Jones Apparel Group, Inc. consolidates denim manufacturing facilities
Jones Apparel Group, Inc has completed a comprehensive review of its denim manufacturing operations located in Mexico. The primary action plan arising from this review will result in closing the laundry, assembly and distribution operations located in San Luis, Mexico. All manufacturing will be consolidated into existing operations in Durango and Torreon, Mexico. The closure is anticipated to be substantially completed by the end of September 2005.
In connection with the closure, in the third quarter the company will incur approximately $14 million of pre-tax restructuring costs as prescribed by Statement of Financial Accounting Standards No. 146 "Accounting for Costs Associated with Exit or Disposal Activities".
Peter Boneparth, Chief Executive Officer and President, commented, "This was a very difficult decision, however it was necessary to address the underutilization of our denim manufacturing operations in Mexico. As a result of the consolidation, our manufacturing operations will perform more efficiently, thereby improving our operating performance. We estimate that the consolidation will result in annual operational savings of $5.0 million."
Approximately 3,500 employees will be affected by the closure. The Company is undertaking a number of measures to assist affected employees, including severance and benefits packages.
