-- Expects 2008 Adjusted earnings per share from continuing operations of $0.85 to $0.88 -- Expects 2008 GAAP loss per share from continuing operations of $(9.23) to $(9.27) -- Expects non-cash impairment charges totaling approximately $840 million -- Forecasts $33 million in annualized savings from cost-reduction actions -- Reduces quarterly cash dividend and planned capital expenditures -- Expects year end cash balance of approximately $335 million
Jones Apparel Group, Inc. (NYSE: JNY) today released its preliminary adjusted and GAAP results for fiscal year 2008. The Company expects to report 2008 full year adjusted earnings per share from continuing operations in a range of
Mr. Card continued, "We are committed to making the necessary decisions that will position us for maximum operating leverage and improved profitability when markets recover. We maintain a strong financial position. We believe our strong brands, price points, history of excellent execution and the actions we are taking to reduce costs, well-positions us to weather this climate and create shareholder value as the economy rebounds."
Non-cash impairment charges
The Company has completed its annual goodwill and trademark impairment analysis for 2008, as required by SFAS No. 142, "Goodwill and Other Intangible Assets." The Company expects fourth quarter and full year 2008 reported results to include a pre-tax, non-cash charge of approximately
Cost reduction actions
The Company has taken aggressive cost reduction actions to address the uncertainty posed by current economic conditions and to protect our future profitability. Cost reduction actions underway are anticipated to result in annualized cash savings of approximately
Mr. McClain commented, "While the decision to take these actions was difficult, and the impact that it will have on our many hard working associates is unfortunate, these actions are a necessary step in aligning our cost structure to the current demand levels."
Dividends
The Company's Board of Directors has determined to reduce the Company's quarterly cash dividend from
Mr. Card commented: "Given the current overall economic climate, and its impact on the retail sector in particular, the Board has made the prudent decision to reduce our dividend. With consumer spending levels expected to remain low, reducing our dividend enhances our financial flexibility and our ability to execute our strategies."
Liquidity
The Company expects to report approximately
The Company reported on
The Company noted that these 2008 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 2008 fourth quarter results as scheduled, on
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 2008 targeted earnings per share projection given that it is an estimate derived from projected results.
About Jones Apparel Group, Inc.
Jones Apparel Group, Inc. (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. The Company's nationally recognized brands include Jones
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;
-- 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;
-- 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
Reconciliation of Projected GAAP EPS to Projected Adjusted EPS for the quarter and twelve months ended December 31, 2008 (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 FULL YEAR ---------------------- ----------------------- 2008 2007 2008 2007 --------------- ------ --------------- ----- Projected (loss) Income from continuing operations $(825.5)-(821.5) $(85.8) $(769.0)-(765.0) $45.9 Benefit for income taxes (36.0)- (37.0) (5.8) (5.0) - (6.0) (104.4) Gain on sale of Mexican operations - - (0.2) - Items affecting segment income: Gain on sale of interest in Australian joint venture (a) - (8.2) - (8.2) Goodwill impairments (b) 815.0 78.0 815.0 78.0 Trademark impairments (b, c) 25.0 7.5 25.0 88.0 Severance and other costs related to the exit from certain moderate product lines and other restructuring costs 10.4 - 11.4 23.3 42.2 - 43.2 93.7 --------------- ----- --------------- ----- Adjusted (loss) income from continuing operations before taxes (11.1) - (7.1) 9.0 108.0 - 112.0 193.0 Adjusted (benefit) provision for income taxes (5.3) - (4.3) 1.2 37.0 - 38.0 64.9 --------------- ----- --------------- ----- Projected adjusted (loss) income from continuing operations $(5.8) - (2.8) $7.8 $71.0 - 74.0 $128.1 --------------- ----- --------------- ----- Projected (loss) earnings per share from continuing operations - diluted $(10.11)-(10.07) $(1.01) $(9.27)- (9.23) $0.45 Benefit for income taxes (0.44)- (0.45) (0.07) (0.06)- (0.07) (1.03) Gain on sale of Mexican operations - - - - Items affecting segment income: Gain on sale of interest in Australian joint venture (a) - (0.10) - (0.08) Goodwill impairments (b) 9.99 0.92 9.83 0.77 Trademark impairments (b, c) 0.31 0.09 0.30 0.87 Severance and other costs related to the exit from certain moderate product lines and other restructuring costs 0.13 - 0.14 0.27 0.51 - 0.52 0.92 --------------- ----- --------------- ----- Adjusted (loss) income from continuing operations before taxes (0.12)-(0.08) 0.10 1.31 - 1.35 1.90 Adjusted (benefit) provision for income taxes (0.06)-(0.05) 0.01 0.45 - 0.46 0.64 Adjustment for using diluted share count (d) - - (0.01) - --------------- ----- --------------- ----- Projected adjusted (loss) earnings per share from continuing operations - diluted $(0.06)-(0.03) $0.09 $0.85 - 0.88 $1.26 --------------- ----- --------------- ----- (a) Represents the gain recorded in relation to the sale of our interest in the Nine West Australia joint venture in December 2007. (b) Represents the impairments recorded as a result of the annual valuation of the fair value of our indefinite-lived intangible assets and goodwill in accordance with GAAP. ( c ) Represents the impairments recorded in accordance with SFAS No. 142, resulting from the exit from certain of our moderate sportswear brands. (d) In accordance with SFAS No. 128, the calculation of diluted shares for the purpose of generating GAAP EPS does not include any antidilutive items (options and restricted stock) that would result in a lower loss per share. Since the non-GAAP adjustments would result in projected adjusted net income, these items would become dilutive to EPS. This adjustment represents the impact of including these dilutive items in the calculation of diluted shares for generating the projected adjusted EPS.
SOURCE Jones Apparel Group, Inc.