The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
31-Oct-2001
Jones Apparel Group, Inc. Reports Revenues And Earnings For The Third Quarter 2001 NEW YORK, Oct. 31 /PRNewswire/ -- Jones Apparel Group, Inc. (NYSE: JNY)
today announced earnings per share for its third quarter ended October 6, 2001
of $.85, excluding certain charges. First, these results exclude the
previously announced non-recurring after-tax charge of $54 million, or $.40
per share, which reflects the write-down to net realizable value of goods that
the Company owns or is committed for and will need to dispose of through off-
price channels, and an incremental provision for markdowns, which the Company
believes it will need to provide to its customers resulting from the economic
climate in the aftermath of the events of September 11, 2001. Second, these
results also exclude a non-cash after-tax charge of $5.7 million, or $.04 per
share, related to a purchase accounting adjustment to bring the recently
acquired McNaughton Apparel Group and Judith Jack inventories to fair market
value. These results compare to $.94 per share reported for the third quarter
of 2000 (excluding a purchase accounting adjustment of $.01). Revenues for
the quarter totaled $1.236 billion as compared to $1.192 billion reported for
the third quarter of 2000. Sidney Kimmel, Chairman, stated, "Although we remain cautious in our
outlook for the fourth quarter and 2002, given the present and anticipated
difficult retail environment, we are noting some improvement in current
selling trends. While we are confident that our products offer the consumer
superior quality and value for her lifestyle dressing needs, we continue to
believe that most consumers have been adopting a cautious spending posture for
the foreseeable future." Mr. Kimmel continued, "Despite this short-term economic impact, we are in
an excellent financial position, with a strong balance sheet and declining
leverage. We maintain our corporate strategy of brand diversification,
incorporating a brand focus to meet varied consumer needs. Channel
diversification, coupled with our multi-product capabilities, including
apparel, footwear, handbags and jewelry, truly provide great diversity and
breadth across our business model. By pursuing this strategy and maintaining
a prudent fiscal posture, we believe that we will be among the strongest
companies within the industry to capitalize on a future economic turnaround." Mr. Kimmel provided further details on the quarter, "Our inventories are
in line with our expectations. Inventories declined from $770 million at the
end of the second quarter to $615 million at the end of third quarter
($659 million after adding back the special reserve taken as noted above). As
we achieve our working capital targets, we remain comfortable with our free
cash flow target of $350 million for 2001 and a comparable level of free cash
flow for 2002. We also remain comfortable with our guidance for fourth
quarter earnings per share in a range of $.20 to $.24 and, therefore, a range
of $2.27 to $2.31 for the full year of 2001. This guidance for 2001, adjusted
for proforma comparability for the adoption of SFAS No. 142 (Accounting for
Goodwill and Certain Other Intangibles) effective January 1, 2002, would be
$2.67 to $2.71, excluding the above-mentioned charges. This proforma guidance
includes $.40 of goodwill and intangible amortization. Forecasting business
trends for 2002 remains difficult, given the uncertainties that face our
nation and the economy. Accordingly, we continue to maintain a cautious
posture in our outlook for 2002, and we reiterate our previous guidance for
earnings per share of approximately $2.50." Jones Apparel Group, Inc. (www.jny.com) is a leading designer and marketer
of branded apparel, footwear and accessories. The Company's nationally
recognized brands include: Jones New York; Lauren by Ralph Lauren, Ralph by
Ralph Lauren, and Polo Jeans Company, which are licensed from Polo Ralph
Lauren Corporation; Evan-Picone, Rena Rowan, Norton McNaughton, Erika,
Energie, Currants, Jamie Scott, Todd Oldham, Nine West, Easy Spirit, Enzo
Angiolini, Bandolino, Napier and Judith Jack. The Company also markets
costume jewelry under the Tommy Hilfiger brand licensed from Tommy Hilfiger
Corporation and the Givenchy brand licensed from Givenchy Corporation.
Celebrating more than 30 years of service, the Company has built a reputation
for excellence in product quality and value, and in operational execution.
Certain statements herein are "forward-looking statements" made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements represent the Company's expectations
or beliefs concerning future events that involve risks and uncertainties,
including the strength of the economy and the overall level of consumer
spending, the performance of the Company's products within the prevailing
retail environment, and other factors which are set forth in the Company's
2000 Form 10-K and in all filings with the SEC made by the Company subsequent
to the filing of the Form 10-K. 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.
CONDENSED OPERATING RESULTS
(UNAUDITED)
all amounts in millions except per share data
Fiscal Quarter Ended Fiscal Nine Months Ended
October 6, October 1, October 6, October 1,
2001 2000 2001 2000
Total revenues $1,236 $1,192 $3,186 $3,181
Operating income 117 213 409 475
Net interest expense 23 26 64 78
Income before taxes 94 187 345 397
Provision for income taxes 41 75 140 159
Net income $53 $112 $205 $238
Diluted earnings
per share $0.41 $0.93 $1.58 $1.96
Non-recurring Charge* $0.40 $0.00 $0.40 $0.00
Purchase Accounting
Adjustment** $0.04 $0.01 $0.08 $0.01
Proforma earnings
per share $0.85 $0.94 $2.07 $1.97
Diluted shares
outstanding 135 121 133 122
* Reflects the write-down to net realizable value of goods that the
Company owns or is committed for and will need to dispose of through
off-price channels and an incremental provision for markdowns.
** Reflects an increase in cost of goods sold attributable to the fair
value of inventory over cost, recorded as a result of the
acquisitions of Judith Jack and McNaughton in 2001 and Victoria in
2000.
JONES APPAREL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
all amounts in millions
October 6, October 1,
2001 2000
ASSETS
CURRENT:
Cash and cash equivalents $57 $53
Accounts receivable, net of allowance of $14
and $15 for doubtful accounts 746 645
Inventories 615 581
Other current assets 133 117
TOTAL CURRENT ASSETS 1,551 1,396
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 237 228
Goodwill, less accumulated amortization 1,382 1,112
Other intangibles, less accumulated amortization 539 345
Other assets 91 135
$3,800 $3,216
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT:
Short-term borrowings and current portion of
long-term debt and capital lease obligations $484 $787
Accounts payable 172 213
Accrued expenses and other current liabilities 178 220
TOTAL CURRENT LIABILITIES 834 1,220
NONCURRENT LIABILITIES:
Long-term debt and obligation under
capital leases 967 575
Other 126 30
TOTAL NONCURRENT LIABILITIES 1,093 605
TOTAL LIABILITIES 1,927 1,825
STOCKHOLDERS' EQUITY 1,873 1,391
$3,800 $3,216
JONES APPAREL GROUP, INC.
CONSOLIDATED PRO FORMA OPERATING RESULTS
(UNAUDITED)
all amounts in millions except per share data
Fiscal Quarter Ended Fiscal Nine Months Ended
October 6, October 1, October 6, October 1,
2001 2000 2001 2000
Total revenues $1,260 $1,192 $3,210 $3,181
Cost of goods sold 771 701 1,926 1,873
Gross profit 489 491 1,284 1,308
SG&A expenses 264 266 739 803
Amortization of goodwill 12 10 32 28
Operating income 213 215 513 477
Net interest expense 23 26 64 78
Income before taxes 190 189 449 399
Provision for income
taxes 77 75 180 159
Net income $113 $114 $270 $240
Proforma diluted earnings
per share adjusted for
non-recurring charges $0.85 $0.94 $2.07 $1.97
Diluted shares outstanding 135 121 133 122
Note: Proforma adjusted for non-recurring charge and purchase accounting
adjustments
JONES APPAREL GROUP, INC.
PRO FORMA SEGMENT INFORMATION
(UNAUDITED)
all amounts in millions
Wholesale Other &
Wholesale Footwear & Elimi- Consol-
Apparel Accessories Retail nations idated
For the fiscal
quarter ended
October 6, 2001
Revenues from
external customers $810 $272 $170 $8 $1,260
Intersegment
revenues 28 17 0 (45) 0
Total revenues 838 289 170 (37) 1,260
Segment Income $166 $56 $13 ($10) 225
19.8% 19.4% 7.6% 17.9%
Amortization of
goodwill 12
Net interest expense 23
Income before provision
for income taxes $190
For the fiscal
quarter ended
October 1, 2000
Revenues from
external customers $664 $272 $249 $7 $1,192
Intersegment
revenues 29 25 0 (54) 0
Total revenues 693 297 249 (48) 1,192
Segment Income $132 $59 $42 ($8) 225
19.0% 19.9% 16.9% 18.9%
Amortization of
goodwill 10
Net interest expense 26
Income before provision
for income taxes $189
For the fiscal
nine months ended
October 6, 2001
Revenues from
external
customers $1,897 $780 $514 $19 $3,210
Intersegment
revenues 70 58 0 (128) 0
Total revenues 1,967 838 514 (109) 3,210
Segment Income $369 $170 $39 ($33) 545
18.8% 20.3% 7.6% 17.0%
Amortization of
goodwill 32
Net interest expense 64
Income before
provision for
income taxes $449
For the fiscal
nine months ended
October 1, 2000
Revenues from
external
customers $1,701 $710 $754 $16 $3,181
Intersegment
revenues 73 87 0 (160) 0
Total revenues 1,774 797 754 (144) 3,181
Segment Income $302 $168 $65 ($31) 504
17.0% 21.1% 8.6% 15.8%
Amortization of
goodwill 28
Net interest expense 77
Income before provision
for income taxes $399
NOTE: Proforma adjusted for non-recurring charge and purchase accounting
adjustments.
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SOURCE Jones Apparel Group, Inc.
Web site: http: //www.jny.com
CONTACT: Wesley R. Card, Chief Financial and Operations Officer, or Anita Britt, Senior Vice President, Finance and Investor Relations, of Jones Apparel Group, +1-215-785-4000 |
The Jones Group Inc.
