NEW YORK — Edging toward its absorption by Jones Apparel Group, bankrupt Kasper A.S.L. said Wednesday that, even without a tax benefit from the resolution of a dispute with the Internal Revenue Service, it managed a double-digit profit increase in the third quarter.

This story first appeared in the November 13, 2003 issue of WWD. Subscribe Today.

Additionally, the firm reported that the price to be paid for it by Jones Apparel Group was being adjusted upward.

For the three months ended Sept. 27, income skyrocketed 175.3 percent to $27.5 million, or $4.04 a diluted share, from $10 million, or $1.47, in the same year-ago period. Results benefited from a $7.6 million gain from a tax dispute settlement, which allows certain operating losses not previously available to be used to offset taxable income and certain tax reserves. Excluding the benefit, the firm, which owns the Anne Klein trademark, still posted a double-digit profit increase of 15.5 percent to $11.5 million.

Total revenue for the quarter leaped 25.1 percent to $128 million from $102.3 million. Revenue includes a 25.3 percent gain in sales to $122.5 million from $97.8 million and a 21.1 percent jump in royalty income to $5.5 million from $4.5 million.

In a telephone interview, John Idol, chairman and chief executive officer, attributed the company’s strong results to better-than-expected gains at retail.

“Business at retail in the third quarter was stronger than we anticipated,” he said. “Clearly, career clothes in retailing were a trend out there. Kasper’s suit business, including the Anne Klein brand, performed very well for us. We also saw in our retail business an 18 percent [same-store sales] increase, which includes our outlet stores and the Anne Klein store in SoHo.”

Idol observed that while October seemed strong, the last week of the month showed signs of softening, with a rebound in the first week of November. “The cold weather helped the turnaround. We remain cautiously optimistic,” the ceo said.

While Idol remained mum about where he was headed once Kasper exited Chapter 11, he did say the company’s tour of bankruptcy proceedings was likely to end on Dec. 1.

The company is currently working with creditors in soliciting votes approving the proposed plan of reorganization.

In a separate announcement, Kasper said Jones Apparel Group Inc. agreed to increase its purchase price for the company by $17 million, bringing the adjusted price to $232.5 million plus the assumption of certain liabilities. The increase is subject to certain conditions, such as the confirmation of Kasper’s plan of reorganization and an outside closing of the sale by Dec. 5. Under the current plan, which Kasper said has the support of the unsecured creditors’ and equity committees, holders of senior note claims will receive $165 million. Other claims are expected to be paid in full, while equity interests should get $46 million, or $6.80 a share. The different creditor groups are expected to vote on the plan by Monday, with a Manhattan bankruptcy court hearing on confirmation set for Wednesday.

According to Idol, the increase in the purchase price was due in part to the recognition that equity holders are entitled to a distribution of the proceeds from the sale of the company to Jones.

For the nine months, income was $36.9 million, or $5.43, against a year-ago loss of $8.8 million, or $1.29. Excluding the tax benefit, income would have been $21 million. Revenue climbed 11.2 percent to $324.1 million from $291.4 million.

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