The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
29-Apr-2003
Jones Apparel Group, Inc.
Reports Revenues and Earnings for the First Quarter 2003 NEW YORK, April 29 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc.
(NYSE: JNY) today reported results for the first quarter of 2003. Revenues
increased 9.5% to $1,234 million for the first quarter ended April 5, 2003,
from $1,127 million for the first quarter of 2002. Earnings per share under
Generally Accepted Accounting Principles ("GAAP") increased to $.90 for the
first quarter of 2003 as compared to $.53 for the first quarter of 2002. On
an operating basis, adjusted to exclude certain charges, earnings per share
for the first quarter of 2002 were $.77. The Company believes these adjusted
results provide a more meaningful comparison of its ongoing operational
results. For a full analysis of the adjustments, refer to Note 1 below along
with the reconciliation of adjusted results to GAAP results. Peter Boneparth, Chief Executive Officer, stated, "Our first quarter
results were very satisfying in a period that witnessed a generally soft
economic climate, major geopolitical concerns and military conflict. This was
evidenced in our retail stores, which were impacted by lackluster consumer
traffic resulting in a 10% decline in comparable store sales. The weaker than
planned retail performance was offset by the acquisitions of Gloria Vanderbilt
and l.e.i., which provided healthy sales and strong operating margins. In
general, our wholesale businesses performed at or close to plan despite the
difficult retail environment. The combination of these factors allowed us to
exceed our expectations for the quarter." Wesley Card, Chief Operating and Financial Officer, commented, "Our
operating margin for the quarter rose to 16.9% compared to an adjusted
operating margin of 16.2% for the first quarter of 2002. We continue to focus
on key financial and operational components of our business -- inventory
management and expense control -- to maintain and to further enhance our
margins. Inventory levels were $532 million, or $456 million excluding
acquisitions, compared to $479 million in 2002, representing a 5% reduction.
The Company ended the quarter with $1 billion of debt, principally long-term,
resulting in a debt to book capitalization ratio, net of cash, of 27.5%.
During the quarter, we repurchased 1 million shares of Company common stock in
the open market at an aggregate cost of $28 million." Mr. Boneparth added, "The economic outlook for the balance of 2003
remains uncertain, with most economists not predicting a significant upturn
until early 2004. We therefore continue to maintain our prudent posture of
focusing on managing cash flow and our balance sheet. We now expect that
earnings per share for the full year will fall in a range of $2.90 to $3.10.
Should consumer traffic and spending on apparel and footwear improve for the
remainder of the year, we believe that we would achieve the upper end of this
range. However, should the trends noted in the first four months continue, we
would expect earnings per share to be closer to the lower end of the range." Mr. Boneparth concluded, "Despite the near-term challenges created by the
soft economic landscape, we continue to believe that our corporate strategy
emphasizing diversification in distribution channels, product offerings and
targeting consumers, uniquely positions us to deliver consistently strong
results. Our initiatives for 2003 and beyond are to significantly reduce our
production cycles where possible and to deliver fashion right product to the
customer. We also continue to offer new product initiatives and brand
extensions to fill market voids. Our product launch in ESPRIT footwear for
Spring is showing good initial consumer response. Additional 2003 product
launches include Bandolino apparel, Gloria Vanderbilt sportswear, ESPRIT
handbags, and Gloria Vanderbilt footwear and handbags. As our industry
becomes increasingly more competitive, we at Jones Apparel Group continue to
focus on inventory management, cost control and our connection with our
consumer."
Note 1: In the first quarter of 2002, adjusted results exclude pre-tax
charges of (i) $31.2 million, or $.14 per share, for executive compensation
obligations under employment agreements with certain former officers, and;
(ii) $22.2 million, or $.10 per share, resulting from a cumulative effect of
change in accounting principle for the adoption of SFAS No. 142.
Reconciliation of Adjusted Results to
GAAP Results First Quarter First Quarter
2003 2002
Reconciliation of net income (net of tax)
Adjusted net income $121.8 $103.9
Executive compensation obligations - (19.4)
Cumulative effect of change in
accounting principle - (13.8)
Net income $121.8 $70.7
Reconciliation of earnings per share
- diluted
Adjusted net income $0.90 $0.77
Executive compensation obligations - (0.14)
Cumulative effect of change in
accounting principle - (0.10)
Net income $0.90 $0.53
The Company will host a conference call with management to discuss these
results and its outlook for 2003 at 8:30 a.m. EDT today, which is accessible
by dialing 412-858-4600 or through a webcast at www.jny.com.
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, l.e.i., 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, and footwear and accessories under the ESPRIT brand
licensed from Esprit Europe, B.V. 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
2002 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.
CONSOLIDATED OPERATING RESULTS
(UNAUDITED)
All amounts in millions except per share data
FIRST QUARTER
2003 2002
Net sales $1,226.7 99.4% $1,120.3 99.4%
Licensing income (net) 7.5 0.6% 6.6 0.6%
Total revenues 1,234.2 100.0% 1,126.9 100.0%
Cost of goods sold 752.8 61.0% 678.5 60.2%
Gross profit 481.4 39.0% 448.4 39.8%
SG&A expenses 272.4 22.1% 265.5 23.6%
Executive compensation obligations - - 31.2 2.8%
Income from operations 209.0 16.9% 151.7 13.5%
Net interest expense and financing
costs 14.1 1.1% 16.0 1.4%
Equity in earnings of unconsolidated
affiliates 0.6 0.0% - -
Income before taxes 195.5 15.8% 135.7 12.0%
Provision for income taxes 73.7 6.0% 51.2 4.5%
Income before cumulative effect of
change
in accounting principle 121.8 9.9% 84.5 7.5%
Cumulative effect of change in
accounting
for intangible assets, net of tax - - 13.8 1.2%
Net income $121.8 9.9% $70.7 6.3%
Shares outstanding - diluted 137.4 137.3
Earnings per share - diluted
Income before cumulative effect of
change in accounting principle $0.90 $0.63
Cumulative effect of change in
accounting
for intangible assets, net of tax - 0.10
Net income $0.90 $0.53
Percentages may not add due to rounding.
JONES APPAREL GROUP, INC.
ADJUSTED CONSOLIDATED OPERATING RESULTS
(UNAUDITED)
All amounts in millions except per share data
FIRST QUARTER
2003 2002
Net sales $1,226.7 99.4% $1,120.3 99.4%
Licensing income (net) 7.5 0.6% 6.6 0.6%
Total revenues 1,234.2 100.0% 1,126.9 100.0%
Cost of goods sold 752.8 61.0% 678.5 60.2%
Gross profit 481.4 39.0% 448.4 39.8%
Adjusted SG&A expenses 272.4 22.1% 265.5 23.6%
Adjusted income from operations 209.0 16.9% 182.9 16.2%
Net interest expense and financing
costs 14.1 1.1% 16.0 1.4%
Equity in earnings of unconsolidated
affiliates 0.6 0.0% - -
Adjusted income before taxes 195.5 15.8% 166.9 14.8%
Adjusted provision for income taxes 73.7 6.0% 63.0 5.6%
Adjusted net income $121.8 9.9% $103.9 9.2%
Shares outstanding - diluted 137.4 137.3
Adjusted earnings per share - diluted $0.90 $0.77
Reconciliation of net income
Adjusted net income $121.8 $103.9
Executive compensation obligations - (19.4)
Cumulative effect of change in
accounting principle - (13.8)
Net income $121.8 $70.7
Reconciliation of earnings per share -
diluted
Adjusted earnings per share -
diluted $0.90 $0.77
Executive compensation obligations - (0.14)
Cumulative effect of change in
accounting principle - (0.10)
Earnings per share - diluted $0.90 $0.53
Percentages may not add due to rounding.
Adjusted information excludes the executive compensation obligations and
cumulative effect of change in accounting principle in 2002.
JONES APPAREL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
all amounts in millions
April 5, 2003 April 6, 2002
ASSETS
CURRENT:
Cash and cash equivalents $95.1 $143.3
Accounts receivable, net of
allowances of $54.1 and $47.4 for
doubtful accounts, discounts,
returns and co-op advertising 722.8 585.1
Inventories 531.9 478.9
Deferred taxes 73.9 64.3
Other current assets 42.7 45.6
TOTAL CURRENT ASSETS 1,466.4 1,317.2
Property, plant and equipment, at
cost, less
accumulated depreciation and
amortization 256.6 246.6
Goodwill, less accumulated
amortization 1,541.3 1,369.8
Other intangibles, less accumulated
amortization 674.1 509.8
Other assets 61.7 79.7
$4,000.1 $3,523.1
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT:
Current portion of long-term debt
and capital lease obligations $7.2 $8.3
Accounts payable 208.2 181.3
Income taxes payable 81.5 67.8
Accrued expenses and other current
liabilities 148.2 171.8
TOTAL CURRENT LIABILITIES 445.1 429.2
NONCURRENT LIABILITIES:
Long-term debt and obligation
under capital leases 998.4 980.7
Deferred taxes 100.0 66.5
Other 53.1 33.0
TOTAL NONCURRENT LIABILITIES 1,151.5 1,080.2
TOTAL LIABILITIES 1,596.6 1,509.4
STOCKHOLDERS' EQUITY 2,403.5 2,013.7
$4,000.1 $3,523.1
JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
(UNAUDITED)
all amounts in millions
Wholesale Wholesale Wholesale
Better Moderate Footwear &
Apparel Apparel Accessories
For the fiscal quarter
ended April 5, 2003
Revenues from external
customers $445.1 $412.3 $229.0
Intersegment revenues 26.5 1.4 16.1
Total revenues 471.6 413.7 245.1
Segment income (loss) $101.5 $73.7 $47.0
21.5% 17.8% 19.2%
Net interest expense
Equity in earnings of
unconsolidated affiliates
Income before provision for
income taxes
For the fiscal quarter ended
April 6, 2002
Revenues from external
customers $474.0 $256.5 $233.9
Intersegment revenues 29.8 1.4 22.5
Total revenues 503.8 257.9 256.4
Segment income (loss) $108.1 $46.9 $31.0
21.5% 18.2% 12.1%
Net interest expense
Income before provision for
income taxes
Other &
Retail Eliminations Consolidated
For the fiscal quarter ended
April 5, 2003
Revenues from external
customers $140.3 $7.5 $1,234.2
Intersegment revenues - (44.0) -
Total revenues 140.3 (36.5) 1,234.2
Segment income (loss) $(4.8) $(8.4) 209.0
-3.4% 16.9%
Net interest expense (14.1)
Equity in earnings of
unconsolidated affiliates 0.6
Income before provision for
income taxes $195.5
For the fiscal quarter ended
April 6, 2002
Revenues from external
customers $155.9 $6.6 $1,126.9
Intersegment revenues - (53.7) -
Total revenues 155.9 (47.1) 1,126.9
Segment income (loss) $6.6 $(40.9) 151.7
4.2% 13.5%
Net interest expense (16.0)
Income before provision for
income taxes $135.7
JONES APPAREL GROUP, INC.
ADJUSTED SEGMENT INFORMATION
(UNAUDITED)
all amounts in millions
Wholesale Wholesale Wholesale
Better Moderate Footwear &
Apparel Apparel Accessories
For the fiscal quarter ended
April 5, 2003
Revenues from external
customers $445.1 $412.3 $229.0
Intersegment revenues 26.5 1.4 16.1
Total revenues 471.6 413.7 245.1
Segment income (loss) $101.5 $73.7 $47.0
21.5% 17.8% 19.2%
Net interest expense
Equity in earnings of
unconsolidated affiliates
Income before provision for
income taxes
For the fiscal quarter ended
April 6, 2002
Revenues from external
customers $474.0 $256.5 $233.9
Intersegment revenues 29.8 1.4 22.5
Total revenues 503.8 257.9 256.4
Adjusted segment income (loss) $108.1 $46.9 $31.0
21.5% 18.2% 12.1%
Net interest expense
Adjusted income before provision
for income taxes
Other &
Retail Eliminations Consolidated
For the fiscal quarter ended
April 5, 2003
Revenues from external
customers $140.3 $7.5 $1,234.2
Intersegment revenues - (44.0) -
Total revenues 140.3 (36.5) 1,234.2
Segment income (loss) $(4.8) $(8.4) 209.0
-3.4% 16.9%
Net interest expense (14.1)
Equity in earnings of
unconsolidated affiliates 0.6
Income before provision for
income taxes $195.5
For the fiscal quarter ended
April 6, 2002
Revenues from external
customers $155.9 $6.6 $1,126.9
Intersegment revenues - (53.7) -
Total revenues 155.9 (47.1) 1,126.9
Adjusted segment income (loss) $6.6 $(9.7) 182.9
4.2% 16.2%
Net interest expense (16.0)
Adjusted income before provision
for income taxes $166.9
Adjusted segment information excludes the executive compensation
obligations and cumulative effect of change in accounting principle in
2002.
SOURCE Jones Apparel Group, Inc. |
The Jones Group Inc.
