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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

FORM 10-K

Commission file number 1-10746

JONES APPAREL GROUP, INC.
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (215) 785-4000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None

    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.   [X] Yes    [  ] No

    Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

    The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 21, 2002 was approximately $4,325,294,366.

    As of March 21, 2002, 126,820,012 shares of the registrant's common stock were outstanding.

TABLE OF CONTENTS

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DOCUMENTS INCORPORATED BY REFERENCE

    The documents incorporated by reference into this Form 10-K and the Parts hereof into which such documents are incorporated are listed below:

    As used in this Report, unless the context requires otherwise, "our," "us" and "we" means Jones Apparel Group, Inc. and consolidated subsidiaries, "Sun" means Sun Apparel, Inc., "Nine West" means Nine West Group Inc. (acquired June 15, 1999), "Victoria" means Victoria + Co Ltd. (acquired July 31, 2000), "Judith Jack" means Judith Jack, LLC (acquired April 26, 2001) and "McNaughton" means McNaughton Apparel Group, Inc. (acquired June 19, 2001). "FASB" means the Financial Accounting Standards Board, "SFAS" means Statement of Financial Accounting Standards and "SEC" means the United States Securities and Exchange Commission. The results of Nine West, Victoria, Judith Jack and McNaughton are included in our operating results from the respective dates of acquisition and, therefore, our operating results for all periods presented are not comparable.

STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

    This Report includes, and incorporates by reference, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding our 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 our expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of national and regional economic conditions, lowered levels of consumer spending resulting from a general economic downturn or generally reduced shopping activity caused by public safety concerns, the performance of our products within the prevailing retail environment, customer acceptance of both new designs and newly-introduced product lines, financial difficulties encountered by customers, the effects of vigorous competition in the markets in which we operate, the integration of the organizations and operations of any acquired businesses into our existing organization and operations, the termination or non-renewal of the licenses with Polo Ralph Lauren Corporation, our foreign operations and manufacturing, changes in the costs of raw materials, labor and advertising, and our ability to secure and protect trademarks and other intellectual property rights. All statements other than statements of historical facts included in this Report, including, without limitation, the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from our expectations ("Cautionary Statements") are disclosed in this Report in conjunction with the forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements.

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    Jones Apparel Group, Inc. is a leading designer and marketer of a broad range of women's collection sportswear, suits and dresses, casual sportswear and jeanswear for men, women and children, women's shoes and accessories, and costume, sterling silver, and marcasite jewelry. We have pursued a multi-brand strategy by marketing our products under several nationally known brands, including Jones New York; Lauren by Ralph Lauren, Ralph by Ralph Lauren, and Polo Jeans Company, which are licensed from Polo Ralph Lauren Corporation; Evan-Picone, Rena Rowan, Norton McNaughton, Erika, Energie, Currants, Jamie Scott, Todd Oldham, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Napier and Judith Jack. Each brand is differentiated by its own distinctive styling, pricing strategy, distribution channel and target consumer. We primarily contract for the manufacture of our products through a worldwide network of quality manufacturers. We have capitalized on our nationally known brand names by entering into various licenses for the Jones New York, Evan-Picone and Nine West brand names with select manufacturers of women's and men's products which we do not manufacture.

    On April 26, 2001, we acquired substantially all of the assets of Judith Jack. Judith Jack is a manufacturer and distributor of women's jewelry and accessories, including marcasite and sterling silver products. Judith Jack distributes products to better department stores and specialty retailers, including Neiman Marcus Stores and Saks Incorporated.

    On June 19, 2001, we acquired 100% of the common stock of McNaughton. McNaughton designs, contracts for the manufacture of and markets a broad line of branded moderately-priced women's and juniors' career and casual clothing. McNaughton markets its products nationwide to department stores, national chains, mass merchants, and specialty retailers, including J.C. Penney Company, Inc., Kohl's Department Stores, Inc., Federated Department Stores, Inc., May Department Stores Company and Sears, Roebuck and Co.

    On March 19, 2002, we announced that we had entered into an agreement to acquire 100% of the common stock of Gloria Vanderbilt Apparel Corp. and 100% of the assets of Gloria Vanderbilt Trademark B.V. Gloria Vanderbilt, a leading designer, marketer and distributor of women's moderately priced stretch and twill jeanswear, markets its products nationwide to national chains, department stores, mass merchants, and specialty retailers, including Kohl's Department Stores, J.C. Penney Company, Inc., Mervyns, Costco Wholesale Corporation and Federated Department Stores, Inc. Brands include Gloria Vanderbilt and junior product marketed under the GLO brand name.

Operating Segments

    Our operations are comprised of three reportable segments: wholesale apparel, wholesale footwear and accessories, and retail. We identify operating segments based on, among other things, the way our management organizes the components of our business for purposes of allocating resources and assessing performance. Segment revenues are generated from the sale of apparel, footwear and accessories through wholesale channels and our own retail locations. See "Business Segment and Geographic Area Information" in the Notes to Consolidated Financial Statements.

    Our brands cover a broad array of categories for the women's markets; we also provide Polo Jeans Company apparel to the men's markets. Within those brands, various product classifications include career and casual sportswear, jeanswear, dresses, suits, and a combination of all components termed lifestyle collection. Career and casual sportswear are marketed as individual items or groups of skirts, pants, shorts, jackets, blouses, sweaters and related accessories which, while sold as separates, are coordinated as to styles, color schemes and fabrics, and are designed to be worn together. New collections are introduced in four of 

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the principal selling seasons - Spring, Summer, Fall and Holiday. Each season is comprised of a series of individual items or groups which have systematically spaced shipment dates to ensure a fresh flow of goods to the retail floor.

    The following table summarizes selected aspects of the products sold under both our brands and licensed brands:

    In addition to the products sold under these brands, we provide design and manufacturing resources to certain retailers to develop moderately-priced product lines to be sold under private labels.

    Our wholesale footwear and accessories operations include the sale of both brand name and private label footwear, handbags, small leather goods and costume, sterling silver, and marcasite jewelry. The following table summarizes selected aspects of the products sold under both our brands and licensed brands:

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    We market apparel, footwear and accessories directly to consumers through our specialty retail stores operating in malls and urban retail centers, as well as our various value-based ("outlet") stores.

    Our ongoing evaluation of our retail operations has led to a decision to close many of our underperforming locations in the past several years. During 2002, we plan to open 15 to 20 and close 30 to 40 retail locations.

    Specialty Retail Stores. At December 31, 2001, we operated a total of 420 specialty retail stores. These stores sell either footwear and accessories or apparel (or a combination of these products) primarily under their respective brand names. Our Nine West, Easy Spirit and Enzo Angiolini retail stores offer selections of exclusive products not marketed to our wholesale customers. Certain of our specialty retail stores also sell products licensed by us, including belts, legwear, outerwear, watches and sunglasses.

    The following table summarizes selected aspects of our specialty retail stores at December 31, 2001. Of these stores, 411 are located within the United States and nine are located in Canada. In addition to the 

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stores listed in the table, we participate in a joint venture that operates 24 specialty stores in Australia under the Nine West name.

    Outlet Stores. At December 31, 2001, we operated a total of 524 outlet stores. Our shoe stores focus on breadth of product line, as well as value pricing, and offer a distribution channel for our residual inventories. The majority of the shoe stores' merchandise consists of new production of current and proven prior season's styles, with the remainder of the merchandise consisting of discontinued styles from our specialty retail footwear stores and wholesale divisions. The apparel stores focus on breadth of product line, customer service and value pricing. In addition to our brand name merchandise, these stores also sell merchandise produced by our licensees. Our jewelry stores focus on breadth of product line and value pricing and offer a distribution channel for our residual and discontinued wholesale inventories.

    The following table summarizes selected aspects of our outlet stores at December 31, 2001. Of these stores, 511 are located within the United States and its territories, with the remainder located primarily in Canada. In addition to the stores listed in the table, we participate in a joint venture that operates four outlet stores in Australia under the Nine West name.

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Licensed Brands

    We license three major brands from Polo Ralph Lauren Corporation for selling in the United States, Canada and, beginning in February 2002, Mexico: Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans Company. We also license the Polo Ralph Lauren brand in Canada.

    In October 1995, we acquired an exclusive license to manufacture and market women's shirts, blouses, skirts, jackets, suits, sweaters, pants, vests, coats, outerwear and hats under the Lauren by Ralph Lauren trademark in the United States and Canada pursuant to license and design service agreements with Polo Ralph Lauren Corporation. In February 2002, the territory was expanded to include Mexico. Although the initial term of the license and design service agreements expired December 31, 2001, we have exercised our option to renew them through December 31, 2006. The agreements provide for the payment by us of a percentage of net sales against guaranteed minimum royalty and design service payments as set forth in the agreements.

    In May 1998, we acquired an exclusive license to manufacture and market women's dresses, shirts, blouses, skirts, jackets, suits, sweaters, pants, vests, coats, outerwear and hats under the Ralph by Ralph Lauren trademark in the United States and Canada pursuant to license and design service agreements with Polo Ralph Lauren, which expire on December 31, 2003. In February 2002, the territory was expanded to include Mexico. Upon expiration of the initial term, we have the right to renew the license for an additional three-year period, provided that we meet certain minimum sales levels. The agreements provide for the payment by us of a percentage of net sales against guaranteed minimum royalty and design service payments as set forth in the agreements.

    As a result of the acquisition of Sun, we obtained the right to sell Polo Jeans Company products under long-term license and design agreements which Sun entered into with Polo Ralph Lauren in 1995 (collectively, the "Polo Jeans License"). Under the Polo Jeans License, Polo Ralph Lauren has granted us an exclusive license for the design, manufacture and sale of men's and women's jeanswear, sportswear, and related apparel under the Polo Jeans Company by Ralph Lauren trademarks in the United States and its territories. In February 2002, the territory was expanded to include Mexico. The agreements expire on December 31, 2005 and may be renewed by us in five-year increments for up to 25 additional years, if certain sales requirements are met. Renewal of the Polo Jeans License after 2010 requires a one-time payment by us of $25.0 million or, at our option, a transfer of a 20% interest in our Polo Jeans Company business to Polo Ralph Lauren (with no fees required for subsequent renewals). Polo Ralph Lauren also has an option, exercisable on or before June 1, 2010, to purchase our Polo Jeans Company business at the end of 2010 for a purchase price, payable in cash, equal to 80% of the then fair value of the business as a going concern, assuming continuation of the Polo Jeans License through 2030. The agreements provide for the payment by us of a percentage of net sales against guaranteed minimum royalty and design service payments as set forth in the agreements.

    In June 2000, we acquired an exclusive license to manufacture and market in Canada certain products under the Polo Jeans Company and Polo Ralph Lauren trademarks pursuant to license and design service agreements with Polo Ralph Lauren Corporation. The agreements expire on December 31, 2005 and are renewable for an additional five years, provided that we achieve certain minimum sales levels. The agreements provide for the payment by us of a percentage of net sales against guaranteed minimum royalty and design service payments as set forth in the agreements.

    As a result of the acquisition of Victoria, we obtained the exclusive license to produce and sell costume jewelry in the United States and Canada under the Tommy Hilfiger trademark, which expires on December 31, 2004. Upon expiration, we have the right to renew the license for an additional three-year period, provided that we meet certain minimum sales levels. The agreement provides for payment by us of a percentage of net sales against guaranteed minimum royalty and advertising payments as set forth in the agreement. We also obtained the exclusive, worldwide license to produce, market and distribute costume jewelry under the Givenchy mark, which expires on December 31, 2002. Victoria has held the Givenchy license for more than eight years. We are currently in discussions with Givenchy Corporation to extend the term of that license.

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    Each of our apparel product lines has its own design team which is responsible for the creation, development and coordination of the product group offerings within each line. We believe our design staff is recognized for its distinctive styling of garments and its ability to update fashion classics with contemporary trends. Our apparel designers travel throughout the world for fabrics and colors, and stay continuously abreast of the latest fashion trends. In addition, we actively monitor the retail sales of our products to determine changes in consumer trends.

    For most sportswear lines, we will develop several groups in a season. A group typically consists of an assortment of skirts, pants, jeans, shorts, jackets, blouses, sweaters, t-shirts and various accessories. We believe that we are able to minimize design risks because we often will not have started cutting fabrics until the first few weeks of a major selling season. Since different styles within a group often use the same fabric, we can redistribute styles and, in some cases, colors, to fit current market demand.

    Our footwear brands are developed by a combination of our own design teams and third-party designers, which independently interpret global lifestyle, clothing, footwear and accessories trends. To research and confirm such trends, the teams travel extensively in Asia, Europe and major American markets, conduct extensive market research on retailer and consumer preferences, and subscribe to fashion and color information services. Each team presents styles that maintain each brand's distinct personality. Samples are refined and then produced. After the samples are evaluated, lines are modified further for presentation at each season's shoe shows.

    Our jewelry brands are developed by separate design teams. Each team presents styles that maintain each brand's distinct personality. A prototype is developed for each new product where appropriate. Most prototypes are produced in-house, and samples are sent to vendors for cost estimates. After samples are evaluated and cost estimates are received, the lines are modified as needed for presentation for each selling season.

    In accordance with standard industry practices for licensed products, we have the right to approve the concepts and designs of all products produced and distributed by our licensees. Similarly, Polo Ralph Lauren provides design services to us for our licensed products and has the right to approve our designs for the Lauren by Ralph Lauren, Ralph by Ralph Lauren, Polo Ralph Lauren and Polo Jeans Company product lines.

    Apparel sold by us is produced in accordance with our design, specification and production schedules. We contract for the cutting and sewing of the majority of our garments with approximately 43 contractors and agents located in the United States, approximately 34 in Mexico and approximately 704 in other locations. We also operate several manufacturing facilities of our own. Approximately 16% of our apparel products were manufactured in the United States and Mexico and 84% in other parts of the world (primarily Asia) during 2001. We source a portion of our products in Central America, enabling us to take advantage of shorter lead times than other offshore locations due to proximity. Sourcing in this region enables us to utilize exemptions under "807" customs regulations, which provide that certain articles assembled abroad from United States components are exempt from United States duties on the value of these components.

    We believe that outsourcing a majority of our products allows us to maximize production flexibility, while avoiding significant capital expenditures, work-in-process inventory build-ups and costs of managing a larger production work force. Our fashion designers, production staff and quality control personnel closely examine garments manufactured by contractors to ensure that they meet our high standards.

    Our comprehensive quality control program is designed to ensure that purchased raw materials and finished goods meet our exacting standards. Substantially all of the fabric purchases for garments manufactured domestically, in Mexico and in Central America are inspected upon receipt in either our 

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warehouse facilities (where they are stored prior to shipment for cutting) or at the contractor's warehouse. Fabrics for garments manufactured offshore are inspected by either independent inspection services or by our contractors upon receipt in their warehouses. Our quality control program includes inspection of prototypes of each garment prior to cutting by the contractors to ensure compliance with our specifications.

    Domestic contractors are supervised by our quality control staff based primarily in Pennsylvania, while foreign manufacturers' operations are monitored by both our Hong Kong-based personnel and buying agents located in other countries. All finished goods are shipped to our warehouses for final inspection and distribution.

    For our sportswear business, we generally supply the raw material to our domestic manufacturers and occasionally to foreign manufacturers. Otherwise, the raw materials are purchased directly by the manufacturer in accordance with our specifications. Raw materials, which are in most instances made and/or colored especially for us, consist principally of piece goods and yarn and are purchased by us from a number of domestic and foreign textile mills and converters. Our foreign finished goods purchases are generally purchased on a letter of credit basis, while our domestic purchases are generally purchased on open account.

    Our primary raw material in our jeanswear business is denim, nearly all of which is purchased from leading mills located in the United States and Mexico. Denim purchase commitments and prices are negotiated on a quarterly or semi-annual basis. We perform our own extensive testing of denim, cotton twill and other fabrics to ensure consistency and durability.

    We do not have long-term arrangements with any of our suppliers. We have experienced little difficulty in satisfying our raw material requirements and consider our sources of supply adequate.

    Our apparel products are manufactured according to plans prepared each year which reflect prior years' experience, current fashion trends, economic conditions and management estimates of a line's performance. We generally order piece goods concurrently with concept development. The purchase of piece goods is controlled and coordinated on a divisional basis. When possible, we limit our exposure to specific colors and fabrics by committing to purchase only a portion of total projected demand with options to purchase additional volume if demand meets the plan.

    We believe our extensive experience in logistics and production management underlies our success in coordinating with contractors who manufacture different garments included within the same product group. We also contract for the production of a portion of our products through a network of foreign agents. We have had long-term mutually satisfactory business relationships with many of our contractors and agents but do not have long-term written agreements with any of them.

    We have an active program in place to monitor compliance by our contract manufacturers (in all product categories in accordance with the Jones Apparel Group Standards for Contractors and Suppliers) with applicable laws relating to the payment of wages and working conditions. In 1996, we became a participant in the United States Department of Labor's Apparel Manufacturers Compliance Program for that purpose. Under that program, and through our independent agreements with each of our domestic and foreign manufacturers, we regularly audit such compliance and require corrective action when appropriate.

    To provide a steady source of footwear and accessories inventory, we rely on long-standing relationships developed by Nine West with Brazilian and Chinese manufacturers, working through independent buying agents, and third party manufacturers in other countries and long-standing relationships developed by Victoria with third-party Asian manufacturers. Allocation of production among our footwear and accessories manufacturing resources is determined based upon a number of factors, including manufacturing capabilities, delivery requirements and pricing.

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    During 2001, approximately 46% of our footwear products were manufactured by independently owned footwear manufacturers in Brazil and approximately 53% of our footwear products were manufactured by independent footwear manufacturers located in China. The remainder of footwear production (approximately 1%) originates primarily in Italy. Our handbags and small leather goods are sourced through our own buying offices in Korea and Hong Kong, which utilize independent third party manufacturers in China. Products have historically been purchased from the Brazilian and Asian manufacturers in pre-set United States dollar prices, and therefore, we generally have not been adversely affected by fluctuations in exchange rates. We do not have any contracts with any of our footwear, handbag or small leather goods manufacturers but, with respect to footwear imported from Brazil and China, we rely on established relationships with our Brazilian and Chinese manufacturers directly and through our independent buying agent, Bentley HSTE Far East, Limited.

    As a result of the number of entrepreneurial factory owners, the highly skilled labor force, the modern, efficient vertically-integrated factories and the availability of high-quality raw materials, the Brazilian manufacturers are able to produce significant quantities of moderately priced, high-quality leather footwear. The largest of these Brazilian factories operate tanneries for processing leather and produce lasts, heels and other footwear components as well as finished goods, and source raw materials worldwide based on input from us.

    We believe that our relationships with our Brazilian and Chinese manufacturers provide us with a responsive and active source of supply of our products and, accordingly, give us a significant competitive advantage. We also believe that purchasing a significant percentage of our products in Brazil and China allows us to maximize production flexibility while limiting our capital expenditures, work-in-process inventory and costs of managing a larger production work force. Because of the sophisticated manufacturing techniques of these manufacturers, individual production lines can be quickly changed from one style to another, and production of certain styles can be completed in as few as four hours, from uncut leather to boxed footwear.

    Historically, periodic instability in Brazil's political and economic environment has not had a material adverse effect on Nine West's financial condition or results of operations. We cannot predict, however, the effect that future changes in economic or political conditions in Brazil could have on the economics of doing business with our Brazilian manufacturers. Although we believe that we could source in China a portion of those products which we currently source in Brazil and find alternative manufacturing sources for the remainder of those products, the establishment of new manufacturing relationships would involve various uncertainties, and the loss of a substantial portion of our Brazilian manufacturing capacity before the alternative sourcing relationships were fully developed could have a material adverse effect on our financial condition or results of operations.

    We place our projected orders for each season's styles with our manufacturers prior to the time we have received all of our customers' orders. Because of our close working relationships with our third party manufacturers (which allow for flexible production schedules and production of large quantities of footwear within a short period of time), most of our orders are finalized only after we have received orders from a majority of our customers. As a result, we believe that, in comparison to our competitors, we are better able to meet sudden demands for particular designs, more quickly exploit market trends as they occur, reduce inventory risk and more efficiently fill reorders booked during a particular season.

    We do not have any contracts with any of our jewelry manufacturers but rely on long-standing relationships developed by Victoria and Judith Jack, principally with third-party Asian manufacturers. We also have our own manufacturing facility to satisfy demand for products manufactured domestically (such as cosmetic containers) and to provide sufficient production capacity in the event of disruption in our outsourced manufacturing. Victoria and Judith Jack have historically experienced little difficulty in satisfying finished goods requirements, and we consider their source of supplies adequate. Products have historically been purchased from Asian manufacturers in preset U. S. dollar prices, effectively minimizing the effects of adverse fluctuations in exchange rates.

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    During 2001, our jewelry products were manufactured primarily by independently-owned jewelry manufacturers in Asia. We believe that the quality and cost of products manufactured by our suppliers provide us with the ability to remain competitive. Sourcing the majority of our products enables us to better control costs and avoid significant capital expenditures, work in process inventory, and costs of managing a larger production workforce. Victoria's and Judith Jack's history as manufacturers gives them the requisite experience and knowledge to manage their vendors effectively.

    Forecasts for basic jewelry products are produced on a rolling 12-week basis and are adjusted based on point of sale information from retailers. Manufacturing of fashion jewelry products is based on marketing forecasts and sales plans; actual orders are received several weeks after such forecasts are produced. Quality control testing is performed on-site by domestic employees or private firms in the country of manufacture and quality assurance checks are also performed upon receipt of finished goods at our distribution facilities.

    During 2001, no single customer accounted for more than 10% of sales; however, certain of our customers are under common ownership. When considered together as a group under common ownership, sales to eight department store customers currently owned by The May Department Stores Company ("May") accounted for approximately 16% of 2001 sales, and sales to ten department store customers currently owned by Federated Department Stores, Inc. ("Federated") accounted for approximately 15% of 2001 sales. Our ten largest customer groups accounted for approximately 62% of sales in 2001. While we believe that purchasing decisions are generally made independently by each department store customer (including the stores in the May and Federated groups), in some cases the trend is toward more centralized purchasing decisions. We attempt to minimize our credit risk from our concentration of customers by closely monitoring accounts receivable balances and shipping levels and the ongoing financial performance and credit status of our customers.

    Sportswear products are marketed to department stores and specialty retailing customers during "market weeks," which are generally four to six months in advance of the corresponding industry selling seasons. While we typically will allocate a six-week period to market a sportswear line, most major orders are written within the first three weeks of any market period.

    We believe retail demand for our apparel products is enhanced by our ability to provide our retail accounts and consumers with knowledgeable sales support. In this regard, we have an established program to place retail sales specialists in many major department stores for many of our brands, including Jones New York, Jones New York Sport, Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans Company. These individuals have been trained by us to support the sale of our products by educating other store personnel and consumers about our products and by coordinating our marketing activities with those of the stores. In addition, the retail sales specialists provide us with firsthand information concerning consumer reactions to our products. In addition, we have a program of designated sales personnel in which a store agrees to designate certain sales personnel who will devote a substantial portion of their time to selling our products in return for certain benefits.

    We introduce new collections of footwear at industry-wide shoe shows, held four times yearly in New York City and semi-annually in Las Vegas, and at regional shoe shows throughout the year. We introduce new handbag and small leather goods collections at market shows that occur four times each year in New York City. Jewelry products are marketed in New York City showrooms through individual customer appointments and at five industry-wide market shows each year. Retailers visit our showrooms at these times to view various product lines and merchandise.

    We market our footwear, handbag and small leather goods businesses with certain department stores and specialty retail stores by bringing our retail and sales planning expertise to those retailers. Under this program, members of branded division management who have extensive retail backgrounds work with the retailer to create a "focus area" or "concept shop" within the store that displays the full collection of an entire brand in one area. These individuals assist the department and specialty retail stores by: providing advice about appropriate product assortment and product flow; making recommendations about when a product 

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should be re-ordered; providing sales guidance, including the training of store personnel; and developing advertising programs with the retailer to promote sales of our products. In addition, our sales force and, for handbags and small leather goods, field merchandising associates recommend how to display our products and educate store personnel about us and our products. The goal of this approach is to promote high retail sell-throughs of our products. With this approach, customers are encouraged to devote greater selling space to our products, and we are better able to assess consumer preferences, the future ordering needs of our customers, and inventory requirements.

    Most of our wholesale jewelry customers outsource their product management and merchandising to us. We work closely with these retailers to create long-term sales programs, which include choosing among our diverse product lines and implementing sales programs at the store level. A team of sales representatives and sales managers monitor product performance against plan and are responsible for inventory management, using point-of-sale information to respond to shifts in consumer preferences. Management uses this information to adjust product mix and inventory requirements. Retailers are also provided with customized displays and store-level merchandising designed to maximize sales and inventory turnover. By providing retailers with in-store product management, we establish close relationships with retailers, allowing us to maximize product sales and increase floor space allocated to our product lines. We have also placed retail sales specialists in major department stores to support the sale of our Napier, Nine West, Tommy Hilfiger and Judith Jack jewelry products.

    We employ a cooperative advertising program for our branded products, whereby we share the cost of certain wholesale customers' advertising and promotional expenses in newspapers, magazines and other media up to a preset maximum percentage of the customer's purchases. An important part of the marketing program includes prominent displays of our products in wholesale customers' sales catalogs as well as in-store shop displays.

    National advertising campaigns in the print media have existed for the Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo Jeans Company products since their inception. We also have national advertising campaigns for Jones New York (primarily in the print media encompassing both our products and products of our licensees), Nine West (footwear, apparel, jewelry and licensed products, primarily in fashion magazines), Easy Spirit (advertised primarily in fashion, lifestyle, health and fitness magazines), Enzo Angiolini (in fashion magazines), Norton McNaughton and Maggie McNaughton (in fashion, lifestyle and ethnic magazines), Napier (in fashion magazines), and the licensed Tommy Hilfiger and Givenchy jewelry lines. Given the strong recognition and brand loyalty already afforded its brands, we believe these campaigns will serve to further enhance and broaden our customer base. Except for Norton McNaughton and Maggie McNaughton, our in-house creative services departments oversee the conception, production and execution of virtually all aspects of these activities. We also believe that our retail network promotes brand name recognition and supports the merchandising of complete lines by, and the marketing efforts of, our wholesale customers.

    We have entered into various license agreements under which independent licensees produce and sell certain products under our Jones New York (and related) trademarks in accordance with designs furnished or approved by us in the United States, Canada and various other territories. Current licenses cover products including men's tailored clothing and overcoats, women's intimate apparel, women's rainwear, women's outerwear and leather outerwear, men's and women's woolen coats, belts, women's swimwear, umbrellas, costume jewelry, hair accessories, legwear, women's slippers, women's sleepwear, men's small leather goods, men's formal wear, men's neckwear and women's sunglasses and optical eyewear. These licenses provide for the payment to us of a percentage of the licensee's net sales of the licensed products against guaranteed minimum royalty payments which typically increase over the term of the agreement. During 2001, we received $12.2 million of gross licensing revenues under these agreements.

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    We have entered into various license agreements under which independent licensees produce and sell certain products under our Evan-Picone trademarks in accordance with designs furnished or approved by us in the United States, Canada and various other territories. These licenses cover products including men's tailored clothing, women's sunglasses, women's optical wear and women's hosiery and casual legwear. These licenses provide for the payment to us of a percentage of the licensee's net sales of the licensed products against guaranteed minimum royalty payments which typically increase over the term of the agreement. During 2001, we received $2.2 million of gross licensing revenues under these agreements.

    We have entered into various license agreements, primarily under the Nine West trademark, with independent licensees with respect to the manufacture and marketing of footwear and non-footwear products, including legwear, outerwear, cold weather accessories, belts, slippers, watches, sunglasses and optical eyewear. These licenses provide for the payment to us of a percentage of the licensee's net sales of the licensed products against guaranteed minimum royalty payments which typically increase over the term of the agreement.

    We have also entered into foreign distribution and license agreements under which independent licensees have the exclusive right to distribute and sell at retail (and, in some cases, at wholesale) footwear, handbags and small leather goods under the Nine West trademark and to own and operate Nine West retail stores in certain countries. These licenses provide for the payment to us of commissions on the sale to the licensees of certain licensed products, as well as a percentage of the licensee's net sales of all licensed products against guaranteed minimum royalty payments which typically increase over the term of the agreement. We have entered into such licenses for Turkey, Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates, portions of South America and Asia, Mexico, Canada, Greece, Cyprus, South Africa, Spain, portions of Central America and the Carribean, the United Kingdom, Ireland and the Channel Islands.

    Under rights obtained in perpetuity under license agreements for the production of various non-footwear products under the Capezio trademark, we have entered into various sub-license agreements under the Capezio trademark with independent licensees with respect to the manufacture and marketing of products including handbags, belts and hair accessories.

    During 2001, we received $14.6 million of gross licensing revenues under the Nine West licenses and other similar agreements, including revenues from the sub-licensing of the Capezio trademark.

    We utilize a variety of trademarks which we own, including Jones New York, Jones New York Sport, Jones Wear, Jones New York Country, Jones Jeans, Rena Rowan, Evan-Picone, Todd Oldham, Code Bleu, Executive Suite, Norton McNaughton, Maggie McNaughton, Norton Studio, Erika, Energie, Nine West, Easy Spirit, Enzo Angiolini, Bandolino, Banister, Calico, Nine & Company, Westies, Napier, Richelieu and Judith Jack. We have registered or applied for registration for these and other trademarks for use on a variety of items of apparel, footwear, accessories and/or related products and, in some cases, for retail store services, in the United States and certain other countries. The expiration dates of the United States trademark registrations for our material registered trademarks are as follows, with our other registered foreign and domestic trademarks expiring at various dates through 2020, all of which are subject to renewal if, in the case of domestic and certain foreign registrations, the marks are still in use for the goods and services covered by such registrations.

14

    We carefully monitor trademark expiration dates to ensure uninterrupted registration of our material trademarks. We also license the Lauren by Ralph Lauren, Ralph by Ralph Lauren, Polo Jeans Company by Ralph Lauren, Polo Ralph Lauren, Capezio, Givenchy and Tommy Hilfiger trademarks (see "Licensed Brands" above).

    We also hold numerous patents and have several patent applications pending in the United States Patent and Trademark Office and in certain other countries. We regard our trademarks and other proprietary rights as valuable assets which are critical in the marketing of our products. We vigorously protect our trademarks and patents against infringement.

    Our transactions with our foreign manufacturers and suppliers are subject to the risks of doing business abroad. Imports into the United States are affected by, among other things, the cost of transportation and the imposition of import duties and restrictions. The United States, China, Brazil and other countries in which our products are be manufactured may, from time to time, impose new quotas, duties, tariffs or other restrictions, or adjust presently prevailing quotas, duty or tariff levels, which could affect our operations and our ability to import products at current or increased levels. We cannot predict the likelihood or frequency of any such events occurring.

    Our import operations are subject to constraints imposed by bilateral textile agreements between the United States and a number of foreign countries, including Hong Kong, Taiwan and Korea. These agreements impose quotas on the amount and type of goods which can be imported into the United States from these countries. Such agreements also allow the United States to impose, at any time, restraints on the importation of categories of merchandise that, under the terms of the agreements, are not subject to specified limits. Our imported products are also subject to United States customs duties and, in the ordinary course of business, we are from time to time subject to claims by the United States Customs Service for duties and other charges.

    We monitor duty, tariff and quota-related developments and continually seek to minimize our potential exposure to quota-related risks through, among other measures, geographical diversification of our manufacturing sources, the maintenance of overseas offices, allocation of overseas production to merchandise categories where more quota is available and shifts of production among countries and manufacturers.

    Because our foreign manufacturers are located at greater geographic distances from us than our domestic manufacturers, we are generally required to allow greater lead time for foreign orders, which reduces our manufacturing flexibility. Foreign imports are also affected by the high cost of transportation into the United States.

    In addition to the factors outlined above, our future import operations may be adversely affected by political instability resulting in the disruption of trade from exporting countries, any significant fluctuation in the value of the dollar against foreign currencies and restrictions on the transfer of funds.

    On December 31, 2001, we had unfilled customer orders of approximately $1.2 billion, compared to approximately $1.0 billion of such orders at December 31, 2000. These amounts include both confirmed and unconfirmed orders which we believe, based on industry practice and past experience, will be confirmed. The amount of unfilled orders at a particular time is affected by a number of factors, including the mix of product, the timing of the receipt and processing of customer orders and scheduling of the manufacture and shipping of the product, which in some instances is dependent on the desires of the customer. Backlog is also affected by a continuing trend among customers to reduce the lead time on their orders. Due to these factors, as well as the acquisitions of Judith Jack and McNaughton during 2001, a comparison of unfilled orders from period to period is not necessarily meaningful and may not be indicative of eventual actual shipments.

15

    Competition is intense in the sectors of the apparel, footwear and accessory industries in which we participate. We compete with many other manufacturers and retailers, some of which are larger and have greater resources than us.

    We compete primarily on the basis of fashion, price and quality. We believe our competitive advantages include our ability to anticipate and respond quickly to changing consumer demands, our brand names and range of products and our ability to operate within the industries' production and delivery constraints. Furthermore, our established brand names and relationships with retailers have resulted in a loyal following of customers.

    We consider the risk of formidable new competitors to be minimal due to barriers to entry, such as significant startup costs and the long-term nature of supplier and customer relations. We believe that, during the past few years, major department stores and specialty retailers have been increasingly sourcing products from suppliers who are well capitalized or have established reputations for delivering quality merchandise in a timely manner. However, there can be no assurance that significant new competitors will not develop in the future.

Employees

    At December 31, 2001, we had approximately 12,175 full-time employees. This total includes approximately 6,885 in quality control, production, design and distribution positions, approximately 2,155 in administrative, sales, clerical and office positions and approximately 3,135 in our retail stores. We also employ approximately 4,515 part-time employees, of which approximately 3,960 work in our retail stores.

    Approximately 230 of our employees located in Bristol, Pennsylvania are members of the Teamsters Union, which has a collective bargaining agreement with us expiring in March 2006. Approximately 90 of our employees located in Vaughan, Ontario are members of the Laundry and Linen Drivers and Industrial Workers Union, which has a collective bargaining agreement with us expiring in March 2003. Approximately 1,415 of our employees located in Mexico are members of an affiliate of the Cofederacion de Trabajadores Mexicanos, which has a collective bargaining agreement expiring on January 1, 2003. We consider our relations with our employees to be satisfactory.

16

    The general location, use and approximate size of our principal properties are set forth below:

    We sublease approximately 200,000 square feet of our White Plains facilities to an independent company. We own a 105,000 square foot closed factory in Meriden, Connecticut, and a 150,000 square foot finishing facility in El Paso, Texas, both of which we intend to sell. Our joint venture company leases office and distribution facilities in Australia.

    Our retail stores are leased pursuant to long-term leases, typically five to seven years for apparel and footwear outlet stores and ten years for footwear and accessories and apparel specialty stores. Certain leases allow us to terminate our obligations after a predetermined period (generally one to three years) in the event that a particular location does not achieve specified sales volume. Many leases include clauses that provide for contingent payments based on sales volumes, and many leases contain escalation clauses for increases in operating costs and real estate taxes.

    We believe that our existing facilities are well maintained, in good operating condition and that our existing and planned facilities will be adequate for our operations for the foreseeable future.

    We have been named as a defendant in various actions and proceedings, including actions brought by certain employees whose employment has been terminated arising from ordinary business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, it is our opinion that any such liability would not have a material adverse financial effect on us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    Not Applicable.

17

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Our common stock is traded on the New York Stock Exchange under the symbol "JNY." The above figures set forth, for the periods indicated, the high and low sale prices per share of our common stock as reported on the New York Stock Exchange Composite Tape. The last reported sale price per share of our common stock on March 21, 2002 was $35.08, and on that date there were 379 holders of record of our common stock. However, many shares are held in "street name;" therefore, the number of holders of record may not represent the actual number of shareholders. To date, we have not paid any cash dividends on shares of our common stock. We anticipate that all of our future earnings will be retained for our financial requirements and do not anticipate paying cash dividends on our common stock in the foreseeable future.

Equity Compensation Plan Information

    The following table gives information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 31, 2001. 

    In connection with the acquisition of McNaughton, stock options held by McNaughton employees on the acquisition date were converted to fully-vested options to purchase our common stock under the same terms and conditions as the original grants. A portion of these options were originally granted pursuant to equity compensation plans not approved by McNaughton shareholders. No additional options, warrants or other equity rights will be granted under any McNaughton equity compensation plans. For further information, see "Stock Options and Restricted Stock" in Notes to Consolidated Financial Statements.

18

    The following financial information is qualified by reference to, and should be read in conjunction with, our Consolidated Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained elsewhere in this Report. The selected consolidated financial information presented below is derived from our audited Consolidated Financial Statements for each of the five years in the period ended December 31, 2001. We completed our acquisitions of Sun, Nine West, Victoria, Judith Jack, and McNaughton at various dates within the five-year period and, accordingly, the results of their operations are included in our operating results from the respective dates of acquisition.

(All amounts in millions except net income per share data)

(1) Reflects an increase in cost of goods sold attributable to the fair value of inventory over cost, recorded as a result of acquisitions as required by the purchase method of accounting.

(2) All share and per share amounts have been restated to retroactively reflect a 2-for-1 stock split in 1998.

19

    The following discussion provides information and analysis of our results of operations from 1999 through 2001, and our liquidity and capital resources. The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements included elsewhere herein.

    Several of our accounting policies involve significant judgements and uncertainties. The policies with the greatest potential effect on our results of operations and financial position include the estimated collectibility of accounts receivable and the recovery value of obsolete or overstocked inventory. For accounts receivable, we estimate the net collectibility considering both historical and anticipated trends of trade discounts and co-op advertising deductions taken by our customers, allowances we provide to our retail customers to effectively flow goods through the retail channels, and the possibility of non-collection due to the financial position of our customers. For inventory, we estimate the amount of goods that we will not be able to sell in the normal course of business and write down the value of these goods to the recovery value expected to be realized through off-price channels. If we incorrectly anticipate these trends or unexpected events occur (such as those of September 11, 2001), our results of operations could be materially affected.

    We operate in three reportable segments: wholesale apparel, wholesale footwear and accessories, and retail.

    We completed our acquisitions of Nine West on June 15, 1999, Victoria on July 31, 2000, Judith Jack on April 26, 2001 and McNaughton on June 19, 2001. The results of operations of the acquired companies are included in our operating results from the respective dates of acquisition. Accordingly, the financial position and results of operations presented and discussed herein are not directly comparable between years. Nine West operates in both the wholesale footwear and accessories and the retail segments, Victoria and Judith Jack operate primarily in the wholesale footwear and accessories segment, and McNaughton operates in the wholesale apparel segment.

    We believe that we have achieved our growth in recent years by enhancing the brand equity of our labels through our focus on design, quality and value, and through strategic acquisitions which provide significant diversification to the business by successfully adding new labels and product lines (such as the Nine West, Napier, Judith Jack, Norton McNaughton, Energie and Erika brands). Through this diversification, we have evolved into a multidimensional resource in apparel, footwear and accessories. We have leveraged the strength of our brands to increase both the number of locations and amount of selling space in which our products are offered, to introduce new product extensions such as the Nine West and Nine & Company apparel and Jones New York accessory labels, and to reposition the Bandolino and Evan-Picone labels to the moderate market segment. We believe we have also benefitted from a trend among our major retail accounts to concentrate their women's apparel, footwear and accessories buying among a narrowing group of vendors.

    We have substantially restructured our businesses at Nine West, including the sale of Nine West's Asian and United Kingdom operations in August 2000 and January 2001, respectively, and the closing of underperforming domestic retail stores, remote distribution and administrative centers and several domestic manufacturing operations. Several Nine West footwear brands, including Selby and Pappagallo, were discontinued until alternative distribution channels can be established or sales of these brands can be effected. The licensed brand cK/Calvin Klein was also discontinued.

    The terrorist attacks of September 11, 2001 and subsequent increases in unemployment and reduced consumer spending have clearly had a negative impact on the United States economy. Retailers in those distribution channels to which we sell our products have responded to the general sense of economic uncertainty with order reductions and extremely aggressive promotional activity. As a result, we had the challenge of liquidating inventory above our normal plan, as well as working with our retail customers to 

20

flow inventories through the normal retail distribution channels. Accordingly, we recorded a pre-tax charge of $86.8 million (the "special charge") in the third fiscal quarter of 2001 to provide for the writedown of inventories and receivables. Of the charge, $61.7 million was to write down to net realizable value merchandise that we either own or are committed for and need to dispose of through off-price channels. The charge to receivables of $24.1 million was to record an incremental provision for customer allowances, which we anticipated we needed to provide to our retail customers in order to effectively flow goods through the retail channels. At December 31, 2001, $25.5 million of the write down of inventory (applicable to inventory either on-hand or in transit) and $1.5 million of the provision for customer allowances remained to be used.

Results of Operations
2001 Compared to 2000

    Revenues. Total revenues for 2001 decreased 1.7%, or $69.6 million, to $4.07 billion, compared to $4.14 billion for 2000. Excluding the special charge, total revenues for 2001 decreased 1.1%, or $45.5 million. Revenue growth from the net sales of product lines added as a result of the Judith Jack and McNaughton acquisitions were offset by the effects of the restructuring of the Nine West business mentioned above.

    Revenues by segment were as follows:      

                                                         December 31, 2001                            December 31, 2000
                                             ----------------------------------------     ---------------------------------------
                                                                     Elim-      Cons-                             Elim-     Cons-
                                              Issuers    Others   inations   olidated      Issuers    Others   inations  olidated
                                             ----------------------------------------     ---------------------------------------
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                    $ 24.5    $ 52.0        $ -     $ 76.5       $ 45.5    $ 15.0        $ -    $ 60.5
  Accounts receivable - net                     251.9     143.9          -      395.8        288.2     109.8          -     398.0
  Inventories                                   351.9     230.4       (9.4)     572.9        404.4     159.7       (6.9)    557.2
  Prepaid and refundable income taxes             4.0         -       (4.0)         -          4.8         -       (4.8)        -
  Deferred taxes                                 35.6      26.6       (0.1)      62.1         58.7      11.9          -      70.6
  Prepaid expenses and other
    current assets                               20.8      12.9          -       33.7         86.2      10.3       (1.1)     95.4
                                             ----------------------------------------     ---------------------------------------
    TOTAL CURRENT ASSETS                        688.7     465.8      (13.5)   1,141.0        887.8     306.7      (12.8)  1,181.7

Property, plant and equipment - net             166.0      76.5          -      242.5        166.4      56.1          -     222.5
Due from affiliates                             595.9     349.7     (945.6)         -        844.4     558.0   (1,402.4)        -
Goodwill - net                                  646.3     722.1          -    1,368.4      1,067.2     408.6     (389.0)  1,086.8
Other intangibles - net                         267.1     266.2          -      533.3        277.4      94.2          -     371.6
Investments in subsidiaries                   2,521.2      24.4   (2,545.6)         -      2,396.0      21.4   (2,417.4)        -
Deferred taxes                                   10.7         -      (10.7)         -            -      15.5      (15.5)        -
Other assets                                     58.1      30.2          -       88.3         80.9      35.8       (0.1)    116.6
                                             ----------------------------------------     ---------------------------------------
                                             $4,954.0  $1,934.9  $(3,515.4)  $3,373.5     $5,720.1  $1,496.3  $(4,237.2) $2,979.2
                                             ========================================     =======================================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term debt and current portion
    of long-term debt and capital
    lease obligations                           $ 6.2     $ 1.5        $ -      $ 7.7      $ 499.1     $ 0.7        $ -   $ 499.8
  Accounts payable                              152.7      64.0          -      216.7        166.6      44.3          -     210.9
  Income taxes payable                            5.8       5.2       (4.0)       7.0         13.5       4.4       (4.8)     13.1
  Accrued expenses and other
    current liabilities                          85.9      61.0       (0.1)     146.8        126.1      37.9       (1.0)    163.0
                                             ----------------------------------------     ---------------------------------------
    TOTAL CURRENT LIABILITIES                   250.6     131.7       (4.1)     378.2        805.3      87.3       (5.8)    886.8
                                             ----------------------------------------     ---------------------------------------

NONCURRENT LIABILITIES:
  Long-term debt                                941.5       8.0          -      949.5        537.9       9.3          -     547.2
  Obligations under capital leases               27.1         -          -       27.1         28.9       0.1          -      29.0
  Deferred taxes                                 23.9      67.6      (10.7)      80.8         22.5       1.8      (15.5)      8.8
  Due to affiliates                             337.2     608.4     (945.6)         -      1,129.7     272.7   (1,402.4)        -
  Other                                          28.5       4.0          -       32.5         30.3       0.1       (0.2)     30.2
                                             ----------------------------------------     ---------------------------------------
    TOTAL NONCURRENT LIABILITIES              1,358.2     688.0     (956.3)   1,089.9      1,749.3     284.0   (1,418.1)    615.2
                                             ----------------------------------------     ---------------------------------------
    TOTAL LIABILITIES                         1,608.8     819.7     (960.4)   1,468.1      2,554.6     371.3   (1,423.9)  1,502.0
                                             ----------------------------------------     ---------------------------------------

STOCKHOLDERS' EQUITY:
  Common stock and additional
    paid-in capital                           2,061.0     835.3   (1,920.6)     975.7      2,261.9     567.4   (2,075.9)    753.4
  Retained earnings                           1,665.7     286.8     (632.2)   1,320.3      1,262.3     561.9     (740.1)  1,084.1
  Accumulated other comprehensive
    income                                        9.6      (6.9)      (2.2)       0.5         (0.8)     (4.3)       2.7      (2.4)
                                             ----------------------------------------     ---------------------------------------
                                              3,736.3   1,115.2   (2,555.0)   2,296.5      3,523.4   1,125.0   (2,813.3)  1,835.1
  Less treasury stock                          (391.1)        -          -     (391.1)      (357.9)        -          -    (357.9)
                                             ----------------------------------------     ---------------------------------------
    TOTAL STOCKHOLDERS' EQUITY                3,345.2   1,115.2   (2,555.0)   1,905.4      3,165.5   1,125.0   (2,813.3)  1,477.2
                                             ----------------------------------------     ---------------------------------------
                                             $4,954.0  $1,934.9  $(3,515.4)  $3,373.5     $5,720.1 $ 1,496.3  $(4,237.2) $2,979.2
                                             ========================================     =======================================

                                Year Ended December 31, 2001            Year Ended December 31, 2000            Year Ended December 31, 1999
                           --------------------------------------  --------------------------------------  --------------------------------------
                                                  Elim-     Cons-                         Elim-     Cons-                         Elim-     Cons-
                            Issuers    Others  inations  olidated   Issuers    Others  inations  olidated   Issuers    Others  inations  olidated
                           --------------------------------------  --------------------------------------  --------------------------------------

Net sales                  $2,945.4  $1,205.0  $ (102.1) $4,048.3  $3,269.8   $ 951.5  $ (100.8) $4,120.5  $2,396.5   $ 837.9  $ (104.6) $3,129.8
Licensing income (net)         14.6      10.2         -      24.8      12.0      10.2         -      22.2       6.7      14.2         -      20.9
                           --------------------------------------  --------------------------------------  --------------------------------------
  Total revenues            2,960.0   1,215.2    (102.1)  4,073.1   3,281.8     961.7    (100.8)  4,142.7   2,403.2     852.1    (104.6)  3,150.7
Cost of goods sold          1,851.8     817.7     (99.1)  2,570.4   1,897.5     640.5    (101.5)  2,436.5   1,513.2     547.4     (99.1)  1,961.5
                           --------------------------------------  --------------------------------------  --------------------------------------
  Gross profit              1,108.2     397.5      (3.0)  1,502.7   1,384.3     321.2       0.7   1,706.2     890.0     304.7      (5.5)  1,189.2
Selling, general and
 administrative expenses      756.8     222.4      (0.6)    978.6     906.6     163.0      (4.9)  1,064.7     654.9     135.0      (1.2)    788.7
Amortization of goodwill       23.6      20.6         -      44.2      36.0      13.4     (12.5)     36.9      12.9      11.5      (2.1)     22.3
                           --------------------------------------  --------------------------------------  --------------------------------------
  Operating income            327.8     154.5      (2.4)    479.9     441.7     144.8      18.1     604.6     222.2     158.2      (2.2)    378.2
Net interest (income)
 expense and financing
 costs                         71.2       8.9         -      80.1     122.5     (21.0)        -     101.5      82.9     (19.3)        -      63.6
                           --------------------------------------  --------------------------------------  --------------------------------------
  Income before provision
   for income taxes and
   equity in earnings of
   subsidiaries               256.6     145.6      (2.4)    399.8     319.2     165.8      18.1     503.1     139.3     177.5      (2.2)    314.6
Provision for income taxes    114.4      49.2         -     163.6     135.4      64.2       1.6     201.2      59.8      68.0      (1.6)    126.2
Equity in earnings of
 subsidiaries                (405.1)     (4.3)    409.4         -    (439.7)     (2.6)    442.3         -    (218.0)     (3.5)    221.5         -
                           --------------------------------------  --------------------------------------  --------------------------------------
  Net income                $ 547.3   $ 100.7  $ (411.8)  $ 236.2   $ 623.5   $ 104.2  $ (425.8)  $ 301.9   $ 297.5   $ 113.0  $ (222.1)  $ 188.4
                           ======================================  ======================================  ======================================

                                Year Ended December 31, 2001            Year Ended December 31, 2000            Year Ended December 31, 1999
                           --------------------------------------  --------------------------------------  --------------------------------------
                                                  Elim-     Cons-                         Elim-     Cons-                         Elim-     Cons-
                            Issuers    Others  inations  olidated   Issuers    Others  inations  olidated   Issuers    Others  inations  olidated
                           --------------------------------------  --------------------------------------  --------------------------------------

Net cash provided by
 operating activities       $ 717.8   $ 233.0  $ (388.4)  $ 562.4   $ 269.5    $ 69.7       $ -   $ 339.2   $ 213.8    $ 34.0       $ -   $ 247.8
                           --------------------------------------  --------------------------------------  --------------------------------------

Cash flows from investing
 activities:
  Acquisitions, net of
    cash acquired            (112.8)    (21.2)        -    (134.0)    (14.9)    (14.2)        -     (29.1)   (436.2)        -         -    (436.2)
  Capital expenditures        (32.8)    (23.6)        -     (56.4)    (23.9)    (22.9)        -     (46.8)    (17.5)    (12.2)        -     (29.7)
  Proceeds from sale of
    U. S. Treasury bonds      321.6         -         -     321.6         -         -         -         -         -         -         -         -
  Repurchase/collateral
    required for repurchase
    of U. S. Treasury bonds  (318.5)        -         -    (318.5)        -         -         -         -         -         -         -         -
  Additional consideration
    paid for acquisition
    of Sun                     (1.0)        -         -      (1.0)    (26.6)        -         -     (26.6)    (20.1)        -         -     (20.1)
  Additional consideration
    paid for acquisition
    of Victoria               (18.4)        -         -     (18.4)        -         -         -         -         -         -         -         -
  Acquisition of intangibles      -      (1.0)        -      (1.0)     (1.0)     (1.0)        -      (2.0)        -     (29.6)        -     (29.6)
  Proceeds from sale of Nine
    West UK operations         28.0         -         -      28.0         -         -         -         -         -         -         -         -
  Repayments from (loans to)
    officers                   18.0         -         -      18.0     (20.0)        -         -     (20.0)        -         -         -         -
  Other                         0.4       1.0         -       1.4     (10.4)      0.2         -     (10.2)      9.1       0.1         -       9.2
                           --------------------------------------  --------------------------------------  --------------------------------------
    Net cash used in
      investing activities   (115.5)    (44.8)        -    (160.3)    (96.8)    (37.9)        -    (134.7)   (464.7)    (41.7)        -    (506.4)
                           --------------------------------------  --------------------------------------  --------------------------------------

Cash flows from
  financing activities:
    Issuance of Senior
      Notes, net              392.8         -         -     392.8         -         -         -         -     390.8         -         -     390.8
    Repurchase of Senior
      Notes                  (265.5)   (125.0)        -    (390.5)        -         -         -         -    (356.9)        -         -    (356.9)
    Premiums paid on
      repurchase of
      Senior Notes                -     (35.2)        -     (35.2)        -         -         -         -         -         -         -         -
    Refinancing of acquired
      long-term debt              -    (146.9)        -    (146.9)    (71.0)        -         -     (71.0)        -         -         -         -
    Net borrowings (payments)
      under long-term credit
      facilities             (227.7)      0.7         -    (227.0)    (30.4)      9.5         -     (20.9)    139.4      (3.1)        -     136.3
    Purchases of treasury
      stock                   (68.9)        -         -     (68.9)   (121.9)        -         -    (121.9)     (2.8)        -         -      (2.8)
    Proceeds from exercise
      of stock options         85.8         -         -      85.8      27.6         -         -      27.6      14.1         -         -      14.1
    Net intercompany
      borrowings (payments)  (544.0)    544.0         -         -      34.4     (34.4)        -         -      95.3     (95.3)        -         -
    Dividends to affiliates       -    (388.4)    388.4         -         -         -         -         -         -         -         -         -
    Other items                 3.4      (0.7)        -       2.7      (4.0)     (0.5)        -      (4.5)     (4.3)     (0.3)        -      (4.6)
                           --------------------------------------  --------------------------------------  --------------------------------------
      Net cash (used in)
        provided by
        financing
        activities           (624.1)   (151.5)    388.4    (387.2)   (165.3)    (25.4)        -    (190.7)    275.6     (98.7)        -     176.9
                           --------------------------------------  --------------------------------------  --------------------------------------

Effect of exchange rates
  on cash                       0.8       0.3         -       1.1      (0.8)      0.5         -      (0.3)        -      (0.3)        -      (0.3)
                           --------------------------------------  --------------------------------------  --------------------------------------

Net increase (decrease) in
  cash and cash equivalents   (21.0)     37.0         -      16.0       6.6       6.9         -      13.5      24.7    (106.7)        -     (82.0)
Cash and cash equivalents,
  beginning                    45.5      15.0         -      60.5      38.9       8.1         -      47.0      14.2     114.8         -     129.0
                           --------------------------------------  --------------------------------------  --------------------------------------

Cash and cash equivalents,
  ending                     $ 24.5    $ 52.0       $ -    $ 76.5    $ 45.5    $ 15.0       $ -    $ 60.5    $ 38.9     $ 8.1       $ -    $ 47.0
                           ======================================  ======================================  ======================================

SCHEDULE II

                                     JONES APPAREL GROUP, INC.
                                 VALUATION AND QUALIFYING ACCOUNTS
                           YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                                           (In Millions)


           Column A                   Column B             Column C            Column D     Column E
- -------------------------------      ----------   -------------------------   ----------   ---------
                                                         Additions
                                                  -------------------------
                                     Balance at   Charged to    Charged to                 Balance
                                     beginning    costs and     other         Deductions   at end of
Description                          of period    expenses      accounts          (1)      period
- ------------                         ----------   ----------    -----------   ----------   ---------

For the year ended
  December 31, 1999:
    Allowance for doubtful accounts      $ 3.3        $5.4       $20.5 (2)       $ 2.6      $26.6

For the year ended
  December 31, 2000:
    Allowance for doubtful accounts      $26.6        $  -       $   -           $14.2      $12.4

For the year ended
  December 31, 2001:
    Allowance for doubtful accounts      $12.4        $3.3       $ 0.9 (3)       $ 4.9      $11.7





(1)  Doubtful accounts written off against accounts receivable.
(2)  Addition due to the acquisition of Nine West Group Inc. on June 15, 1999.
(3)  Addition due to the acquisition of McNaughton Apparel Group, Inc. on June 19, 2001.