By a News Reporter-Staff News Editor at Investment Weekly News -- The Jones Group Inc. (NYSE: JNY; the "Company") reported results for the fourth quarter and year ended December 31, 2013. Revenues for the fourth quarter of 2013 were $889 million, as compared with $972 million for the fourth quarter of 2012. Revenues for the full year 2013 were $3,765 million, as compared with $3,798 million for the full year 2012.
The Company reported adjusted earnings per share ("EPS") of $0.27 for the fourth quarter of 2013, as compared with adjusted EPS of $0.14 for the same period last year. The 2013 fourth quarter results include certain tax benefits of $0.08 per share. Adjusted EPS on a full year basis was $0.91 in 2013, as compared with $1.24 per share in the prior year. 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 and business development-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 a fourth quarter loss per share of ($0.61) and ($1.06) for 2013 and 2012, respectively. On a full year basis, the Company reported a GAAP loss per share of ($0.26) and ($0.72) for 2013 and 2012, respectively. The results for both periods include non-cash impairment charges relating to certain goodwill, trademarks and other intangible assets. The non-cash impairment charges of $57 million ($50 million after tax) and $75 million ($66 million after tax) for 2013 and 2012, respectively, were primarily related to goodwill in our Domestic Wholesale Sportswear and International Retail businesses and trademarks utilized in our Domestic Wholesale Footwear and Accessories and Wholesale Jeanswear businesses.
Wesley R. Card, The Jones Group Chief Executive Officer, stated: "We are pleased with the improvement in our fourth quarter operating performance with an increase in adjusted earnings per share to $0.19 versus $0.14 last year, excluding tax benefits of $0.08. Our Domestic Retail, Domestic Wholesale Footwear and Accessories and International Retail businesses achieved the largest operating improvements. Our Sportswear business remained more challenging and promotional, although we are encouraged with our overall turnaround efforts in this business."
Adjusted operating cash flow during 2013 was $113 million, as compared with $207 million in 2012. The current year results reflect a higher level of required investment in working capital, higher interest payments, and lower earnings. Under GAAP, 2013 cash flows from operations were $92 million, as compared with $113 million in the prior year. Both the 2013 and 2012 GAAP results also include acquisition payments related to the Stuart Weitzman business. At year-end, the Company had $116 million in cash and no amounts 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 year with $116 million in cash and our revolver undrawn. We are continuing to focus on inventory management, expense control, and operational efficiencies and believe we will continue to improve margins and maintain a strong balance sheet."
Mr. Card concluded: "We continue to take definitive actions to enhance profitability and are encouraged by the impact of these initiatives. We believe our approach to brand management and focus on our core brands will prove beneficial to future results."
Merger Agreement with Sycamore Partners
On December 19, 2013, the Company announced that it had entered into an Agreement and Plan of Merger providing for the acquisition of the Company by affiliates of Sycamore Partners. Under the terms of the merger agreement, the Company's shareholders will receive $15.00 in cash for each share of the Company's common stock they hold. In connection with the merger, the Company has agreed to suspend the payment of its quarterly dividend. The Board of Directors of the Company unanimously approved the merger agreement. The merger is subject to the approval of a majority of the Company's shareholders that vote on the proposal to approve the merger agreement and certain other customary closing conditions. The transaction is expected to close in the second quarter of 2014. For further information and a copy of the merger agreement, please see the Company's Current Report on Form 8-K filed with the SEC on December 23, 2013.
In light of the proposed merger with affiliates of Sycamore Partners, the Company will not be holding an earnings conference call.
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 complete reconciliation of the GAAP measures presented to the comparable non-GAAP information appears in the financial tables section of this press release.
Keywords for this news article include: Finance, The Jones Group Inc.
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