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The Jones Group Inc. Reports 2013 First Quarter Financial Results

      The Jones Group Inc. Reports 2013 First Quarter Financial Results  PR Newswire  NEW YORK, May 1, 2013  NEW YORK, May 1, 2013 /PRNewswire/ --The Jones Group Inc. (NYSE: JNY; the "Company") today reported results for the first quarter ended April 6, 2013. Revenues for the first quarter of 2013 were $1,009 million, as compared with $936 million for the first quarter of 2012.  The Company reported adjusted earnings per share ("EPS") of $0.15 for the first quarter of 2013, as compared with adjusted EPS of $0.31 for the same period last year. The results for both periods include charges and gains relating to balances denominated in foreign currencies. The current year quarter includes net charges of approximately $6 million ($4 million after tax), or $0.05 per share, whereas in the prior year quarter, net gains of $4 million ($3 million after tax), or $0.03 per share, were realized. The adjusted results exclude charges related to the impairments of certain intangible assets, the impact of severance and other costs related to restructuring activities, certain acquisition-related costs and other costs not considered relevant for period-over-period comparisons (see reconciliation of adjusted earnings to reported earnings in the accompanying schedule).  As reported under generally accepted accounting principles ("GAAP"), the Company reported first quarter earnings per share of $0.01 in 2013 and a ($0.01) loss per share in 2012. The results for 2013 include charges of $17 million ($11 million after tax) relating to the planned closure of certain Company-operated retail stores, restructuring, acquisitions, and other cost saving initiatives. The results for 2012 include charges of $28 million ($18 million after tax) related to the Stuart Weitzman acquisition and $12 million ($8 million after tax) of restructuring and strategic review costs.  Wesley R. Card, The Jones Group Chief Executive Officer, stated: "First quarter revenues were in line with our revised expectations, with the jeanswear business registering the largest improvement in operating results. For other areas of the business, the cold weather negatively impacted seasonal spring product sales and, accordingly, gross margins for the first quarter were approximately 210 basis points below last year. The domestic wholesale footwear and accessories business registered improved operating results; while the international businesses, primarily retail, were negatively impacted by economic conditions and cold weather, particularly in Europe. We expect continued margin pressure in sportswear in the second quarter, as we clear spring merchandise in anticipation of our new and refocused product offerings for fall."  Net cash used by operating activities during the first quarter of 2013 was $137 million, compared with $60 million in the prior period. The current year results reflect a higher level of required investment in working capital and higher tax and interest payments. At April 6, 2013, the Company had $45 million in cash and $65 million drawn under its $650 million of committed revolving credit facilities.  John T. McClain, The Jones Group Chief Financial Officer, commented: "Our financial position remains strong. We ended the quarter with $45 million in cash and $65 million drawn on our revolver, to meet seasonal working capital needs. Our approach to inventory commitments continues to be conservative, and we continue to emphasize tight expense control. We believe these actions will enable us to maintain a strong balance sheet."  Mr. Card concluded: "Our efforts to enhance profitability are showing some early signs of success. We are experiencing growth in the majority of our core brands and are continuing to diversify our portfolio in favor of the areas that we believe offer the greatest opportunity for revenue growth. However, we believe we can do more to strengthen results. The strategic actions announced last week are designed to substantially improve the performance of our domestic retail business, and create operational efficiencies and reduce costs within the wholesale channel. At the same time, we continue to focus on delivering quality products that resonate with our customers."  The Company's Board of Directors has declared a regular quarterly cash dividend of $0.05 per share to all common stockholders of record as of May 17, 2013, for payment on May 31, 2013.  The Company will host a conference call with management to discuss these results at 8:30 a.m. Eastern Time today, which is accessible by dialing 412-858-4600 or through a web cast at www.jonesgroupinc.com (under Investor Relations/Conference Schedule). The call will be recorded and made available through May 9, 2013 and may be accessed by dialing 877-344-7529 (International 412-317-0088). Enter account number 10026948. A slide presentation will accompany the prepared remarks and has been posted with the webcast on the Company's website.  Presentation of Information in the Press Release  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 reconciliation of the GAAP measures presented to the comparable non-GAAP information appears in the financial tables section of this press release.  About The Jones Group Inc.  The Jones Group Inc. (www.jonesgroupinc.com) is a leading global designer, marketer and wholesaler of over 35 brands with product expertise in apparel, footwear, jeanswear, jewelry and handbags. The Jones Group has a reputation for innovation, excellence in product quality and value, operational execution and talent. The Company also markets directly to consumers through branded specialty retail and outlet stores, through concessions at upscale department stores and through its e-commerce sites.  The Company's internationally recognized brands and licensing agreements (L) include: Nine West, Jones New York, Anne Klein, Kurt Geiger, Rachel Roy (L), Robert Rodriguez, Robbi & Nikki, Stuart Weitzman, Brian Atwood (L), Boutique 9, Easy Spirit, Carvela, Gloria Vanderbilt, l.e.i., Bandolino, Enzo Angiolini, Nine & Co., GLO, Joan & David, Miss KG, Kasper, Energie, Evan-Picone, Le Suit, Mootsies Tootsies, Grane, Erika, Napier, Jessica Simpson (L), Givenchy (L), Judith Jack, Albert Nipon, Pappagallo and Rafe (L).  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," "expects," "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:    othose associated with the effect of national, regional and international     economic conditions;   olowered levels of consumer spending resulting from a general economic     downturn or lower levels of consumer confidence;   othe tightening of the credit markets and the Company's ability to obtain     capital on satisfactory terms;   ogiven the uncertain economic environment, the possible unwillingness of     committed lenders to meet their obligations to lend to borrowers, in     general;   othe performance of the Company's products within the prevailing retail     environment;   ocustomer acceptance of both new designs and newly-introduced product     lines;   othe Company's reliance on a few department store groups for large portions     of the Company's business;   othe Company's ability to identify acquisition candidates and, in a     competitive environment for such acquisitions, acquire such businesses on     reasonable financial and other terms;   othe integration of the organizations and operations of any acquired     businesses into the Company's existing organization and operations;   oconsolidation of the Company's retail customers;   ofinancial difficulties encountered by the Company's customers;   othe effects of vigorous competition in the markets in which the Company     operates;   othe Company's ability to attract and retain qualified executives and other     key personnel;   othe Company's reliance on independent foreign manufacturers, including     political instability in countries where contractors and suppliers are     located;   ochanges in the costs of raw materials, labor, advertising and     transportation, including the impact such changes may have on the pricing     of the Company's products and the resulting impact on consumer acceptance     of the Company's products at higher price points;   othe Company's ability to successfully implement new operational and     financial information systems;   othe Company's ability to secure and protect trademarks and other     intellectual property rights;   othe effects of extreme or unseasonable weather conditions; and   othe Company's ability to implement its strategic initiatives to enhance     profitability.  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, 2012, 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.  THE JONES GROUP INC. CONSOLIDATED OPERATING RESULTS (UNAUDITED) All amounts in millions, except per share data                                    FIRST QUARTER                                    2013                   2012 Net sales                          $        98.9    %   $        98.7    %                                    997.6                  923.4 Licensing income                   10.8       1.1         12.3       1.3 Other revenues                     0.3        0.0         0.3        0.0 Total revenues                     1,008.7    100.0       936.0      100.0 Cost of goods sold                 660.3      65.5        592.5      63.3 Gross profit                       348.4      34.5        343.5      36.7 SG&A expenses                      331.5      32.9        303.3      32.4 Operating income                   16.9       1.7         40.2       4.3 Net interest expense and           (16.1)     (1.6)       (42.7)     (4.6) financing costs (1) Equity in income of                0.6        0.1         0.9        0.1 unconsolidated affiliate Income (loss) before provision     1.4        0.1         (1.6)      (0.2) (benefit) for income taxes Provision (benefit) for income     0.5        0.0         (0.6)      (0.1) taxes Net income (loss)                  0.9        0.1         (1.0)      (0.1) Less: income attributable to       0.4        0.0         0.2        0.0 noncontrolling interest Income (loss) attributable to      $      0.0     %   $       (0.1)   % Jones                              0.5                   (1.2) Earnings (loss) per share (2)        Net income (loss)          $                  $                                       0.9                   (1.0)        Less: income attributable   0.4                    0.2        to noncontrolling interest        Income (loss)               0.5                    (1.2)        attributable to Jones        Less: income (loss)        allocated to participating  -                      (0.2)        securities        Income (loss) available to  $                  $           common stockholders of      0.5                   (1.0)        Jones Shares outstanding - diluted       75.9                   76.1 Earnings (loss) per share -       $                   $   diluted                            0.01                   (0.01) Percentages may not add due to rounding. (1)    Refer to item "g" on the Reconciliation of Non-GAAP Measures to GAAP        for amounts impacting interest expense relating to adjustment of       remaining consideration payable related to acquisition of Stuart        Weitzman.  (2)    Earnings per share is calculated under the "two-class method," where        income is allocated between common shares and participating       securities (unvested restricted shares held by employees that have a        nonforfeitable right to dividends). Both our common shares and       participating securities share equally in dividend payments and        earnings.     THE JONES GROUP INC. Reconciliation of Non-GAAP Measures to GAAP for the quarters ended April 6, 2013 and March 31, 2012 (UNAUDITED) All amounts in millions, except per share data    FIRST QUARTER                                                   2013            2012 Operating income                                    $   16.9      $                                                                        40.2 Adjustments: Items affecting segment income:       Expenses related to retail store closure      8.5             0.5       plan (a)       Charges related to acquired businesses        1.8             (0.9)       (b)       Other business development costs (c)          -               0.2       Present value adjustments to lease       liabilities for properties                    0.2             -        not in use (d)       Severance and other charges related to       executive management                          -               3.7        changes (e)       Other restructuring expenses and certain      6.9             8.9       other charges (f) Total adjustments to operating income               17.4            12.4 Adjusted operating income                           $   34.3      $                                                                        52.6 Income (loss) attributable to Jones (as             $    0.5     $     reported)                                                           (1.2) Provision (benefit) for income taxes                0.5             (0.6) Adjustments to operating income, from above         17.4            12.4 Adjustment of remaining consideration payable related to acquisition       of Stuart Weitzman (g)                        (0.4)           27.7 Adjusted income before provision for income         18.0            38.3 taxes Adjusted provision for income taxes                 6.8             14.3 Adjusted income attributable to Jones               11.2            24.0 Less: adjusted income allocated to                  (0.4)           (0.4) participating securities Adjusted income available to common                 $   10.8      $    stockholders of Jones                                               23.6 Earnings (loss) per share - diluted (as             $   0.01      $   reported)                                                           (0.01) Provision (benefit) for income taxes                0.01            (0.01) Items affecting segment income:       Expenses related to retail store closure      0.11            0.01       plan (a)       Charges related to acquired businesses        0.03            (0.01)       (b)       Other business development costs (c)          -               -       Present value adjustments to lease       liabilities for properties                    -               -        not in use (d)       Severance and other charges related to       executive management                          -               0.05        changes (e)       Other restructuring expenses and certain      0.09            0.11       other charges (f) Adjustment of remaining consideration payable related to acquisition       of Stuart Weitzman (g)                        (0.01)          0.35 Adjusted income before provision for income         0.24            0.49 taxes Adjusted provision for income taxes                 0.09            0.18 Adjusted earnings per share - diluted               $   0.15      $                                                                        0.31 Non-GAAP adjustments affecting income by segment (h):       Domestic wholesale sportswear (b,e,f)         $    3.5     $                                                                         3.9       Domestic wholesale jeanswear (d,e,f,g)        0.6             1.2       Domestic wholesale footwear and               0.7             2.1       accessories (e,f)       Domestic retail (a,e,f,g)                     8.7             1.4       International wholesale (e,f)                 1.6             0.1       International retail (b,f)                    1.6             1.5       Licensing, other & eliminations (b,c,e,f)     0.7             2.2       Total                                         $   17.4      $                                                                        12.4 (a)   2013 and 2012 include severance, fixed asset impairment and other       charges and credits related to the closure of underperforming retail      locations. (b)   2013 and 2012 include the adjustments of the contingent consideration       payable for the Robert Rodriguez acquisition and the amortization of      certain acquired intangible assets related to the acquisition of Kurt       Geiger. (c)   2013 and 2012 include investment consulting fees, legal fees, accounting       fees and other items related to acquisitions and other business      development activities. (d)   2013 includes present value accruals and adjustments for liabilities       related to leases on properties currently not in use.  (e)   2012 includes severance and restricted stock charges related to       executive management changes. (f)   2013 and 2012 include severance, occupancy, and other costs related to       the restructuring of corporate and business support functions and other      charges not considered by management to be part of ongoing operations. (g)   2013 and 2012 represent the fair value adjustment in accordance with       GAAP of the remaining consideration payable related to the acquisition      of Stuart Weitzman. (h)   See "Segment Information" page for the presentation of GAAP and Adjusted       amounts.                                                   FIRST QUARTER                                                   2013            2012       GAAP Gross Profit                             $  348.4       $                                                                       343.5       Other restructuring expenses and certain      0.4             0.2       other charges (f)       Adjusted Gross Profit                         $  348.8       $                                                                       343.7    THE JONES GROUP INC. SEGMENT INFORMATION (UNAUDITED) Dollars in millions                      Domestic                     Domestic   Domestic  Wholesale                                        Licensing,                     Wholesale  Wholesale Footwear &  Domestic International International Other &                     Sportswear Jeanswear Accessories Retail   Wholesale     Retail        Eliminations Consolidated For the fiscal quarter ended April 6, 2013      Revenues       $      $     $       $     $        $        $       $                        216.5     256.6    241.2       126.1 73.2         84.3         10.8        1,008.7      Segment income $      $     $      $     $       $       $           (loss)          10.2     34.2   21.9              5.6          (8.2)         (11.8)       16.9                                                      (35.0)      Segment margin 4.7%       13.3%     9.1%        (27.8%)  7.7%          (9.7%)                     1.7%      Net interest                                                                                      (16.1)      expense (a)      Equity in      income of                                                                                         0.6      unconsolidated      affiliate      Income before                                                                                     $           provision for                                                                                      1.4      income taxes      Segment income $      $     $      $     $       $       $       $           (loss)          10.2     34.2   21.9              5.6          (8.2)         (11.8)       16.9                                                      (35.0)      Adjustments      affecting      3.5        0.6       0.7         8.7      1.6           1.6           0.7          17.4      segment income      (b)      Adjusted       $      $     $      $     $       $       $       $           segment income  13.7     34.8   22.6              7.2          (6.6)         (11.1)       34.3      (loss)                                          (26.3)      Adjusted       6.3%       13.6%     9.4%        (20.9%)  9.8%          (7.8%)                     3.4%      segment margin For the fiscal quarter ended March 31, 2012      Revenues       $      $     $       $     $        $        $       $                         233.6     184.8    225.9       128.1 73.4         77.9         12.3        936.0      Segment income $      $     $      $     $       $       $           (loss)          23.2     16.6   18.4              9.9          (4.9)          (0.6)      40.2                                                      (22.4)      Segment margin 9.9%       9.0%      8.1%        (17.5%)  13.5%         (6.3%)                     4.3%      Net interest                                                                                      (42.7)      expense (a)      Equity in      income of                                                                                         0.9      unconsolidated      affiliate      Loss before                                                                                       $           benefit for                                                                                        (1.6)      income taxes      Segment income $      $     $      $     $       $       $       $           (loss)          23.2     16.6   18.4              9.9          (4.9)          (0.6)      40.2                                                      (22.4)      Adjustments      affecting      3.9        1.2       2.1         1.4      0.1           1.5           2.2          12.4      segment income      (b)      Adjusted       $      $     $      $     $        $       $       $           segment income  27.1     17.8   20.5              10.0         (3.4)          1.6       52.6      (loss)                                          (21.0)      Adjusted       11.6%      9.6%      9.1%        (16.4%)  13.6%         (4.4%)                     5.6%      segment margin (a)  Refer to item "g" on the Reconciliation of Non-GAAP Measures to GAAP for amounts impacting      interest expense relating to adjustment of remaining consideration payable related to acquisition     of Stuart Weitzman. (b) See "Reconciliation of Non-GAAP Measures to      GAAP" page.    THE JONES GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) All amounts in millions                                         April 6, 2013    March 31, 2012 ASSETS Current assets:  Cash and cash equivalents             $         $                                                       44.7    147.1  Accounts receivable                   446.2            458.6  Inventories                           498.3            473.0  Deferred taxes                        36.2             34.6  Other current assets                  51.3             54.6  Total current assets                  1,076.7          1,167.9 Property, plant and equipment, at cost, less  accumulated depreciation and        265.6            273.0 amortization Goodwill                                212.5            258.5 Other intangibles, less accumulated     854.8            900.9 amortization Other assets                            134.5            134.9 Total assets                            $         $                                                  2,544.1       2,735.2 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings                   $         $                                                       64.5        -  Current portion of long-term debt and 2.2              2.1 capital lease obligations  Current portion of acquisition        20.8             228.3 consideration payable  Accounts payable                      208.2            244.7  Accrued expenses and other current    127.6            136.8 liabilities  Total current liabilities             423.3            611.9 Long-term debt and obligations under    952.7            855.2 capital leases Deferred taxes                          61.6             74.9 Acquisition consideration payable       3.2              5.8 Other                                   114.0            93.6 Total liabilities                       1,554.8          1,641.4 Redeemable noncontrolling interest      0.6              - Equity                                  988.7            1,093.8 Total liabilities and equity            $         $                                                  2,544.1       2,735.2    THE JONES GROUP INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) All amounts in millions                        Three Months Ended                                                April 6, 2013  March 31, 2012 CASH FLOWS FROM OPERATING ACTIVITIES:  Net income (loss)                             $        $                                                            0.9     (1.0)  Adjustments to reconcile net income (loss) to  net cash     used in operating activities, net of     acquisitions:       Amortization of employee stock options   10.9           9.3       and restricted stock       Depreciation and other amortization      21.7           22.5       Impairment losses                        6.2            0.4       Adjustments to acquisition consideration (0.9)          24.6       payable       Equity in income of unconsolidated       (0.6)          (0.9)       affiliate       Deferred taxes                           -              (9.5)       Other items, net                         7.3            (1.0)       Changes in operating assets and       liabilities:            Accounts receivable                 (67.8)         (117.5)            Inventories                         (15.7)         20.8            Accounts payable                    (47.9)         7.4            Income taxes payable/prepaid taxes  (0.5)          14.9            Acquisition consideration payable   (8.9)          (0.3)            Other assets and liabilities, net   (41.4)         (29.5)            Total adjustments                   (137.6)        (58.8)  Net cash used in operating activities         (136.7)        (59.8) CASH FLOWS FROM INVESTING ACTIVITIES:  Capital expenditures                          (16.3)         (18.2)  Other                                         (0.2)          (0.2)  Net cash used in investing activities         (16.5)         (18.4) CASH FLOWS FROM FINANCING ACTIVITIES:  Net increase in short-term borrowings         64.5           -  Repurchase of common stock                    (9.0)          (8.9)  Dividends paid                                (4.0)          (4.0)  Payments of acquisition consideration payable (2.5)          (2.0)  Other                                         (0.7)          1.5  Net cash provided by (used in) financing      48.3           (13.4)  activities EFFECT OF EXCHANGE RATES ON CASH               -              (0.1) NET DECREASE IN CASH AND CASH EQUIVALENTS      (104.9)        (91.7) CASH AND CASH EQUIVALENTS, BEGINNING           149.6          238.8 CASH AND CASH EQUIVALENTS, ENDING              $        $                                                           44.7     147.1  SOURCE The Jones Group Inc.  Website: http://www.jonesgroupinc.com Contact: Investor Contact: John T. McClain, Chief Financial Officer, The Jones Group, (212) 703-9189; Media Contacts: Joele Frank and Sharon Stern, Joele Frank, Wilkinson Brimmer Katcher, (212) 355-4449