustments affecting segment
income 5.9 53.4 127.3
Adjusted segment income $43.0 $(29.1) $393.6
Adjusted segment margin 5.2% 9.6%
JONES APPAREL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
All amounts in millions
December 31, 2007 December 31, 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $302.8 $64.3
Accounts receivable, net of
allowances of $28.5 and $30.6 for
doubtful accounts, discounts,
returns and co-op advertising 337.0 357.8
Inventories 523.9 530.8
Assets held for sale - 620.8
Prepaid income taxes 30.6 14.1
Deferred taxes 33.9 53.7
Other current assets 65.9 67.5
TOTAL CURRENT ASSETS 1,294.1 1,709.0
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 312.1 279.5
Goodwill 973.9 1,051.9
Other intangibles, less accumulated
amortization 618.0 708.3
Other assets 38.5 52.4
$3,236.6 $3,801.1
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $- $100.0
Current portion of capital lease
obligations 4.8 4.1
Accounts payable 223.6 277.9
Liabilities related to assets held
for sale - 180.7
Income taxes payable 20.4 25.4
Accrued expenses and other current
liabilities 146.8 136.7
TOTAL CURRENT LIABILITIES 395.6 724.8
NONCURRENT LIABILITIES:
Long-term debt and obligation
under capital leases 777.7 785.1
Deferred taxes - 7.8
Other 66.5 71.8
TOTAL NONCURRENT LIABILITIES 844.2 864.7
TOTAL LIABILITIES 1,239.8 1,589.5
STOCKHOLDERS' EQUITY 1,996.8 2,211.6
$3,236.6 $3,801.1
JONES APPAREL GROUP, INC.
STATEMENTS OF CASH FLOWS
All amounts in millions Year Ended
December 31, 2007 December 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $311.1 ($144.1)
Less Income from discontinued
operations (265.2) (29.0)
Cumulative effect of change in
accounting principle - (1.9)
Income (loss) from continuing operations 45.9 (175.0)
Adjustments to reconcile income (loss)
from continuing operations to net cash
provided by operating activities,
net of acquisitions and divestitures:
Loss on sale of Polo Jeans
Company business - 45.1
Gain on sale of stock in Rubicon
Retail Limited - (17.4)
Impairment losses on property, plant
and equipment 2.1 8.6
Trademark impairments 88.0 50.2
Goodwill impairments 78.0 441.2
Amortization expense in connection with
employee stock options and
restricted stock 14.0 12.8
Depreciation and other amortization 76.5 73.6
Gain on sale of interest in Australian
joint venture (8.2) -
Equity in earnings of unconsolidated
affiliates (8.1) (4.5)
Dividends received from unconsolidated
affiliates 2.6 -
Provision for losses on accounts
receivable 0.2 (0.8)
Deferred taxes 8.7 (142.5)
Other items, net 2.2 1.2
Changes in operating assets and
liabilities:
Accounts receivable 22.5 56.8
Inventories 9.6 9.0
Prepaid expenses and other current
assets 1.2 (3.8)
Other assets 1.7 2.3
Accounts payable (55.5) 55.5
Income taxes payable/prepaid
income taxes (170.7) (41.0)
Accrued expenses and other
current liabilities 4.9 9.6
Other liabilities 4.9 5.5
Total adjustments 74.6 561.4
Net cash provided by operating activities
of continuing operations 120.5 386.4
Net cash provided by operating activities
of discontinued operations 39.0 37.5
Net cash provided by operating activities 159.5 423.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of Barneys, net
of cash sold and selling costs 845.5 -
Net proceeds from sale of Polo
Jeans Company business - 350.6
Capital expenditures (111.2) (109.3)
Proceeds from sale of interest in
Australian joint venture 20.7 -
Proceeds from sale of stock in
Rubicon Retail Limited - 17.4
Other 3.0 0.1
Net cash provided by investing activities
of continuing operations 758.0 258.8
Net cash used in investing activities
of discontinued operations (40.5) (61.2)
Net cash provided by investing
activities 717.5 197.6
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments under credit facilities (100.0) (29.5)
Redemption at maturity of 7.875%
Senior Notes - (225.0)
Purchases of treasury stock (496.9) (306.2)
Proceeds from exercise of employee
stock options 11.1 32.4
Dividends paid (57.2) (55.7)
Net cash advances to discontinued
operations (21.7) (24.0)
Principal payments on capitalized leases (4.1) (4.2)
Excess tax benefits from share-
based payment arrangements 1.4 3.4
Net cash used in financing activities
of continuing operations (667.4) (608.8)
Net cash provided by financing activities
of discontinued operations 17.9 24.0
Net cash used in financing activities (649.5) (584.8)
EFFECT OF EXCHANGE RATES ON CASH 3.8 (0.1)
NET INCREASE IN CASH AND CASH EQUIVALENTS 231.3 36.6
CASH AND CASH EQUIVALENTS, BEGINNING,
including $7.2 and $6.9 reported under
assets held for sale in 2007 and 2006 71.5 34.9
CASH AND CASH EQUIVALENTS, ENDING,
including $7.2 reported under
assets held for sale in 2006 $302.8 $71.5
SOURCE Jones Apparel Group, Inc.
CONTACT: Investor Contact: John T. McClain, Chief Financial Officer of
Jones Apparel Group,
+1-212-642-3860; or Media Contacts: Joele Frank and
Sharon Stern,
both of Joele Frank, Wilkinson Brimmer Katcher for Jones Apparel
Group, Inc.,
+1-212-355-4449
Web site: http://www.jny.com
(JNY)
|
The Jones Group Inc.
