The Jones Group Inc. (ticker: JNY, exchange: New York Stock Exchange (.N))
News Release -
27-Apr-2004
Jones Apparel Group, Inc. Reports Financial Results
for the First Quarter 2004 -- Earnings Per Share of $0.73
-- Company Owned Retail Business Registered Comparable Store Sales
Increase of 13%
-- Jones New York Signature Continues to Gain Positive Momentum
-- Repurchases of $34.5 Million in Common Stock
-- Increases 2004 Full Year Earnings Per Share Guidance to Range of
$2.68 - $2.80
-- Declares Regular Quarterly Cash Dividend of $0.08 Per Share
NEW YORK, April 27 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc.
(NYSE: JNY) today reported results for the first quarter ended April 3, 2004.
Revenues totaled $1.218 billion versus $1.234 billion for the first quarter of
2003. Earnings per share were $0.73 for the first quarter of 2004, as
compared to $0.90 for the first quarter of 2003. Peter Boneparth, Chief Executive Officer, stated, "We were very pleased
with our first quarter financial results, as we achieved better than
anticipated performance in all segments of our business. Our wholesale
shipments were quite strong, and our company owned retail business registered
a comparable store sales increase of 13%." Mr. Boneparth continued, "The consumer shift toward more structured and
career oriented dressing aligns well with our strengths, and we are fulfilling
that consumer trend. Our diversified portfolio of highly recognizable brands
capitalized on the improved economic landscape that was evidenced by increased
consumer spending and stronger retail sales versus a year ago. The newly
launched Jones New York Signature brand is achieving excellent sell-throughs
at retail and our Jones New York Collection business is continuing to
outperform in the career category. The repositioned Nine West apparel line is
also experiencing good success, primarily attributable to the styling and fit
changes that we have instituted. Our moderate apparel brands, including
Gloria Vanderbilt, Bandolino and Nine & Company, along with our l.e.i. and
Energie junior brands, were some of the best performers in the channel.
Regarding wholesale footwear and accessories, the Nine West and Bandolino
footwear brands generated very good sell-throughs, and we were very pleased
with the performance of our handbag and costume jewelry businesses. Our
retail business also performed exceptionally well, as we delivered on our
various initiatives, including the updating of store visuals, exclusive
product designs and improved customer service. Collectively, these
initiatives are integral to our goal of enhancing the consumer's overall
shopping experience within our stores." Wesley Card, Chief Operating and Financial Officer, commented, "Our
operating profit margin for the quarter was 13.3%, compared to 16.9% in the
prior year. As previously announced, this planned decrease incorporates the
negative effects of exiting the Lauren by Ralph Lauren business (previously
licensed from the Polo Ralph Lauren Corporation), the non-cash purchase
accounting effect related to the Kasper acquisition, and the non-cash write-
off of financing fees and original issue bond discount resulting from the
redemption of our convertible debentures during the quarter." Mr. Card added, "Our inventory levels at the end of the first quarter were
$570.0 million, compared to $531.9 million at the end of the prior year
period. Exclusive of Kasper inventory added as a result of its acquisition in
December 2003, inventory at the end of the first quarter totaled
$523.0 million, a 1.7% decrease from the year-earlier period. Our accounts
receivable balance at the end of the first quarter was $638.5 million,
decreasing $84.4 million, or 11.7%, versus the prior year. When excluding
Kasper, accounts receivable decreased $142.1 million, or 19.7%. We ended the
quarter with $872.4 million of funded debt and, net of $31.9 million cash on
hand, our debt to book capitalization ratio was 24.3%. During the quarter,
the Company repurchased approximately 1 million shares of common stock in the
open market at an aggregate cost of $34.5 million, or $34.42 per share." "Regarding our expectations for 2004, we are increasing our projected
revenue range of $4.415 to $4.435 billion to a range of $4.460 to $4.485
billion. Concurrently, we are increasing our projected 2004 earnings per
share range of $2.50 to $2.75 to a range of $2.68 to $2.80. The increase in
earnings guidance incorporates our excellent first quarter performance, in
addition to our improving comfort level with the retail landscape and its
potential impact on our business. Our projected full year 2004 operating
margins are now forecast in a range of 13.0% to 13.7%. We are maintaining our
second quarter earnings per share forecast in a range of $0.55 to $0.60,"
continued Mr. Card. Additionally, the Company's Board of Directors has declared a regular
quarterly cash dividend of $0.08 per share to all common stockholders of
record as of May 7, 2004 for payment on May 21, 2004. The Company will host a conference call with management to discuss these
results and its outlook for 2004 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.
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, Evan-
Picone, Norton McNaughton, Gloria Vanderbilt, Erika, l.e.i., Energie, Nine
West, Easy Spirit, Enzo Angiolini, Bandolino, Napier, Judith Jack, Kasper,
Anne Klein, Albert Nipon and LeSuit. The Company also markets apparel under
the Polo Jeans Company brand licensed from Polo Ralph Lauren Corporation,
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. For more than 30 years, 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
2003 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
2004 2003
Net sales $1,205.0 98.9% $1,226.7 99.4%
Licensing income (net) 13.1 1.1% 7.5 0.6%
Total revenues 1,218.1 100.0% 1,234.2 100.0%
Cost of goods sold 756.5 62.1% 752.8 61.0%
Gross profit 461.6 37.9% 481.4 39.0%
SG&A expenses 299.7 24.6% 272.4 22.1%
Income from operations 161.9 13.3% 209.0 16.9%
Net interest expense and financing
costs 11.7 1.0% 14.1 1.1%
Equity in earnings of unconsolidated
affiliates 0.8 0.1% 0.6 0.0%
Income before taxes 151.0 12.4% 195.5 15.8%
Provision for income taxes 56.6 4.6% 73.7 6.0%
Net income $94.4 7.7% $121.8 9.9%
Shares outstanding - diluted 130.1 137.4
Earnings per share - diluted $0.73 $0.90
Percentages may not add due to rounding.
JONES APPAREL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
all amounts in millions
April 3, 2004 April 5, 2003
ASSETS
CURRENT:
Cash and cash equivalents $31.9 $95.1
Accounts receivable, net of
allowances of $54.3 and $54.1 for
doubtful accounts, discounts,
returns and co-op advertising 638.5 722.8
Inventories 570.0 531.9
Deferred taxes 75.7 73.9
Other current assets 46.7 42.7
TOTAL CURRENT ASSETS 1,362.8 1,466.4
Property, plant and equipment, at
cost, less accumulated depreciation and
amortization 266.1 256.6
Goodwill 1,637.0 1,541.3
Other intangibles, less accumulated
amortization 758.3 674.1
Other assets 51.5 61.7
$4,075.7 $4,000.1
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $295.5 $ -
Current portion of long-term debt
and capital lease obligations 180.7 7.2
Accounts payable 213.6 208.2
Income taxes payable 62.4 81.5
Accrued expenses and other current
liabilities 128.4 148.2
TOTAL CURRENT LIABILITIES 880.6 445.1
NONCURRENT LIABILITIES:
Long-term debt and obligation
under capital leases 396.2 998.4
Deferred taxes 126.6 100.0
Other 58.6 53.1
TOTAL NONCURRENT LIABILITIES 581.4 1,151.5
TOTAL LIABILITIES 1,462.0 1,596.6
STOCKHOLDERS' EQUITY 2,613.7 2,403.5
$4,075.7 $4,000.1
JONES APPAREL GROUP, INC.
SEGMENT INFORMATION
(Unaudited)
all amounts in millions
Wholesale
Wholesale Wholesale Footwear & Other &
Better Moderate Accessories Elimin- Consol-
Apparel Apparel Retail ations idated
For the fiscal quarter
ended April 3, 2004
Revenues from
external customers $409.1 $395.3 $230.8 $169.8 $13.1 $1,218.1
Intersegment revenues 41.3 2.0 19.0 - (62.3) -
Total revenues 450.4 397.3 249.8 169.8 (49.2) 1,218.1
Segment income $56.0 $60.6 $49.6 $7.7 $(12.0) 161.9
12.4% 15.3% 19.9% 4.5% 13.3%
Net interest expense (11.7)
Equity in earnings of
unconsolidated
affiliates 0.8
Income before
provision for income
taxes $151.0
For the fiscal quarter
ended April 5, 2003
Revenues from
external customers $445.1 $412.3 $229.0 $140.3 $7.5 $1,234.2
Intersegment revenues 26.5 1.4 16.1 - (44.0) -
Total revenues 471.6 413.7 245.1 140.3 (36.5) 1,234.2
Segment income $101.5 $73.7 $47.0 $(4.8) $(8.4) 209.0
21.5% 17.8% 19.2% -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
JONES APPAREL GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Fiscal Quarter Ended
April 3, 2004 April 5, 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $94.4 $121.8
Adjustments to reconcile net income to
net cash provided by operating activities,
net of acquisitions:
Amortization of original issue discount 1.3 3.7
Depreciation and other amortization 27.9 18.9
Provision for losses on accounts receivable (0.2) 1.1
Deferred taxes 9.3 11.5
Loss on redemption of Zero Coupon
Convertible Senior Notes 8.4 -
Other (0.2) (0.3)
Changes in operating assets and liabilities:
Accounts receivable (253.0) (334.0)
Inventories 21.6 (1.6)
Prepaid expenses and other current assets 2.2 (7.4)
Other assets (3.2) 5.1
Accounts payable (24.2) (22.3)
Income taxes payable 50.1 53.5
Accrued expenses and other liabilities (17.7) (17.8)
Total adjustments (177.7) (289.6)
Net cash used in operating activities (83.3) (167.8)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13.5) (12.4)
Payments relating to acquisitions (37.8) (0.1)
Proceeds from sales of property,
plant and equipment - 24.6
Other - 0.2
Net cash (used in) provided by
investing activities (51.3) 12.3
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under credit facilities 295.5 -
Repayment of long-term debt - (7.4)
Redemption of Zero Coupon Convertible
Senior Notes (446.6) -
Principal payments on capitalized leases (1.5) (1.1)
Purchases of treasury stock (41.1) (27.7)
Dividends paid (10.1) -
Proceeds from exercise of employee
stock options 20.3 3.1
Net cash used in financing activities (183.5) (33.1)
EFFECT OF EXCHANGE RATES ON CASH - 0.4
NET DECREASE IN CASH AND CASH
EQUIVALENTS (318.1) (188.2)
CASH AND CASH EQUIVALENTS, beginning of period 350.0 283.3
CASH AND CASH EQUIVALENTS, end of period $31.9 $95.1
All amounts in millions
SOURCE Jones Apparel Group, Inc. |
The Jones Group Inc.
