Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||||
In Millions | Oct. 03, 2009
| Dec. 31, 2008
| Oct. 04, 2008
| Dec. 31, 2007
|
CURRENT ASSETS | ||||
Cash and cash equivalents | 156.9 | 338.3 | 200.3 | 302.8 |
Accounts receivable | 413.7 | 370.2 | 474.6 | |
Inventories, primarily finished goods | 417 | 509.5 | 547.9 | |
Prepaid income taxes | 9.1 | 16.9 | 7.8 | |
Deferred taxes | 22.1 | 28 | 25.4 | |
Prepaid expenses and other current assets | 37.3 | 42.6 | 57.8 | |
TOTAL CURRENT ASSETS | 1056.1 | 1305.5 | 1313.8 | |
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization | 246.8 | 301 | 306.7 | |
GOODWILL | 160.7 | 160.7 | 973.9 | |
OTHER INTANGIBLES, at cost, less accumulated amortization | 589.1 | 590.8 | 616.7 | |
DEFERRED TAXES | 0 | 14.2 | 0 | |
Equity Method Investments | 43.1 | 19.6 | 20 | |
OTHER ASSETS | 71.2 | 35.7 | 36.6 | |
TOTAL ASSETS | 2,167 | 2427.5 | 3267.7 | |
CURRENT LIABILITIES | ||||
Current portion of long-term debt | 7.5 | 250 | 0 | |
Current portion of capital lease obligations | 2.7 | 3.1 | 3.5 | |
Accounts payable | 194.7 | 231.4 | 222.9 | |
Income taxes payable | 0 | 0.1 | 15.2 | |
Accrued employee compensation and benefits | 41.6 | 30 | 36.3 | |
Accrued restructuring and severance payments | 6.2 | 13 | 12.8 | |
Accrued expenses and other current liabilities | 72.6 | 84.3 | 83.3 | |
TOTAL CURRENT LIABILITIES | 325.3 | 611.9 | 374 | |
NONCURRENT LIABILITIES | ||||
Long-term debt, noncurrent | 499.5 | 499.5 | 749.4 | |
Obligations under capital leases | 27.5 | 29.4 | 30 | |
Income taxes | 11.3 | 20.8 | 0 | |
Deferred taxes | 2.4 | 0 | 19.8 | |
Other | 77.8 | 83.7 | 68.7 | |
TOTAL NONCURRENT LIABILITIES | 618.5 | 633.4 | 867.9 | |
TOTAL LIABILITIES | 943.8 | 1245.3 | 1241.9 | |
STOCKHOLDERS' EQUITY | ||||
Preferred stock | 0 | 0 | 0 | |
Common stock | 1.6 | 1.5 | 1.5 | 1.5 |
Additional paid-in capital | 1356.5 | 1350.7 | 1349.4 | 1339.7 |
Retained earnings | 1699.1 | 1,668 | 2502.5 | 2480.8 |
Accumulated other comprehensive (loss) income | -7.9 | -11.7 | -1.3 | 2.1 |
Treasury stock | -1826.3 | -1826.3 | -1826.3 | -1827.3 |
Stockholders' Equity Attributable to Noncontrolling Interest | 0.2 | 0 | 0 | 0 |
TOTAL STOCKHOLDERS' EQUITY | 1223.2 | 1182.2 | 2025.8 | 1996.8 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $2,167 | 2427.5 | 3267.7 |
Parenthetical Data To The Conso
Parenthetical Data To The Consolidated Balance Sheets (USD $) | |||
In Millions | Oct. 03, 2009
| Dec. 31, 2008
| Oct. 04, 2008
|
ASSETS | |||
PROPERTY, PLANT AND EQUIPMENT, accumulated depreciation and amortization | 523.5 | 484.3 | 467.9 |
STOCKHOLDERS' EQUITY | |||
Preferred stock, par value (in dollars per share) | 0.01 | 0.01 | 0.01 |
Preferred stock, shares authorized (in shares) | 1 | 1 | 1 |
Preferred stock, issued (in shares) | 0 | 0 | 0 |
Common stock, par value (in dollars per share) | 0.01 | 0.01 | 0.01 |
Common stock, shares authorized (in shares) | 200 | 200 | 200 |
Common stock, issued (in shares) | 156.8 | 154.8 | 154.9 |
Treasury stock, shares (in shares) | 71.4 | 71.4 | 71.4 |
Consolidated Statements of Oper
Consolidated Statements of Operations (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Oct. 03, 2009 | 3 Months Ended
Oct. 04, 2008 | 9 Months Ended
Oct. 03, 2009 | 9 Months Ended
Oct. 04, 2008 |
Net sales | 843.9 | 948.6 | 2516.8 | 2732.2 |
Licensing income | 11.6 | 16 | 33.3 | 36.5 |
Other revenues | 0.2 | 0.1 | 0.6 | 0.8 |
Total revenues | 855.7 | 964.7 | 2550.7 | 2769.5 |
Cost of goods sold | 551.3 | 641.4 | 1670.9 | 1843.2 |
Gross profit | 304.4 | 323.3 | 879.8 | 926.3 |
Selling, general and administrative expenses | 243.5 | 271.5 | 763.1 | 809.1 |
Operating income | 60.9 | 51.8 | 116.7 | 117.2 |
Interest income | 0.6 | 1.6 | 2.3 | 6.3 |
Interest expense and financing costs | 12.1 | 12.1 | 46.5 | 36.3 |
Loss and costs associated with repurchase of 4.250% Senior Notes | 0 | 0 | 2 | 0 |
Gain on sale of interest in Australian joint venture | 0 | 0 | 0 | 0.8 |
Equity in loss of unconsolidated affiliate | 2.3 | 0.4 | 2.8 | 0.4 |
Income from continuing operations before provision for income taxes | 47.1 | 40.9 | 67.7 | 87.6 |
Provision for income taxes | 16.5 | 14.6 | 23.7 | 31.1 |
Income from continuing operations | 30.6 | 26.3 | 44 | 56.5 |
Income from discontinued operations, net of tax | 0 | 1 | 0 | 1 |
Net income | 30.6 | 27.3 | 44 | 57.5 |
Less: income attributable to noncontrolling interest | 0.2 | 0 | 0.2 | 0 |
Income attributable to Jones | 30.4 | 27.3 | 43.8 | 57.5 |
Basic earnings per share | ||||
Income from continuing operations attributable to Jones | 0.36 | 0.32 | 0.52 | 0.67 |
Income from discontinued operations attributable to Jones | $0 | 0.01 | $0 | 0.01 |
Net income attributable to Jones | 0.36 | 0.33 | 0.52 | 0.68 |
Diluted earnings per share | ||||
Income from continuing operations attributable to Jones | 0.36 | 0.32 | 0.51 | 0.67 |
Income from discontinued operations attributable to Jones | $0 | 0.01 | $0 | 0.01 |
Net income attributable to Jones | 0.36 | 0.33 | 0.51 | 0.68 |
Weighted Average Number of Shares [Abstract] | ||||
Basic (in shares) | 81.7 | 81.6 | 81.7 | 83.4 |
Diluted (in shares) | 81.8 | 81.7 | 81.7 | 83.4 |
Dividends declared per share | 0.05 | 0.14 | 0.15 | 0.42 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (USD $) | ||||||||
In Millions | Capital Units [Member]
| Common Stock [Member]
| Additional Paid-in Capital [Member]
| Retained Earnings [Member]
| Accumulated Other Comprehensive Income [Member]
| Treasury Stock [Member]
| Noncontrolling Interest [Member]
| Total
|
Beginning Balance, Shares at Dec. 31, 2007 | 85.3 | |||||||
Beginning Balance at Dec. 31, 2007 | 1.5 | 1339.7 | 2480.8 | 2.1 | -1827.3 | $0 | 1996.8 | |
Issuance of restricted stock to employees, net of forfeitures | 1.3 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Comprehensive income: | ||||||||
Net income | 0 | 0 | 0 | 57.5 | 0 | 0 | 0 | 57.5 |
Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax | 0 | 0 | 0 | 0 | 0.4 | 0 | 0 | 0.4 |
Total stockholders' equity: Reclassification adjustment for hedge gains and losses included in net income, net of tax | 0 | 0 | 0 | 0 | 0.7 | 0 | 0 | 0.7 |
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | -4.5 | 0 | 0 | -4.5 |
Total comprehensive income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 54.1 |
Amortization expense in connection with employee stock options and restricted stock | 0 | 0 | 11 | 0 | 0 | 0 | 0 | 11 |
Excess tax benefit derived from exercise of employee stock options and vesting of restricted stock | 0 | 0 | -1.4 | 0 | 0 | 0 | 0 | -1.4 |
Dividends on common stock | 0 | 0 | 0 | -35.8 | 0 | 0 | 0 | -35.8 |
Settlement of accelerated share repurchase program | 0 | 0 | 0 | 0 | 1 | 0 | 1 | |
Settlement of accelerated share repurchase program (in shares) | -3.2 | |||||||
Exercise of employee stock options | 0 | 0 | 0.1 | 0 | 0 | 0 | 0 | 0.1 |
Ending Balance, Shares at Oct. 04, 2008 | 83.4 | |||||||
Ending Balance at Oct. 04, 2008 | 1.5 | 1349.4 | 2502.5 | -1.3 | -1826.3 | 0 | 2025.8 | |
Comprehensive income: | ||||||||
Beginning Balance, Shares at Dec. 31, 2008 | 83.4 | |||||||
Beginning Balance at Dec. 31, 2008 | 1.5 | 1350.7 | 1,668 | -11.7 | -1826.3 | 0 | 1182.2 | |
Issuance of restricted stock to employees, net of forfeitures | 2 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Comprehensive income: | ||||||||
Net income | 0 | 0 | 0 | 43.8 | 0 | 0 | 0.2 | 44 |
Other Comprehensive Income, Derivatives Qualifying as Hedges, Net of Tax | 0 | 0 | 0 | 0 | -0.6 | 0 | 0 | -0.6 |
Total stockholders' equity: Reclassification adjustment for hedge gains and losses included in net income, net of tax | 0 | 0 | 0 | 0 | 0.3 | 0 | 0 | 0.3 |
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | 4.1 | 0 | 0 | 4.1 |
Total comprehensive income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 47.8 |
Amortization expense in connection with employee stock options and restricted stock | 0 | 0.1 | 9.1 | 0 | 0 | 0 | 0 | 9.2 |
Excess tax benefit derived from exercise of employee stock options and vesting of restricted stock | 0 | 0 | -1.1 | 0 | 0 | 0 | 0 | -1.1 |
Tax effects of expired employee stock options | 0 | 0 | -2.2 | 0 | 0 | 0 | 0 | -2.2 |
Dividends on common stock | 0 | 0 | 0 | -12.7 | 0 | 0 | 0 | -12.7 |
Ending Balance, Shares at Oct. 03, 2009 | 85.4 | |||||||
Ending Balance at Oct. 03, 2009 | 1.6 | 1356.5 | 1699.1 | -7.9 | -1826.3 | 0.2 | 1223.2 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | ||
In Millions | 9 Months Ended
Oct. 03, 2009 | 9 Months Ended
Oct. 04, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $44 | 57.5 |
Less: income from discontinued operations | 0 | (1) |
Income from continuing operations | 44 | 56.5 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||
Loss and costs associated with repurchase of 4.250% Senior Notes | 2 | 0 |
Amortization expense in connection with employee stock options and restricted stock | 9.2 | 11 |
Depreciation and other amortization | 58 | 61.7 |
Impairment of Long-Lived Assets Held-for-use | 22.8 | 0 |
Equity in loss of unconsolidated affiliate | 2.8 | 0.4 |
Provision for losses on accounts receivable | 1.6 | 8.7 |
Deferred taxes | 22.3 | 28.9 |
Write-off of deferred financing fees | 7.9 | 0 |
Payments for Other Operating Activities | 0.6 | 1.1 |
Changes in operating assets and liabilities | ||
Accounts receivable | -54.2 | -147.1 |
Inventories | 94.6 | -25.4 |
Prepaid expenses and other current assets | -2.3 | 7.5 |
Other assets | -2.1 | -0.4 |
Accounts payable | -37.3 | -0.7 |
Income taxes payable/prepaid income taxes | -5.2 | 15.3 |
Accrued expenses and other current liabilities | -8.3 | -11.8 |
Other liabilities | -7.2 | 2.2 |
Total adjustments | 105.2 | -48.6 |
Net Cash Provided by (Used in) Operating Activities | 149.2 | 7.9 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | -20.1 | -56.8 |
Investment in GRI | -15.2 | -20.2 |
Acquisition-related costs | 0 | -0.2 |
Proceeds from sale of Mexican operations | 0 | 5.9 |
Proceeds from sale of interest in Australian joint venture | 0 | 0.8 |
Proceeds from sale of property, plant and equipment | 0 | 0.6 |
Net Cash Provided by (Used in) Investing Activities | -35.3 | -69.9 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repurchase of 4.250% Senior Notes, including consent fees and related costs | -252.4 | 0 |
Costs related to secured revolving credit agreement | (30) | 0 |
Dividends paid | -12.7 | -35.8 |
Principal payments on capital leases | -2.4 | -3.6 |
Repayment of acquired debt | 0 | -0.2 |
Settlement of accelerated share repurchase program | 0 | 1 |
Proceeds from exercise of employee stock options | 0 | 0.1 |
Net Cash Provided by (Used in) Financing Activities | -297.5 | -38.5 |
Effect of Exchange Rate on Cash and Cash Equivalents | 2.2 | (2) |
Cash and Cash Equivalents, Period Increase (Decrease) | -181.4 | -102.5 |
CASH AND CASH EQUIVALENTS, BEGINNING | 338.3 | 302.8 |
CASH AND CASH EQUIVALENTS, ENDING | 156.9 | 200.3 |
Basis Of Presentation
Basis Of Presentation | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Basis of Presentation [Abstract] | |
Basis Of Presentation | BASIS OF PRESENTATION The consolidated financial statements include the accounts of Jones Apparel Group, Inc. and its subsidiaries.The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the requirements of Form 10-Q.Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.The consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the footnotes thereto included within our Annual Report on Form 10-K. In our opinion, the information presented reflects all adjustments necessary for a fair statement of interim results.All such adjustments are of a normal and recurring nature.Certain reclassifications have been made to conform prior year data to the current presentation.The foregoing interim results are not necessarily indicative of the results of operations for the full year ending December 31, 2009.Subsequent events have been evaluated through October 29, 2009, the date the financial statements were issued. |
Accounts Receivable
Accounts Receivable | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Accounts Receivable [Abstract] | |
Accounts Receivable | ACCOUNTS RECEIVABLE Accounts receivable consist of the following: (In millions) October 3, 2009 October 4, 2008 December 31, 2008 Trade accounts receivable $ 448.0 $ 519.9 $ 397.6 Allowances for doubtful accounts, returns, discounts and co-op advertising (34.3 ) (45.3 ) (27.4 ) $ 413.7 $ 474.6 $ 370.2 Due to our 25% ownership interest in GRI, GRI is deemed to be a related party.Included in accounts receivable are amounts due from GRI in the amount of $45.6 million, $27.0 million and $43.3 million at October 3, 2009, October 4, 2008 and December 31, 2008, respectively.Net revenues from GRI amounted to $34.9 million and $45.3 million for the fiscal nine months ended October 3, 2009 and October 4, 2008, respectively.On April 23, 2009, we converted $10.0 million of the outstanding GRI accounts receivable to a three-year interest-bearing convertible note.GRI has the option, during the 90-day period that begins when the audited financial statements for the GRI fiscal year ending January 31, 2011 become available (or such shorter period that ends on the maturity date of the note), to convert the note into common shares of GRI at a conversion rate based on the greater of eight times the net income of GRI for such fiscal year, or an appraised value determined as of that date. |
Earnings Per Share
Earnings Per Share | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (now ASC Subtopic 260-10-45-61A), which classifies unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) as participating securities and requires them to be included in the computation of earnings per share pursuant to the two-class method described in ASC Subtopic 260-10-45-60B.This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years.All prior-period earnings per share data presented are to be adjusted retrospectively (including interim financial statements, summaries of earnings, and selected financial data).The adoption of this Staff Position required us to allocate a portion of net income to the unvested restricted shares held by our employees and directors, which are now classified as participating securities.Prior period earnings per share figures have been restated to conform to this presentation. The allocation of income to our common shareholders and the computation of basic and diluted earnings per share under the two-class method are as follows: Fiscal Quarter Ended Fiscal Nine Months Ended (In millions, except per share amounts) October 3, 2009 October 4, 2008 October 3, 2009 October 4, 2008 Income from continuing operations $ 30.6 $ 26.3 $ 44.0 $ 56.5 Less: income from continuing operations attributable to noncontrolling interest (0.2 ) - (0.2 ) - Income from continuing operations attributable to Jones 30.4 26.3 43.8 56.5 Less: income from continuing operations allocated to participating securities (1.3 ) (0.5 ) (1.7 ) (1.0 ) Income from continuing operations available to common stockholders of Jones 29.1 25.8 42.1 55.5 Income from discontinued operations - 1.0 - 1.0 Net income available to common stockholders of Jones $ 29.1 $ 26.8 $ 42.1 $ 56.5 Weighted-average common shares outstanding - basic 81.7 81.6 81.7 83.4 Effect of dilutive employee stock options 0.1 0.1 - - Weighted-average common shares and share equivalents outstanding - diluted 81.8 81.7 81.7 83.4 Earnings per share - basic Income from continuing operations $ 0.36 $ 0.32 $ 0.52 $ 0.67 Income from discontinued operations - 0.01 - 0.01 Basic earnings per share $ 0.36 $ 0.33 $ 0.52 $ 0.68 Earnings per share - diluted Income from continuing operations $ 0.36 $ 0.32 $ 0.51 $ 0.67 Income from discontinued operations - 0.01 - 0.01 Diluted earnings per share $ 0.36 $ 0.33 $ 0.51 $ |
Accrued Restructuring Costs
Accrued Restructuring Costs | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Accrued Restructuring Costs [Abstract] | |
Accrued Restructuring Costs | ACCRUED RESTRUCTURING COSTS Manufacturing Restructuring On September 12, 2006, we announced the closing of certain El Paso, Texas and Mexican operations related to the decision by Polo to discontinue the Polo Jeans Company product line (the manufacturing restructuring), which we produced for Polo subsequent to the sale of the Polo Jeans Company business to Polo in February 2006.In connection with the closings, we previously incurred $6.9 million of one-time termination benefits and associated employee costs for 1,838 employees and $1.0 million of other costs.The closings were substantially completed by the end of March 2007.On May 8, 2008, we sold the remaining assets of the Mexican operations for $5.9 million, resulting in a gain of $0.2 million. The details of the manufacturing restructuring accruals are as follows: (In millions) One-time termination benefits Other associated costs Total manufacturing restructuring Balance, January 1, 2008 $ 0.3 $ 0.9 $ 1.2 Net reversals (0.1 ) - (0.1 ) Payments and reductions (0.1 ) (0.3 ) (0.4 ) Balance, October 4, 2008 $ 0.1 $ 0.6 $ 0.7 Balance, January 1, 2009 $ - $ 0.1 $ 0.1 Reversals - (0.1 ) (0.1 ) Balance, October 3, 2009 $ - $ - $ - The net accrual of $0.7 million at October 4, 2008 is reported as accrued restructuring and severance payments. Moderate Apparel Restructuring In connection with the exit from and reorganization of certain moderate apparel product lines, we decided to close certain New York offices, and on October 9, 2007, we announced the closing of warehouse facilities in Goose Creek, South Carolina.We previously recorded $7.4 million of one-time termination benefits and associated employee costs for approximately 440 employees and $0.9 million of lease obligations as selling, general and administrative expenses in our wholesale jeanswear segment.During the fiscal nine months ended October 4, 2008 and October 3, 2009, we recorded $0.8 million and $1.9 million, respectively, of additional lease obligation costs and reversed $0.2 million of accruals for termination benefits during the fiscal nine months ended October 4, 2009.These costs are reported as selling, general and administrative expenses in our wholesale jeanswear segment relating to one of the warehouse facilities.These closings were substantially complete by the end of February 2008. The details of the moderate apparel restructuring accruals are as follows: (In millions) One-time termination benefits Lease obligations Total moderate apparelrestructuring Balance, January 1, 2008 $ 5.7 $ - $ 5.7 Net (reversals) additions (0.4 ) 0.8 0.4 Payments and reductions (4.0 ) (0.2 ) (4.2 ) Balance, October 4, 2008 $ 1.3 $ 0.6 $ 1.9 Balance, January 1, 2009 $ 0.9 $ 0.3 $ 1.2 (Reversals) additions (0.2 ) 1.9 1.7 Payments and reductions (0.7 ) (1.1 ) |
Credit Facilities
Credit Facilities | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Credit Facilities [Abstract] | |
Credit Facilities | CREDIT FACILITIES Prior to May 2009, we had a revolving credit agreement with several lending institutions to borrow an aggregate principal amount of up to $600 million (which was reduced from $750 million on January 5, 2009).This agreement could be used for letters of credit or cash borrowings.In May 2009, we replaced this revolving credit facility and our C$10.0 million unsecured line of credit in Canada with a new three-year $650 million secured revolving credit agreement (the New Credit Facility).Under the New Credit Facility, up to the entire amount of the facility is available for cash borrowings, with up to $400 million available for trade letters of credit and up to $50 million for standby letters of credit, and a subfacility available to our Canadian subsidiaries of up to $25 million for letters of credit and borrowings.Borrowings under the New Credit Facility may be used to refinance existing indebtedness, to repay our 4.250% Senior Notes due 2009 (the 2009 Notes), and for general corporate purposes in the ordinary course of business.Such borrowings bear interest either based on the alternate base rate, as defined in the New Credit Facility, or based on Eurocurrency rates, each with a margin that depends on the availability remaining under the New Credit Facility.The New Credit Facility contains customary events of default.Upon the termination of our prior credit agreement, we wrote off the remaining $7.9 million of deferred financing costs related to that agreement, which is reported as interest expense and financing costs in the fiscal nine months ended October 3, 2009. Availability under the New Credit Facility is determined in reference to a borrowing base consisting of a percentage of eligible inventory, accounts receivable, credit card receivables and licensee receivables, minus reserves determined by the joint collateral agents.At October 3, 2009, we had no cash borrowings and $37.3 million of letters of credit outstanding, and our remaining availability was $461.0 million.If availability under the New Credit Facility falls below a stated level, we will be required to comply with a minimum fixed charge coverage ratio.The New Credit Facility also contains affirmative and negative covenants that, among other things, will limit or restrict our ability to (1) incur indebtedness, (2) create liens, (3) merge, consolidate, liquidate or dissolve, (4) make investments (including acquisitions), loans or advances, (5) sell assets, (6) enter into sale and leaseback transactions, (7) enter into swap agreements, (8) make certain restricted payments (including dividends and other payments in respect of capital stock), (9) enter into transactions with affiliates, (10) enter into restrictive agreements, and (11) amend material documents.The New Credit Facility is secured by a first priority lien on substantially all of our personal property. |
Fair Values
Fair Values | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Fair Values [Abstract] | |
Fair Values | FAIR VALUES ASC Subtopic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.ASC Subtopic 820-10 outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements, and details the disclosures that are required for items measured at fair value.We currently do not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.We are permitted to choose to measure many financial instruments and certain other items at fair value, although we did not elect the fair value measurement option for any of our financial assets or liabilities. We have several financial instruments that must be measured under the fair value standard, including derivatives, the assets and liabilities of the Jones Apparel Group, Inc. Deferred Compensation Plan (the Rabbi Trust) and deferred director fees that are valued based on the quoted market price of our common stock.Our financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows: Level 1 - inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date; Level 2 - inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and Level 3 - unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing assets or liabilities based on the best information available. Assets and Liabilities Measured at Fair Value on a Recurring Basis In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis at October 4, 2008 and October 3, 2009. (In millions) Description Classification Value at October 4, 2008 Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobserv-able inputs (Level 3) Rabbi Trust assets Other current assets $ 7.7 $ 7.7 $ - $ - Total assets $ 7.7 $ 7.7 $ - $ - Rabbi Trust liabilities Accrued employee compen-sation and benefits $ 7.7 $ 7.7 $ - $ - Deferred director fees Accrued expenses and other current liabilities 0.6 0.6 - - Total liabilities $ 8.3 $ 8.3 $ - $ - (In millions) Description Classification |
Statement of Cash Flows
Statement of Cash Flows | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Statement of Cash Flows [Abstract] | |
Statement of Cash Flows | STATEMENT OF CASH FLOWS Fiscal Nine Months Ended October 3, 2009 October 4, 2008 (In millions) Supplemental disclosures of cash flow information for continuing operations: Cash paid (received) during the period for: Interest $ 28.1 $ 23.5 Net income tax payments (refunds ) 1.0 (15.9 ) Supplemental disclosures of non-cash investing and financing activities for continuing operations: Property and equipment acquired through capital lease financing 0.1 3.7 Restricted stock issued to employees 7.2 20.3 |
Derivatives
Derivatives | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Derivatives [Abstract] | |
Derivatives | DERIVATIVES ASC Topic 815 establishes accounting and reporting standards for derivative instruments.Specifically, ASC Topic 815 requires us to recognize all derivatives as either assets or liabilities on the balance sheet and to measure those instruments at fair value.Additionally, the fair value adjustments will affect either stockholders equity or net income, depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity. We use foreign currency forward contracts for the specific purpose of hedging the exposure to variability in forecasted cash flows associated primarily with inventory purchases.These instruments are designated as cash flow hedges as the principal terms of the forward exchange contracts are the same as the underlying forecasted foreign currency cash flows.Therefore, changes in the fair value of the forward contracts should be highly effective in offsetting changes in the expected foreign currency cash flows, and accordingly, changes in the fair value of forward exchange contracts are recorded in accumulated other comprehensive income, net of related tax effects, with the corresponding asset or liability recorded in the balance sheet.Amounts recorded in accumulated other comprehensive income are reflected in current-period earnings when the hedged transaction affects earnings. The following summarizes the U.S. Dollar notional amount and the fair value of our Canadian foreign currency forward exchange contracts, which we have classified as cash flow hedges.The contracts outstanding at October 3, 2009 mature at various dates through February 2010. (In millions) October 3, 2009 October 4, 2008 Notional amount Fair value other current liabilities Notional amount Fair value other current liabilities Canadian Dollar - U.S. Dollar $ 5.9 $ 0.2 $ 4.4 $ - The effect of our cash flow hedges on the statement of operations was as follows: (In millions) Amount of Pretax Gain (Loss) Recognized in Other Comprehensive Income Amount of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income Derivative type Fiscal Nine Months Ended October 3, 2009 Fiscal Nine Months Ended October 4, 2008 Location of Pretax Gain (Loss) Reclassified from Other Comprehensive Income into Income Fiscal Nine Months Ended October 3, 2009 Fiscal Nine Months Ended October 4, 2008 Foreign exchange contracts $ (0.9 ) $ 0.7 Cost of sales $ (0.4 ) $ (1.1 ) Since the derivatives we use in our risk management strategies are highly effective hedges because all the critical terms of the derivative instruments match those of the hedged item, we record no ineffectiveness related to our cash flow hedges.If foreign currency exchange rates do not change from their October 3, 2009 amounts, we estimate that any reclassifications from other comprehensive income to earnings within the next 12 months will not be material.The actual amounts that will be reclassified to earnings over the next 12 months could v |
Pension Plans
Pension Plans | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Pension Plans [Abstract] | |
Pension Plans | PENSION PLANS Components of Net Periodic Benefit Cost Fiscal Quarter Ended Fiscal Nine Months Ended (In millions) October 3, 2009 October 4, 2008 October 3, 2009 October 4, 2008 Interest cost $ 0.7 $ 0.7 $ 2.0 $ 2.0 Expected return on plan assets (0.6 ) (0.7 ) (1.6 ) (2.1 ) Amortization of net loss 0.4 0.2 1.1 0.6 Settlements - 1.6 - 1.6 Net periodic benefit cost $ 0.5 $ 1.8 $ 1.5 $ 2.1 Employer Contributions During the fiscal nine months ended October 3, 2009, we contributed $1.2 million to our defined benefit pension plans.We anticipate contributing an additional $0.3 million during 2009. We previously participated in a multi-employer defined benefit plan that covers union employees at a distribution center that has been closed.As a result of closing this facility, in March 2009 we paid a partial withdrawal liability payment of $2.4 million. |
Common Stock
Common Stock | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Common Stock [Abstract] | |
Common Stock | COMMON STOCK The Board of Directors has authorized several programs to repurchase our common stock from time to time in open market transactions.We repurchased no common stock on the open market during the first fiscal nine months of 2008 and 2009.As of October 3, 2009, $304.1 million of Board authorized repurchases was still available.We may make additional share repurchases in the future depending on, among other things, market conditions and our financial condition, although any such repurchases will be subject to limitations under our current revolving credit agreement. On September 6, 2007, we entered into an accelerated stock repurchase (ASR) agreement with Goldman, Sachs Co. (Goldman) to repurchase $400 million of our outstanding common stock.Purchases under the ASR were subject to collar provisions that established minimum and maximum numbers of shares based generally on the volume-weighted average price of our common stock during the term of the ASR program.We received an initial delivery of 15.5 million shares on September 11, 2007 and a second delivery of 2.4 million shares on October 18, 2007.Final settlement of the ASR program was scheduled for no later than July 19, 2008 and could occur earlier at the option of Goldman or later under certain circumstances.On June 5, 2008, Goldman informed us that it had concluded the ASR.As a result, we received a final delivery of 3.2 million shares on June 10, 2008, bringing the aggregate number of shares received under the ASR program to 21.1 million shares.No cash was required to complete the final delivery of shares.The combined average price for the shares delivered under the ASR was $19.00 per share. Our Board of Directors has authorized our common stock repurchases as a tax-effective means to enhance shareholder value and distribute cash to shareholders and, to a lesser extent, to offset the impact of dilution resulting from the issuance of employee stock options and shares of restricted stock.We believe that we have sufficient sources of funds to repurchase shares without significantly impacting our short-term or long-term liquidity.In authorizing future share repurchase programs, our Board of Directors gives careful consideration to our projected cash flows, our existing capital resources and repurchase limitations under our current revolving credit agreement. |
Segment Information
Segment Information | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Segment Information [Abstract] | |
Segment Information | SEGMENT INFORMATION We identify operating segments based on, among other things, differences in products sold and the way our management organizes the components of our business for purposes of allocating resources and assessing performance.Our operations are comprised of four reportable segments: wholesale better apparel, wholesale jeanswear, wholesale footwear and accessories, and retail.Segment revenues are generated from the sale of apparel, footwear and accessories through wholesale channels and our own retail locations.The wholesale segments include wholesale operations with third party department and other retail stores and our own retail stores, the retail segment includes operations by our own stores and e-commerce web sites, and income and expenses related to trademarks, licenses and general corporate functions are reported under licensing, other and eliminations.We define segment profit as operating income before net interest expense, goodwill impairment charges, gains or losses on sales of subsidiaries, equity in earnings of unconsolidated affiliates and income taxes.Summarized below are our revenues and income by reportable segment for the fiscal quarters ended October 3, 2009 and October 4, 2008.We are an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets.Therefore, we do not represent that these segments, if operated independently, would report the operating profit and other financial information shown below. (In millions) Wholesale Better Apparel Wholesale Jeanswear Wholesale Footwear Accessories Retail Licensing, Other Eliminations Consolidated For the fiscal quarter ended October 3, 2009 Revenues from external customers $ 245.5 $ 204.4 $ 227.2 $ 167.0 $ 11.6 $ 855.7 Intersegment revenues 41.7 0.2 15.0 - (56.9 ) - Total revenues 287.2 204.6 242.2 167.0 (45.3 ) 855.7 Segment income (loss) $ 38.1 $ 21.3 $ 28.3 $ (16.9 ) $ (9.9 ) 60.9 Net interest expense (11.5 ) Equity in loss of unconsolidated affiliate (2.3 ) Income from continuing operations before provision for income taxes $ 47.1 For the fiscal quarter ended October 4, 2008 Revenues from external customers $ 303.8 $ 202.0 $ 269.6 $ 173.2 $ 16.1 $ 964.7 Intersegment revenues 46.8 1.1 27.6 - (75.5 ) - Total revenues 350.6 203.1 297.2 173.2 (59.4 ) 964.7 Segment income (loss) $ 36.4 $ 10.8 $ 30.4 $ (20.1 ) $ (5.7 ) 51.8 Net interest expense (10.5 ) Equity in loss of unconsolidated affiliate (0.4 ) Income from continuing operati |
Equity Method Investments
Equity Method Investments | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Joint Ventures Equity/ Method Investments [Abstract] | |
Joint Ventures/ Equity Method Investments | EQUITY-METHOD INVESTMENTS We had a 50% ownership interest in a joint venture with Sutton Development Pty. Ltd. (Sutton) to operate retail locations in Australia, which operated under the name Nine West Australia Pty Ltd.We sold our interest in this joint venture to Sutton on December 3, 2007 for $20.7 million, which resulted in a pre-tax gain of $8.2 million.The sales price was subject to certain working capital adjustments, which resulted in additional sales proceeds and pre-tax gain of $0.8 million in the fiscal nine months ended October 4, 2008. On June 20, 2008, we acquired a 10% equity interest in GRI, an international accessories and apparel brand management and retail-distribution network, for $20.2 million.On June 24, 2009, we increased our equity interest to 25% for an additional $15.2 million.The selling shareholders of GRI are entitled to receive an additional cash payment equaling 60% of the amount of GRIs fiscal year 2011 net income that exceeds a certain threshold.GRI, which (including its franchisees) operates over 800 points of sale in 12 Asian countries, is the exclusive licensee of several of our brands in Asia, including Nine West, Anne Klein New York, AK Anne Klein, Easy Spirit, Enzo Angiolini and Joan David.GRI also distributes other womens apparel, shoes and accessory brands.See Accounts Receivable for additional information regarding GRI. |
New Accounting Standards
New Accounting Standards | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
New Accounting Standards [Abstract] | |
New Accounting Standards | NEW ACCOUNTING STANDARDS In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (now ASC Subtopic 825-10-65), which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements.This Staff Position is effective for interim reporting periods ending after June 15, 2009, and its requirements are reflected herein. In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (now ASC Subtopic 320-10-65), which amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements.This Staff Position is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009.The adoption of this Staff Position did not have an effect on our operations. In May 2009, the FASB issued SFAS No. 165, Subsequent Events (now ASC Subtopic 855-10).This standard establishes principles and requirements for subsequent events, which are events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be issued.In particular, this standard sets forth (a) the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (b) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements, and (c) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date.This standard is effective for interim or annual financial periods ending after June 15, 2009 and is to be applied prospectively.The adoption of this standard did not have a material impact on our results of operations or our financial position. In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140 (now part of ASC Topic 860).The objective of this standard is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferors continuing involvement in transferred financial assets.Additionally, on and after the effective date, the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes.This standard is effective as of the beginning of each reporting entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim |
Condensed Financial Information
Condensed Financial Information | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Supplemental Summarized Condensed Financial Information [Abstract] | |
Supplemental Summarized/Condensed Financial Information | SUPPLEMENTAL CONDENSED FINANCIAL INFORMATION Certain of our subsidiaries function as co-issuers (fully and unconditionally guaranteed on a joint and several basis) of the outstanding debt of Jones Apparel Group, Inc. (Jones), including Jones USA, Jones Apparel Group Holdings, Inc. (Jones Holdings), Nine West Footwear Corporation (Nine West) and Jones Retail Corporation (Jones Retail). The following condensed consolidating balance sheets, statements of operations and statements of cash flows for the Issuers (consisting of Jones and Jones USA, Jones Holdings, Nine West and Jones Retail, which are all our subsidiaries that act as co-issuers and co-obligors) and the Others (consisting of all of our other subsidiaries, excluding all obligor subsidiaries) have been prepared using the equity method of accounting in accordance with the requirements for presentation of such information. Separate financial statements and other disclosures concerning Jones are not presented as Jones has no independent operations or assets.There are no contractual restrictions on distributions from Jones USA, Jones Holdings, Nine West or Jones Retail to Jones. Condensed Consolidating Balance Sheets (In millions) October 3, 2009 December 31, 2008 Issuers Others Elim- inations Cons- olidated Issuers Others Elim- inations Cons- olidated ASSETS CURRENT ASSETS Cash and cash equivalents $ 148.7 $ 8.2 $ - $ 156.9 $ 318.4 $ 19.9 $ - $ 338.3 Accounts receivable 289.1 124.6 - 413.7 219.7 150.5 - 370.2 Inventories 293.0 123.2 0.8 417.0 339.3 170.6 (0.4 ) 509.5 Prepaid and refundable income taxes 1.3 0.2 7.6 9.1 15.0 0.2 1.7 16.9 Deferred taxes 8.5 13.6 - 22.1 12.5 16.7 (1.2 ) 28.0 Prepaid expenses and other current assets 28.8 8.5 - 37.3 34.7 7.9 - 42.6 TOTAL CURRENT ASSETS 769.4 278.3 8.4 1,056.1 939.6 365.8 0.1 1,305.5 Property, plant and equipment - net 98.3 148.5 - 246.8 135.4 165.6 - 301.0 Due from affiliates - 1,347.9 (1,347.9 ) - - 1,154.6 (1,154.6 ) - Goodwill 160.7 - - 160.7 160.7 - - 160.7 Other intangibles - net 0.5 588.6 - 589.1 0.5 590.3 - 590.8 Deferred taxes 78.3 - (78.3 ) - 73.7 - (59.5 ) 14.2 Investment in and loans to unconsolidated affiliate - 43.1 - 43.1 - 19.6 - 19.6 Investments in subsidiaries 1,983.3 - (1,983.3 ) - 1,866.2 - (1,866.2 ) - Other assets 60.3 10.9 - 71.2 25.9 10.0 (0.2 ) 35.7 TOTAL ASSETS $ 3,150.8 $ 2,417.3 |
Long-term Debt
Long-term Debt | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Long Term Debt [Abstract] | |
Long-term Debt | LONG-TERM DEBT On April 1, 2009, we commenced a cash tender offer to purchase any and all of our outstanding 2009 Notes, as well as a consent solicitation to amend the indenture (the Indenture) governing our outstanding 2009 Notes, our 5.125% Senior Notes due 2014 and our 6.125% Senior Notes due 2034 (collectively, the Notes).The purpose of the consent solicitation was to receive the consent of holders of at least a majority in principal amount of the Notes outstanding for proposed amendments to the Indenture to provide for a carveout to the lien covenant, for liens incurred in connection with the new senior secured credit facility described above (the Amendments).We received the required consents on April 15, 2009; consequently, the Amendments became operative upon payment of the consent fee to each validly consenting holder of the Notes, and are binding on all holders, including non-consenting holders of Notes.The consideration for each $1,000 principal amount of 2009 Notes validly tendered and not withdrawn pursuant to the tender offer was $980, and the consent fee for each $1,000 principal amount of Notes with respect to which holders validly delivered and did not revoke their consent pursuant to the consent solicitation was $20. Under the tender offer, we repurchased a total of $242.5 million of our outstanding 2009 Notes for a payment of $237.7 million, resulting in a loss on debt extinguishment of $1.9 million after fees and related expenses.We also paid $12.9 million in consent fees and $1.7 million of related costs, of which $8.0 million is being amortized over the life of the remaining related Notes as additional interest expense. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Discontinued Operations [Abstract] | |
Discontinued Operations | DISCONTINUED OPERATIONS On September 6, 2007, we completed the sale of Barneys to an affiliate of Istithmar PJSC.In 2007, we recognized a net after-tax gain on the sale of $254.2 million, which was subject to certain working capital adjustments.During the fiscal quarter ended October 4, 2008, we reached final settlement on certain liabilities remaining from the sale, resulting in an additional pretax gain of $1.5 million ($1.0 million after tax).This adjustment to the gain on the sale of Barneys has been reported as discontinued operations for the fiscal quarter and nine months ended October 4, 2008. |
Document Information
Document Information | |
9 Months Ended
Oct. 03, 2009 USD / shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-10-03 |
Entity Information
Entity Information (USD $) | |||
9 Months Ended
Oct. 03, 2009 | Oct. 28, 2009
| Jul. 05, 2008
| |
Entity Information [Line Items] | |||
Entity Registrant Name | JONES APPAREL GROUP INC | ||
Entity Central Index Key | 0000874016 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1,091,099,302 | ||
Entity Common Stock, Shares Outstanding | 85,392,067 |