UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-10746
JONES APPAREL GROUP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 06-0935166
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
(Address of principal (Zip Code)
executive offices)
(215) 785-4000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at August 11, 1997
$.01 par value 52,209,801
<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
Index
PART I. FINANCIAL INFORMATION Page No.
Financial Statements:
Consolidated Balance Sheets
June 29, 1997 and December 31, 1996................. 3
Consolidated Statements of Income
Thirteen and Twenty-six Weeks ended June 29, 1997
and June 30, 1996................................. 4
Consolidated Statements of Stockholders' Equity
Twenty-six Weeks ended June 29, 1997................ 5
Consolidated Statements of Cash Flows
Twenty-six Weeks ended June 29, 1997 and
June 30, 1996..................................... 6
Notes to Consolidated Financial Statements.................. 7 - 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 9 - 12
PART II. OTHER INFORMATION....................................... 13 - 14
- 2 -
<PAGE>
<TABLE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 29, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents............................................................. $ 30,010 $ 30,085
Accounts receivable, net of allowance of $3,533 and $2,263............................ 104,583 112,678
Inventories........................................................................... 274,067 214,437
Receivable from and advances to contractors........................................... 12,468 11,490
Deferred taxes........................................................................ 17,257 9,708
Prepaid expenses and other current assets............................................. 14,463 11,432
------- -------
TOTAL CURRENT ASSETS................................................................ 452,848 389,830
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation and amortization of $38,567 and $33,127.................................. 69,573 61,696
CASH RESTRICTED FOR CAPITAL ADDITIONS................................................... 9,015 -
INTANGIBLES, less accumulated amortization of $6,758 and $5,896......................... 25,426 26,288
DEFERRED TAXES.......................................................................... 1,311 461
OTHER ASSETS............................................................................ 10,520 9,834
------- -------
$568,693 $488,109
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings................................................................. $ 11,879 $ -
Current portion of long-term debt and capital lease obligations....................... 3,655 3,067
Accounts payable...................................................................... 89,536 72,569
Income taxes payable.................................................................. 4,844 8,959
Accrued expenses and other current liabilities........................................ 14,705 11,265
------- -------
TOTAL CURRENT LIABILITIES........................................................... 124,619 95,860
NONCURRENT LIABILITIES:
Obligations under capital leases...................................................... 19,925 12,134
Long-term debt........................................................................ 2 7
------- -------
TOTAL NONCURRENT LIABILITIES........................................................ 19,927 12,141
------- -------
TOTAL LIABILITIES................................................................... 144,546 108,001
EXCESS OF NET ASSETS ACQUIRED OVER COST................................................. 2,457 3,379
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value - shares authorized 1,000; none issued................ - -
Common stock, $.01 par value - shares authorized 100,000;
issued 54,053 and 53,595............................................................. 541 536
Additional paid in capital............................................................ 109,444 99,140
Retained earnings..................................................................... 366,011 317,192
Cumulative foreign currency translation adjustments................................... (1,216) (1,154)
------- -------
474,780 415,714
Less treasury stock, 1,976 and 1,600 shares, at cost.................................. (53,090) (38,985)
------- -------
TOTAL STOCKHOLDERS' EQUITY.......................................................... 421,690 376,729
------- -------
$568,693 $488,109
======= =======
<FN>
All amounts in thousands except per share data
See notes to consolidated financial statements
</TABLE>
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<PAGE>
<TABLE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
---------------------- ------------------------
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net sales................................................. $262,988 $193,275 $580,978 $453,626
Cost of goods sold........................................ 178,542 132,243 393,426 319,800
------- ------- ------- -------
Gross profit.............................................. 84,446 61,032 187,552 133,826
Selling, general and administrative expenses.............. 56,632 42,157 115,729 84,874
Licensing income.......................................... (3,301) (2,659) (6,766) (5,235)
------- ------- ------- -------
Income from operations.................................... 31,115 21,534 78,859 54,187
Net interest expense...................................... 267 463 629 984
------- ------- ------- -------
Income before provision for income taxes.................. 30,848 21,071 77,960 53,203
Provision for income taxes................................ 11,568 7,733 29,141 19,526
------- ------- ------- -------
Net income................................................ $19,280 $13,338 $48,819 $33,677
======= ======= ======= =======
Earnings per share
Primary................................................. $0.36 $0.25 $0.90 $0.63
Fully diluted........................................... $0.36 $0.25 $0.90 $0.63
Weighted average common shares and
share equivalents outstanding
Primary................................................. 54,014 53,967 53,979 53,749
Fully diluted........................................... 54,167 53,967 54,250 53,844
<FN>
All amounts in thousands except per share data
See notes to consolidated financial statements
</TABLE>
- 4 -
<PAGE>
<TABLE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
Cumulative
foreign Total
Additional currency stock-
Common paid-in Retained translation Treasury holders'
stock capital earnings adjustments stock equity
------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997.............................. $536 $99,140 $317,192 ($1,154) $(38,985) $376,729
Twenty-six weeks ended June 29, 1997:
Amortization of deferred compensation................. - 158 - - - 158
Net income............................................ - - 48,819 - - 48,819
Exercise of stock options............................. 5 6,280 - - (100) 6,185
Tax benefit derived from exercise of stock options.... - 3,866 - - - 3,866
Acquisition of treasury stock......................... - - - - (14,005) (14,005)
Foreign currency translation adjustments.............. - - - (62) - (62)
------- ---------- ---------- ---------- --------- ----------
Balance, June 29, 1997............................... $541 $109,444 $366,011 ($1,216) $(53,090) $421,690
======= ========== ========== ========== ========= ==========
<FN>
All amounts in thousands
See notes to consolidated financial statements
</TABLE>
- 5 -
<PAGE>
<TABLE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Twenty-six weeks ended
--------------------------
June 29, June 30,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................................................. $48,819 $33,677
------- -------
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization............................................................. 5,877 4,146
Provision for losses on accounts receivable............................................... 1,783 460
Deferred taxes............................................................................ (8,399) 1,929
Other..................................................................................... 87 154
Decrease (increase) in:
Trade receivables....................................................................... 6,282 (4,825)
Inventories............................................................................. (59,694) (61,383)
Prepaid expenses and other current assets............................................... (4,023) (2,697)
Other assets............................................................................ (687) (227)
Increase (decrease)in:
Accounts payable........................................................................ 16,975 14,690
Taxes payable........................................................................... (256) 4,614
Accrued expenses and other current liabilities.......................................... 3,462 2,639
------- -------
Total adjustments..................................................................... (38,593) (40,500)
------- -------
Net cash provided by (used in) operating activities......................................... 10,226 (6,823)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................................................... (13,523) (10,744)
Changes in cash restricted for capital additions.......................................... (9,015) (2,798)
Trademark costs........................................................................... - (1,519)
Proceeds from disposition of assets....................................................... - 108
------- -------
Net cash used in investing activities....................................................... (22,538) (14,953)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings......................................................... 11,879 18,839
Proceeds from capital lease............................................................... 10,000 5,000
Repayment of capital leases and long-term debt............................................ (1,846) (1,187)
Acquisition of treasury stock............................................................. (14,005) (14,299)
Proceeds from exercise of stock options................................................... 6,185 7,085
Other..................................................................................... - (37)
------- -------
Net cash provided by financing activities................................................... 12,213 15,401
------- -------
EFFECT OF EXCHANGE RATES ON CASH............................................................ 24 1
------- -------
NET DECREASE IN CASH........................................................................ (75) (6,374)
CASH AND CASH EQUIVALENTS, beginning of period.............................................. 30,085 16,864
------- -------
CASH AND CASH EQUIVALENTS, end of period.................................................... $30,010 $10,490
======= =======
<FN>
All amounts in thousands
See notes to consolidated financial statements
</TABLE>
- 6 -
<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The consolidated financial statements include the accounts of Jones
Apparel Group, Inc. and its wholly-owned subsidiaries (collectively, the
"Company"). The financial statements are presented in accordance with the
requirements of Form 10-Q and consequently do not include all of the
disclosures normally made in an annual Form 10-K filing. Accordingly, the
consolidated financial statements included herein should be reviewed in
conjunction with the consolidated financial statements and the footnotes
therein included within the Company's Annual Report on Form 10-K.
The financial information has been prepared in accordance with the
Company's customary accounting practices and has not been audited. All
significant intercompany balances and transactions have been eliminated. In
the opinion of management, the information presented reflects all adjustments
necessary for a fair statement of interim results. All such adjustments are of
a normal and recurring nature. The foregoing interim results are not
necessarily indicative of the results of operations for the full year ending
December 31, 1997. The Company reports interim results in 13 week quarters;
however, the annual reporting period is the calendar year.
2. Inventories
Inventories are summarized as follows (amounts in thousands):
June 29, December 31,
1997 1996
-------- ------------
Raw materials..................... $39,340 $38,571
Work in process................... 68,185 37,682
Finished goods.................... 166,542 138,184
------- -------
$274,067 $214,437
======= =======
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<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Earnings Per Share
The computation of earnings per share is based on the weighted average
number of common shares outstanding during the period plus, in periods in which
they have a dilutive effect, the effect of common shares contingently issuable
upon exercise of stock options. Fully diluted earnings per share also reflect
additional dilution related to stock options due to the use of the market price
at the end of the period when this price is higher than the average price for
the period.
4. Statement of Cash Flows
Cash payments made for interest for the twenty-six weeks ended June 29, 1997
and June 30, 1996 were $1,176,000 and $1,272,000, respectively.
Cash payments made for income taxes for the twenty-six weeks ended June 29,
1997 and June 30, 1996 were $37,751,000 and $12,198,000, respectively.
Equipment acquired through capital lease financing during the twenty-six
weeks ended June 29, 1997 was $220,000.
Reduction in income tax payments resulting from the exercise of employee
stock options during the twenty-six weeks ended June 29, 1997 and June 30, 1996
were $3,866,000 and $4,002,000, respectively.
Under the provisions of the Company's 1991 Stock Option Plan, employees
exercising stock options during the twenty-six weeks ended June 29, 1997
exchanged 2,122 shares of the Company's Common Stock (valued at $100,000) for
8,963 newly issued shares and during the twenty-six weeks ended June 30, 1996
exchanged 28,000 shares of the Company's Common Stock (valued at $763,000) for
67,430 newly issued shares.
5. New Accounting Standards.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earning per Share," which provides
for the calculation of "basic" and "diluted" earnings per share. Basic earnings
per share includes no dilution and is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution
from the assumed exercise of stock options in a manner similar to fully diluted
earnings per share, except that the use of the market price at the end of the
period, when that price is higher than the average market price for the period,
has been eliminated. This standard is effective for periods ending after
December 15, 1997. The adoption of this standard is not expected to have a
significant effect on the Company's earnings per share calculation. Under
SFAS No. 128, basic and diluted earning per share for the twenty-six weeks ended
June 29, 1997 would be $.94 and $.90, respectively. Basic and diluted earnings
per share for the twenty-six weeks ended June 30, 1996 would be $.64 and $.63,
respectively. Under SFAS No. 128, basic and diluted earnings per share for the
thirteen weeks ended June 29, 1997 would be $.37 and $.36, respectively. Basic
and diluted earnings per share for the thirteen weeks ended June 30, 1996 would
be $.25 and $.25, respectively.
6. Capital Stock
On July 30, 1996, the Company's Board of Directors approved a two-for-one
stock split of the Company's Common Stock in the form of a 100% stock dividend
for shareholders of record as of September 12, 1996. Concurrently, the number
of authorized shares of Common Stock was increased to 100,000,000. On October
2, 1996, a total of 26,744,580 shares of Common Stock were issued in connection
with the split. The stated par value of each share was not changed from
$0.01. All share and per share amounts have been restated to retroactively
reflect the stock split.
- 8 -
<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The following discussion provides information and analysis of the Company's
results of operations for the thirteen and twenty-six week periods ended June
29, 1997 and June 30, 1996 and its liquidity and capital resources. The
following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements included elsewhere herein.
Results of Operations
Quarter Ended June 29, 1997 Compared to Quarter Ended June 30, 1996
Net Sales. Net sales in the thirteen weeks ended June 29, 1997 (hereinafter
referred to as the "second quarter of 1997") increased by 36.1%, or $69.7
million, to $263.0 million as compared to $193.3 million in the thirteen weeks
ended June 30, 1996 (hereinafter referred to as the "second quarter of 1996").
The increase was due primarily to an increase in the number of units shipped,
as well as the impact of a higher average price per unit resulting from the mix
of products shipped. Career sportswear sales, which include the new Lauren
Ralph Lauren division in 1997, increased by 57.1% or $59.1 million, to
$162.6 million in the second quarter of 1997 as compared to $103.5 million in
the second quarter of 1996. Casual sportswear sales for the second quarter
of 1997 increased by 19.1%, or $10.8 million, to $67.4 million as compared to
$56.6 million in the second quarter of 1996. Net sales for the Company's
suit, dress and other category decreased by 0.6%, or $0.2 million, to $33.0
million in the second quarter of 1997 as compared to $33.2 million in
the second quarter of 1996.
Gross Profit. The gross profit margin was 32.1% in the second quarter of
1997 as compared to 31.6% in the second quarter of 1996. The increase was
primarily attributable to the impact of higher gross profit margins from the
Company's major product lines including, in 1997, the new Lauren Ralph Lauren
label, which carries higher margins than the corporate average.
SG&A Expenses. Selling, general and administrative expenses
("SG&A" expenses) of $56.6 million in the second quarter of 1997 represented an
increase of $14.5 million over the second quarter of 1996. As a percentage of
sales, SG&A expenses decreased to 21.5% in the second quarter of 1997 from 21.8%
for the comparable period in 1996. Advertising, royalties and operating
expenses associated with Lauren Ralph Lauren sales, as well as the Company's
overall sales growth, added significant expenses during the quarter. Retail
store operating expenses increased by $2.0 million, reflecting the added cost
of 24 more stores in operation at the end of the second quarter of 1997
compared to the end of the second quarter of 1996.
Licensing Income. Licensing income increased by $0.6 million to $3.3
million in the second quarter of 1997 as compared to $2.7 million in the second
quarter of 1996. Licensees under the Jones New York label accounted for $0.5
million of the increase while income from licenses under the Evan-Picone label
increased by $0.1 million.
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<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Operating Income. The resulting second quarter of 1997 operating profit of
$31.1 million increased by 44.5%, or $9.6 million, as compared to $21.5 million
during the second quarter of 1996. The operating profit margin increased to
11.8% for the second quarter of 1997 from the 11.1% achieved during the second
quarter of 1996.
Net Interest Expense. Net interest expense was $0.3 million in the second
quarter of 1997 compared to $0.5 million in the comparable period of 1996.
The primary reasons for the change were lower average borrowings and higher
average cash balances during the second quarter of 1997.
Provision for Income Taxes. The effective income tax rate was 37.5% for
the second quarter of 1997 as compared to 36.7% for the second quarter of 1996.
The increase was primarily due to higher state income tax provisions for the
second quarter of 1997.
Net Income. Net income increased by 44.5% to $19.3 million in the second
quarter of 1997, an increase of $6.0 million over the net income of $13.3
million earned in the second quarter of 1996. Net income as a percentage of
sales was 7.3% in the second quarter of 1997 and 6.9% in the second quarter of
1996.
Six Months Ended June 29, 1997 Compared to Six Months Ended June 30, 1996
Net Sales. Net sales in the twenty-six weeks ended June 29, 1997
(hereinafter referred to as the "first six months of 1997") increased by 28.1%,
or $127.4 million, to $581.0 million as compared to $453.6 million in the
twenty-six weeks ended June 30, 1996 (hereinafter referred to as the "first six
months of 1996"). The increase was due primarily to an increase in the number
of units shipped, as well as the impact of a higher average price per unit
resulting from the mix of products shipped. Career sportswear sales, which
include the new Lauren Ralph Lauren division in 1997, increased by
44.9% or $112.9 million, to $364.1 million in the first six months of 1997 as
compared to $251.2 million in the first six months of 1996. Casual
sportswear sales for the first six months of 1997 increased by 9.9%, or $13.1
million, to $145.2 million as compared to $132.1 million in the first six months
of 1996. Net sales for the Company's suit, dress and other category increased
by 2.0%, or $1.4 million, to $71.7 million in the first six months of 1997 as
compared to $70.3 million in the first six months of 1996.
Gross Profit. The gross profit margin was 32.3% in the first six months of
1997 as compared to 29.5% in the first six months of 1996. The increase was
primarily attributable to the impact of higher gross profit margins from the
Company's major product lines including, in 1997, the new Lauren Ralph Lauren
label, which carries higher margins than the corporate average.
SG&A Expenses. Selling, general and administrative expenses
("SG&A" expenses) of $115.7 million in the first six months of 1997 represented
an increase of $30.9 million over the first six months of 1996. As a percentage
of sales, SG&A expenses increased to 19.9% in the first six months of 1997 from
18.7% for the comparable period in 1996. Advertising, royalties and operating
expenses associated with Lauren Ralph Lauren sales, as well as the Company's
overall sales growth, added significant expenses during
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<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
the first six months. Retail store operating expenses increased by $3.8
million, reflecting the added cost of 24 more stores in operation at the end
of the first six months of 1996.
Licensing Income. Licensing income increased by $1.6 million to $6.8
million in the first six months of 1997 as compared to $5.2 million in the first
six months of 1996. Licensees under the Jones New York label accounted for
$1.3 million of the increase while income from licenses under the Evan-Picone
label increased by $0.3 million.
Operating Income. The resulting first six months of 1997 operating profit
of $78.6 million increased by 45.0%, or $24.4 million, as compared to $54.2
million during the first six months of 1996. The operating profit margin
increased to 13.5% for the first six months of 1997 from the 11.9% achieved
during the first six months of 1996.
Net Interest Expense. Net interest expense was $0.6 million in the first
six months of 1997 compared to $1.0 million in the comparable period of 1996.
The primary reasons for the change were lower average borrowings and higher
average cash balances during the first six months of 1997.
Provision for Income Taxes. The effective income tax rate was 37.4% for the
first six months of 1997 as compared to 36.7% for the first six months of 1996.
The increase was primarily due to higher state income tax provisions for the
first six months of 1997.
Net Income. Net income increased by 45.0% to $48.8 million in the first six
months of 1997, an increase of $15.1 million over the net income of $33.7
million earned in the first six months of 1996. Net income as a percentage of
sales was 8.4% in the first six months of 1997 and 7.4% in the first six months
of 1996.
Liquidity and Capital Resources
The Company's principal capital requirements have been to fund working
capital needs, capital expenditures and, beginning in 1995, to repurchase the
Company's Common Stock on the open market. The Company has historically relied
primarily on internally generated funds, trade credit and bank borrowings to
finance its operations and expansion.
Net cash provided by (used in) operations was $10.2 million in the first six
months of 1997, compared to ($6.8) million in the first six months of 1996,
primarily reflecting the effects of a higher net income for the first six months
of 1997 (before depreciation and amortization charges). Significant offsetting
changes also include a decrease in trade receivables of $6.3 million in 1997
compared to a $4.8 million increase in 1996 and the generation of an $8.4
million deferred tax benefit in 1997 compared to a deferred tax expense of
$1.9 million in 1996.
Net cash used in investing activities was $7.6 million higher in the first
six months of 1997 than in the first six months of 1996 due to additional
capital improvements and replacements. Expenditures for capital improvements,
replacements and property under capital lease for the full year 1997 are
expected to approximate $20 million, of which $10 million represents the
estimated cost of an additional warehouse facility under construction to support
anticipated growth.
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<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Net cash provided by financing activities was $12.2 million in the first six
months of 1997 as compared to $15.4 million in the first six months of 1996.
The principal reasons for the changes were decreases in the amounts of
short-term borrowings to fund working capital requirements and transactions
involving the Company's Common Stock. In the first six months of 1997, the
Company repurchased $14.0 million of its Common Stock on the open market under
an announced program under which the Company is authorized to acquire up to
$100.0 million of such shares through the end of 1997. As of June 29, 1997, an
aggregate of $52.2 million had been expended pursuant to the stock repurchase
program. Proceeds from the issuance of common stock to employees exercising
stock options amounted to $6.2 million in the first six months of 1997 as
compared to $7.1 million in the first six months of 1996.
As of June 29, 1997, the Company had credit arrangements with six United
States financial institutions which totaled $330.0 million. These lines, which
may be used for unsecured borrowings and letters of credit (issued primarily to
finance foreign inventory purchases), contain an aggregate sub-limit of $190.0
million for unsecured borrowings with rates depending on the borrowing vehicle
utilized. At June 29, 1997, $169.8 million was utilized for letters of credit
and there were $11.9 million of short-term borrowings outstanding, leaving
$148.3 million available for additional borrowings and letters of credit at that
date.
The Company also has a line of credit with a Canadian institution for
C$4.0 million to be used for unsecured borrowings under which no amounts were
outstanding at June 29, 1997. The Company believes that funds generated by
operations and the bank credit arrangements will provide the financial resources
sufficient to meet its foreseeable working capital, letter of credit, capital
expenditure and stock repurchase requirements.
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<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
OTHER INFORMATION
Part II.
Item 4. Submission of matters to a vote of security holders
(a) Annual Meeting of Shareholders
May 21, 1997
(c) Proposals
<TABLE>
<CAPTION>
Broker
For Against Withheld Abstain Nonvotes
---------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Election of Directors
Sidney Kimmel 49,872,806 * 471,480 * -
Herbert J. Goodfriend 49,954,082 * 390,204 * -
Irwin Samelman 49,959,606 * 384,680 * -
Geraldine Stutz 50,121,506 * 222,780 * -
Howard Gittis 50,129,006 * 215,280 * -
Ratification of Appointment
of BDO Seidman as
Independent Public
Accountants 50,333,014 5,859 * 5,413 -
<FN>
*Not Applicable
</TABLE>
Item 5. Other information
Statement Regarding Forward-looking Disclosure
This Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended which represent the Company's
expectations or beliefs concerning future events that involve risks and
uncertainties, including those associated with the effect of national and
regional economic conditions, the overall level of consumer spending, the
performance of the Company's products within the prevailing retail environment,
customer acceptance of both new designs and newly-introduced product lines, and
financial difficulties encountered by customers. All statements, other than
statements of historical facts included in this Quarterly Report, including,
without limitation, the statements under "Management's Discussion and Analysis
of Financial Condition and Results of Operations," are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are disclosed in this Report. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the Cautionary
Statements.
Item 6. Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended June 29, 1997.
- 13 -
<PAGE>
JONES APPAREL GROUP, INC. AND SUBSIDIARIES
OTHER INFORMATION (CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
JONES APPAREL GROUP, INC.
(Registrant)
Date: August 12, 1997 By /s/ Sidney Kimmel
----------------------------
SIDNEY KIMMEL
Chief Executive Officer
By /s/ Wesley R. Card
----------------------------
WESLEY R. CARD
Chief Financial Officer
- 14 -
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