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Jones Apparel to record Q4 2006 goodwill & trademark impairment charges

30
Jan '07
Jones Apparel Group Inc announced that it has completed its annual goodwill and trademark impairment analysis for 2006, as required by SFAS No. 142, "Goodwill and Other Intangible Assets."

The Company expects fourth quarter 2006 results to include a pre-tax, non-cash charge of approximately $491.4 million ($322.2 million after-tax) for the impairment of goodwill and trademarks primarily within the Company's Wholesale Moderate Apparel segment.

The impairment charge is comprised of two components. Approximately $441.2 million ($290.8 million after-tax) of the non-cash charge relates to the impairment of goodwill recorded in connection with the Company's 2001 acquisition of McNaughton Apparel Group Inc and its 2002 acquisition of RSV Sport Inc (herein referred to as l.e.i.).

The balance of the non-cash charge of approximately $50.2 million ($31.4 million after-tax) relates to the impairment of trademarks, primarily attributable to the Norton McNaughton brand.

Peter Boneparth, Chief Executive Officer, stated, "Many of our moderate brands are performing very well. However, declining revenues and profitability with respect to Norton McNaughton, l.e.i. and certain of our other moderate price-point brands, along with changes in business strategy with respect to the Norton McNaughton brand, necessitate the recognition of a goodwill and trademark impairment."

"We remain optimistic about the operational and organizational changes we continue to implement, especially those to enhance the l.e.i. brand. Most notably, as previously announced, we are closing unproductive manufacturing facilities and repositioning the brand for 2007. l.e.i. continues to remain a leading junior jeanswear resource based on its retail performance."


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