Jones Apparel Group, Inc. Reports Preliminary 2009 Fourth Quarter and Full Year Adjusted Results and Other Items
29 January 2010 - 12:30AM
PR Newswire (US)
- Expects 2009 adjusted earnings per share from continuing
operations of $1.11 to $1.14 - Expects 2009 GAAP loss per share
from continuing operations of $(1.02) to $(1.05) - Expects non-cash
impairment charges totaling approximately $150 million - Expects
year end cash balance of approximately $330 million and cash
provided by operating activities of approximately $345 million NEW
YORK, Jan. 28 /PRNewswire-FirstCall/ -- Jones Apparel Group, Inc.
(NYSE:JNY) today released its preliminary adjusted and GAAP results
for fiscal year 2009. The Company expects to report 2009 full year
adjusted earnings per share from continuing operations in a range
of $1.11 to $1.14, compared with 2008 adjusted earnings per share
from continuing operations of $0.87. For the fourth quarter of
2009, the Company expects to report adjusted earnings per share
from continuing operations in a range of $0.08 to $0.11, compared
with a 2008 fourth quarter adjusted loss per share from continuing
operations of $(0.04). Adjusted earnings/(loss) per share excludes
the effects of impairment and restructuring charges and other items
not considered part of ongoing operations (see reconciliation of
adjusted earnings in the attached schedule). As reported under
generally accepted accounting principles ("GAAP"), the Company
expects to report a full year 2009 loss per share from continuing
operations in the range of $(1.02) to $(1.05) and $(1.53) to
$(1.56) for the fiscal fourth quarter. These ranges compare to a
loss per share from continuing operations of $(9.05) for the full
year 2008 and a loss per share of $(9.86) for the fourth quarter of
2008. Wesley R. Card, Jones Apparel Group President and Chief
Executive Officer, stated: "While we continue to note positive
signs of economic recovery, we are maintaining a cautious and
disciplined approach to execution as the environment remains
uncertain. During the fourth quarter we were encouraged by improved
results primarily from a less promotional environment throughout
the holiday season. We continued to tightly control inventories,
manage our costs and expenses and leverage our scale. We ended the
year with cash on hand of approximately $330 million, significantly
higher than our earlier expectations." Mr. Card continued: "The
year 2009 presented a unique set of challenges and we believe we
are entering 2010 from a position of operational and financial
strength. We have the right brands at the right price points for
today's consumer, and our retail business continues to show signs
of improvement. We are positioned for growth as we continue to
bring innovative, fresh concepts and brands to market, such as
Rachel Rachel Roy, Jones New York Collection Knits, j. Jones New
York, and the recently announced Jessica Simpson Jeanswear line,
which will begin shipping mid-year and is anticipated to be
distributed in approximately 1,000 doors." Non-Cash Impairment
Charges The Company has completed its required annual goodwill and
trademark impairment analysis for 2009 and expects fourth quarter
and full year 2009 reported results to include a pre-tax, non-cash
charge of approximately $150 million ($138 million after-tax) for
the impairment of certain goodwill and trademark amounts. The
impairment charge is comprised of two components. Approximately
$121 million ($120 million after-tax) of the non-cash charge
relates to the impairment of goodwill recorded in connection with
the Company's Retail business. The balance of the non-cash charge
of approximately $29 million ($18 million after-tax) relates to the
impairment of trademarks utilized in our Wholesale Jeanswear and
Wholesale Footwear and Accessories businesses. John T. McClain,
Jones Apparel Group Chief Financial Officer, stated, "As a result
of the challenging market conditions and the uncertain economic
outlook, we were required under the accounting rules to record
non-cash goodwill and trademark impairment charges in the fourth
quarter." Retail Improvement Plan The Company continues to
implement its previously-announced retail improvement plan to
right-size the retail portfolio, with the goal of enhancing segment
profitability, reducing capital expenditures and improving return
on invested capital. To date, the Company has exited 99 locations
and remains on track to exit a total of approximately 265
locations, with the remaining closings scheduled to occur
throughout the remainder of 2010. The Company expects to report a
profit on an adjusted basis in the Retail segment in the fourth
quarter 2009. Liquidity and Cash Provided By Operating Activities
The Company expects to report approximately $330 million of cash on
hand at December 31, 2009, with no amounts drawn under its $650
million revolving credit facility. Additionally, the Company
expects to report cash provided by operating activities from 2009
of approximately $345 million. The Company's previous guidance was
cash on hand of $200 million and cash provided by operating
activities to be in excess of $200 million. The increase in cash on
hand and in cash provided by operating activities is primarily due
to inventory control, lower working capital requirements and the
timing of certain cash receipts and payments. Fourth Quarter 2009
Earnings Results / Conference Call The Company noted that these
2009 fourth quarter results are preliminary and therefore subject
to the Company's completion of its customary quarterly closing and
review procedures. The Company will provide an update on these
matters when it announces final 2009 fourth quarter results as
scheduled, on Wednesday, February 10, 2010. A conference call with
management will be held on February 10, 2010 at 8:30 am Eastern
Time, which is accessible by dialing 412-858-4600 or through a web
cast at http://www.jonesapparel.com/. The call will be recorded and
made available through February 17, 2010 and may be accessed by
dialing 877-344-7529. Enter account number 437170. Presentation of
Financial Information Financial information discussed in this press
release includes both GAAP and non-GAAP measures, which include or
exclude certain items. These non-GAAP measures differ from reported
results and are intended to illustrate what management believes are
relevant period-over-period comparisons. A complete reconciliation
of reported GAAP results to the comparable non-GAAP information
appears in the financial tables section of this press release. The
Company has not provided a reconciliation with respect to the 2009
targeted earnings per share projection given that it is an estimate
derived from projected results. About Jones Apparel Group, Inc.
Jones Apparel Group, Inc. (http://www.jonesapparel.com/) is a
leading designer, marketer and wholesaler of branded apparel,
footwear and accessories. The Company also markets directly to
consumers through its chain of specialty retail and value-based
stores and through its e-commerce web sites. The Company's
nationally recognized brands include Jones New York, Nine West,
Anne Klein, Gloria Vanderbilt, Kasper, Bandolino, Easy Spirit,
Evan-Picone, l.e.i., Energie, Enzo Angiolini, Joan & David,
Mootsies Tootsies, Sam & Libby, Napier, Judith Jack, Albert
Nipon and Le Suit. The Company also markets costume jewelry under
the Givenchy brand licensed from Givenchy Corporation, women's
footwear under the Dockers® and Dockers® Women brands and infants',
toddlers' and boys' footwear (excluding girls' footwear) under the
Dockers® and Dockers® Premium brands, licensed from Levi Strauss
& Co., and apparel under the Rachel Roy brand licensed from
Rachel Roy IP Company, LLC. Each brand is differentiated by its own
distinctive styling, pricing strategy, distribution channel and
target consumer. The Company contracts for the manufacture of its
products through a worldwide network of quality manufacturers. The
Company has capitalized on its nationally known brand names by
entering into various licenses for several of its trademarks,
including Jones New York, Anne Klein New York, Nine West, Gloria
Vanderbilt, l.e.i. and Evan-Picone, with select manufacturers of
women's and men's products which the Company does not manufacture.
For more than 30 years, the Company has built a reputation for
excellence in product quality and value, and in operational
execution. Forward Looking Statements Certain statements contained
herein are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
regarding the Company's expected financial position, business and
financing plans are forward-looking statements. The words
"believes," "expect," "plans," "intends," "anticipates" and similar
expressions identify forward-looking statements. Forward-looking
statements also include representations of the Company's
expectations or beliefs concerning future events that involve risks
and uncertainties, including: -- those associated with the effect
of national, regional and international economic conditions; --
lowered levels of consumer spending resulting from a general
economic downturn or lower levels of consumer confidence; -- the
tightening of the credit markets and our ability to obtain credit
on satisfactory terms; -- given the uncertain economic environment,
the possible unwillingness of committed lenders to meet their
obligations to lend to borrowers, in general; -- the performance of
the Company's products within the prevailing retail environment; --
customer acceptance of both new designs and newly-introduced
product lines; -- the Company's reliance on a few department store
groups for large portions of the Company's business; -- the
Company's ability to identify acquisition candidates and, in a
competitive environment for such acquisitions, acquire such
businesses on reasonable financial and other terms; -- the
integration of the organizations and operations of any acquired
businesses into the Company's existing organization and operations;
-- consolidation of the Company's retail customers; -- financial
difficulties encountered by customers; -- the effects of vigorous
competition in the markets in which the Company operates; -- the
Company's ability to attract and retain qualified executives and
other key personnel; -- the Company's reliance on independent
foreign manufacturers; -- changes in the costs of raw materials,
labor, advertising and transportation; -- the general inability to
obtain higher wholesale prices for the Company's products that the
Company has experienced for many years; -- the uncertainties of
sourcing associated with an environment in which general quota has
expired on apparel products but litigation and political activity
seeking to re-impose quotas have been initiated; -- the Company's
ability to successfully implement new operational and financial
computer systems; and -- the Company's ability to secure and
protect trademarks and other intellectual property rights. A
further description of these risks and uncertainties and other
important factors that could cause actual results to differ
materially from the Company's expectations can be found in the
Company's Annual Report on Form 10-K for the year ended December
31, 2008, including, but not limited to, the Statement Regarding
Forward-Looking Disclosure and Item 1A-Risk Factors therein, and in
the Company's other filings with the Securities and Exchange
Commission. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, such
expectations may prove to be incorrect. The Company does not
undertake to publicly update or revise its forward-looking
statements as a result of new information, future events or
otherwise. Reconciliation of Projected GAAP EPS to Projected
Adjusted EPS for the quarter and twelve months ended December 31,
2009 (UNAUDITED) As required by the Securities and Exchange
Commission Regulation G, the following table contains information
regarding the non-GAAP adjustments used by the Company in the
presentation of its financial results: All amounts in millions,
except per share data FOURTH QUARTER
----------------------------------------- -------------- 2009 2008
---- ---- Projected loss from continuing operations attributable to
Jones $ (133.5) - (130.5) (822.8) (Benefit) provision for income
taxes (8.6) - (7.5) (37.7) Gain on sale of Mexican operations - -
Loss and costs associated with repurchase of 4.250% Senior Notes
(a) (0.4) - Adjustments to deferred financing costs (b) (3.6) 0.8
Goodwill impairments (c) 120.6 813.2 Items affecting segment
income: Trademark impairments (c) 28.7 25.2 Impairments and other
expenses related to retail store closure plan (d) (0.2) - Charges
associated with bankruptcy of former U.K. licensee - - Severance
related to restructuring activities (e) 4.0 - 3.5 6.4 Other
restructuring expenses and certain other charges (f) 4.9 - 4.4 5.9
Adjusted income (loss) from continuing operations before taxes 11.9
- 15.0 (9.0) Adjusted provision (benefit) for income taxes 4.7 -
5.4 (5.7) Projected adjusted income (loss) from continuing
operations 7.2 - 9.6 (3.3) Less: adjusted (income) from continuing
operations allocated to participating securities (0.3) - (0.5) 0.1
Projected adjusted income (loss) from continuing operations
available to common stockholders $ 6.9 - 9.1 $(3.2) Projected loss
per share from continuing operations - diluted $ (1.56) - (1.53)
$(9.86) (Benefit) provision for income taxes (0.10) - (0.09) (0.45)
Gain on sale of Mexican operations - - Loss and costs associated
with repurchase of 4.250% Senior Notes (a) - - Adjustments to
deferred financing costs (b) (0.04) 0.01 Goodwill impairments (c)
1.41 9.75 Items affecting segment income: Trademark impairments (c)
0.33 0.30 Impairments and other expenses related to retail store
closure plan (d) - - Charges associated with bankruptcy of former
U.K. licensee - - Severance related to restructuring activities (e)
0.04 0.07 Other restructuring expenses and certain other charges
(f) 0.06 - 0.05 0.07 Adjusted income (loss) from continuing
operations before taxes 0.14 - 0.17 (0.11) Adjusted provision
(benefit) for income taxes 0.06 (0.07) Projected adjusted earnings
(loss) per share from continuing operations - diluted $ 0.08 - 0.11
$(0.04) All amounts in millions, except per share data FULL YEAR
----------------------------------------- --------- 2009 2008 ----
---- Projected loss from continuing operations attributable to
Jones $ (89.5) - (86.5) $(766.3) (Benefit) provision for income
taxes 15.4 - 16.5 (6.6) Gain on sale of Mexican operations - (0.2)
Loss and costs associated with repurchase of 4.250% Senior Notes
(a) 1.5 - Adjustments to deferred financing costs (b) 4.4 0.8
Goodwill impairments (c) 120.6 813.2 Items affecting segment
income: Trademark impairments (c) 28.7 25.2 Impairments and other
expenses related to retail store closure plan (d) 24.1 - Charges
associated with bankruptcy of former U.K. licensee 3.9 - Severance
related to restructuring activities (e) 19.9 - 19.4 13.1 Other
restructuring expenses and certain other charges (f) 17.5 - 17.0
31.0 Adjusted income (loss) from continuing operations before taxes
146.5 - 149.6 110.2 Adjusted provision (benefit) for income taxes
52.0 - 52.7 36.6 Projected adjusted income (loss) from continuing
operations 94.5 - 96.9 73.6 Less: adjusted (income) from continuing
operations allocated to participating securities (3.9) - (4.0)
(1.6) Projected adjusted income (loss) from continuing operations
available to common stockholders $ 90.6 - 92.9 $72.0 Projected loss
per share from continuing operations - diluted $ (1.05) - (1.02)
$(9.05) (Benefit) provision for income taxes 0.18 - 0.19 (0.08)
Gain on sale of Mexican operations - - Loss and costs associated
with repurchase of 4.250% Senior Notes (a) 0.02 - Adjustments to
deferred financing costs (b) 0.05 0.01 Goodwill impairments (c)
1.42 9.60 Items affecting segment income: Trademark impairments (c)
0.33 0.30 Impairments and other expenses related to retail store
closure plan (d) 0.28 - Charges associated with bankruptcy of
former U.K. licensee 0.05 - Severance related to restructuring
activities (e) 0.23 0.15 Other restructuring expenses and certain
other charges (f) 0.21 - 0.20 0.37 Adjusted income (loss) from
continuing operations before taxes 1.72 - 1.75 1.30 Adjusted
provision (benefit) for income taxes 0.61 0.43 Projected adjusted
earnings (loss) per share from continuing operations - diluted $
1.11 - 1.14 $0.87 (a) 2009 includes the loss and costs associated
with the repurchase of 4.250% Senior Notes. (b) 2009 and 2008 are
comprised of adjustments to deferred financing costs related to our
prior revolving credit facility. (c) Represents the impairments
recorded as a result of the required annual review of our
indefinite-lived intangible assets and goodwill in accordance with
GAAP. (d) 2009 includes fixed asset impairments and other charges
related to the closure of underperforming retail locations
announced in April 2009. (e) 2009 includes severance related to the
restructuring of our costume jewelry business. 2009 and 2008
include severance related to other cost saving initiatives. (f)
2009 and 2008 include costs related to the exit from or
restructuring of our moderate sportswear and certain other lines.
2008 also includes costs related to the repositioning of l.e.i. as
an exclusive product for Walmart. Both periods contain certain
other charges not considered by management to be part of ongoing
operations. DATASOURCE: Jones Apparel Group, Inc. CONTACT:
Investors, John T. McClain, Chief Financial Officer, Jones Apparel
Group, +1-212-642-3860; Media, Joele Frank and Jennifer Freidman,
Joele Frank, Wilkinson Brimmer Katcher, +1-212-355-4449 Web Site:
http://www.jonesapparel.com/
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