The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
Jones Apparel Group, Inc. Enters Into Agreement to Purchase l.e.i.
NEW YORK, July 10 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc.
(NYSE: JNY) today announced that it has entered into an agreement to acquire
RSV Sport, Inc. and its related companies, herein referred to as l.e.i. As a
leading designer, manufacturer and distributor of girls' and young women's
moderately priced jeanswear, l.e.i. generated net sales of $248 million for
the year ended December 31, 2001. Its products are marketed nationwide to
national chains, department stores, and specialty retailers, including May
Company, Federated, Nordstrom, JCPenney, Kohl's, Sears, and Mervyn's.
Licensed products under the l.e.i. brand include footwear, knit tops,
children's apparel, underwear, accessories, sunglasses and handbags.
The transaction is valued at $385 million, which includes payments to the
selling shareholders of $272.5 million in cash, the issuance of approximately
1 million shares of Jones common stock valued at $37.5 million, and
approximately $75 million of funded debt to be assumed by Jones as of the
closing date. The number of Jones common shares being delivered is based upon
the average of the high and low sales price for the 10 consecutive trading
days on the NYSE immediately preceding the signing date. All cash components
of this transaction, including debt to be refinanced by Jones upon closing,
will be funded primarily with cash on hand and to a lesser extent, existing
bank credit facilities. The selling shareholders and certain employees of
l.e.i. will also be entitled to receive future payments of up to $70 million
in the form of cash and/or common stock if certain earnings targets are
achieved during the three years following the closing of the transaction. If
fully earned, approximately $61.0 million of any such future payments would be
treated as goodwill. The transaction is expected to close in July 2002.
Peter Boneparth, President and Chief Executive Officer, Jones Apparel
Group, stated, "I would like to welcome Mel and Susan Geliebter, Co-Founders,
of l.e.i., and their entire team into the Jones Apparel Group. In addition to
the strong l.e.i. brand and excellent management team, we are acquiring a
company that shares many of the Jones operating philosophies. These include:
strong cost controls and operating margins, a commitment to working capital
management, and an overall focus on maximizing return on investment." Mr.
Boneparth continued, "It further provides us with additional product
diversification into the junior arena, the fastest growing consumer
demographic. On a pro forma basis, the junior classification will represent
approximately 11% of projected 2002 revenues, the moderate component of our
business will expand from approximately 23% to 28% of projected 2002 revenues,
and our channel distribution to moderate national chains will also increase
from 12% to 15%."
Mr. Boneparth went on to say, "The acquisition price is consistent with
our fundamental objective of achieving a mid to high teen return on
investment. We also believe the addition of the l.e.i. business will be
slightly accretive for 2002, prior to any purchase accounting adjustments.
This opportunity clearly meets all of our core acquisition criteria. Overall,
Mel and his team have built a strong business and we are excited about the
long-term potential of the l.e.i. brand as part of our existing branded
portfolio." Mr. Boneparth continued, "In addition to his responsibilities at
l.e.i., I am also pleased to announce that, at closing, Mel will be named the
CEO of our Sun Apparel private-label division. This action will allow for the
coordinated utilization of our many resources and talents."
Sidney Kimmel, Chairman and Founder, Jones Apparel Group, added, "I join
with Peter and all of us at Jones in welcoming Mel, Susan and their l.e.i.
team. This acquisition follows a consistent pattern that has served our
Company with success: l.e.i. is the pre-eminent brand in a growing business.
According to recent public surveys, the brand has built a loyal following and
ranks near the top among high school and college aged students. I am very
pleased, and proud of the foresight of Peter, Mel and Susan to seek this
Mel Geliebter, Co-Founder, CEO & President of l.e.i. commented,
"Partnering with Jones Apparel Group is a great opportunity to join a leader
in the apparel industry that is committed to growing its moderates business.
l.e.i. has enjoyed a successful history as an independent company and we look
forward to building upon our success as a member of the Jones family."
Jones Apparel Group would like to invite investors to listen to a
broadcast of the Company's conference call discussing this acquisition. The
call will be broadcast live over the Internet on Wednesday, July 10, 2002 at
10:00 am (EDT) and can be accessed by visiting the investor relations web page
Jones Apparel Group, Inc. (www.jny.com), a Fortune 500 Company, 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, Gloria Vanderbilt, 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
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
2001 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.
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SOURCE Jones Apparel Group, Inc.
Web site: http: //www.jny.com
CONTACT: Wesley R. Card, Chief Operating and Financial Officer, or Anita Britt, Executive Vice President Finance, of Jones Apparel Group, +1-215-785-4000