10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED OCTOBER 1, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-10857

THE WARNACO GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-4032739
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

501 Seventh Avenue
New York, New York 10018
(Address of registrant’s principal executive offices)

Registrant’s telephone number, including area code: (212) 287-8000

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. þ Yes o No.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No.

The number of outstanding shares of the registrant’s common stock, par value $0.01 per share, as of October 28, 2011 is as follows: 40,481,065.

THE WARNACO GROUP, INC.
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 1, 2011

	PAGE
	NUMBER
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets as of October 1, 2011, January 1, 2011 and October 2, 2010		1
Consolidated Condensed Statements of Operations for the Three Months and Nine Months Ended October 1, 2011 and for the Three Months and Nine Months Ended October 2, 2010		2
Consolidated Statements of Stockholders’ Equity, Comprehensive Income and Redeemable Non-Controlling Interest for the Nine Months Ended October 1, 2011 and for the Nine Months Ended October 2, 2010		3
Consolidated Condensed Statements of Cash Flows for the Nine Months Ended October 1, 2011 and for the Nine Months Ended October 2, 2010		4
Notes to Consolidated Condensed Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Item 3. Quantitative and Qualitative Disclosures About Market Risk		61
Item 4. Controls and Procedures		61
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		62
Item 1A. Risk Factors		62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		62
Item 3. Defaults Upon Senior Securities		63
Item 4. (Removed and Reserved)		63
Item 5. Other Information		63
Item 6. Exhibits		63
SIGNATURES		64
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 10.10
Exhibit 10.11
Exhibit 10.12
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements.

THE WARNACO GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands, excluding per share data)
(Unaudited)

	October 1, 2011			January 1, 2011			October 2, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	179,326		$	191,227		$	213,409
Accounts receivable, net of reserves of $89,798, $95,639 and $82,594 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		341,406			318,123			346,464
Inventories		392,073			310,504			324,439
Assets of discontinued operations		—			125			112
Prepaid expenses and other current assets (including deferred income taxes of $59,781, $58,270, and $53,402 as of October 1, 2011, January 1, 2011, and October 2, 2010, respectively)		174,355			158,659			147,421
Total current assets		1,087,160			978,638			1,031,845
Property, plant and equipment, net		129,205			129,252			127,157
Other assets:
Licenses, trademarks and other intangible assets, net		360,508			373,276			360,457
Goodwill		143,688			115,278			110,150
Other assets (including deferred income taxes of $24,695, $11,769, and $15,459 as of October 1, 2011, January 1, 2011, and October 2, 2010, respectively)		92,210			56,828			54,859
Total assets	$	1,812,771		$	1,653,272		$	1,684,468
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	47,773		$	32,172		$	69,607
Accounts payable		182,517			152,714			165,171
Accrued liabilities		209,842			227,561			223,397
Liabilities of discontinued operations		7,048			18,800			8,365
Accrued income taxes payable (including deferred income taxes of $1,320, $262 and $1,094 as of October 1, 2011, January 1, 2011, and October 2, 2010, respectively)		34,906			38,219			43,431
Total current liabilities		482,086			469,466			509,971
Long-term debt		209,552			—			—
Other long-term liabilities (including deferred income taxes of $76,410, $74,233, and $69,478 as of October 1, 2011, January 1, 2011, and October 2, 2010, respectively)		206,529			211,200			194,880
Total liabilities		898,167			680,666			704,851
Commitments and contingencies
Redeemable non-controlling interest		15,200			—			—
Stockholders’ equity:
Preferred stock		—			—			—
Common stock: $0.01 par value, 112,500,000 shares authorized, 52,134,522, 51,712,674 and 51,255,219 issued as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		521			517			513
Additional paid-in capital		704,741			674,508			660,362
Accumulated other comprehensive income		20,421			43,048			47,728
Retained earnings		633,776			501,394			482,219
Treasury stock, at cost 11,653,871, 7,445,166 and 6,751,793 shares as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		(460,055	)		(246,861	)		(211,205	)
Total stockholders’ equity		899,404			972,606			979,617
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$	1,812,771		$	1,653,272		$	1,684,468

See Notes to Consolidated Condensed Financial Statements.

1

THE WARNACO GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, excluding per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Net revenues	$	645,121		$	596,761		$	1,898,669		$	1,704,259
Cost of goods sold		365,412			327,736			1,065,552			938,374
Gross profit		279,709			269,025			833,117			765,885
Selling, general and administrative expenses		212,000			198,129			637,491			554,962
Amortization of intangible assets		3,263			3,021			9,548			8,275
Pension income		(310	)		(22	)		(931	)		(65	)
Operating income		64,756			67,897			187,009			202,713
Other loss (income)		1,357			(1,899	)		498			5,651
Interest expense		4,986			2,953			11,142			12,190
Interest income		(986	)		(699	)		(2,542	)		(2,192	)
Income from continuing operations before provision for income taxes and non-controlling interest		59,399			67,542			177,911			187,064
Provision for income taxes		10,770			26,102			39,184			67,285
Income from continuing operations before non-controlling interest		48,629			41,440			138,727			119,779
Income (Loss) from discontinued operations, net of taxes		(4,177	)		57			(4,741	)		(373	)
Net income		44,452			41,497			133,986			119,406
Less: net loss attributable to non-controlling interest		(159	)		—			(159	)		—
Net income attributable to Warnaco Group, Inc.	$	44,611		$	41,497		$	134,145		$	119,406
Amounts attributable to Warnaco Group, Inc. common shareholders:
Income from continuing operations, net of tax	$	48,788		$	41,440		$	138,886		$	119,779
Income (Loss) from discontinued operations, net of tax		(4,177	)		57			(4,741	)		(373	)
Net Income	$	44,611		$	41,497		$	134,145		$	119,406
Basic income per common share (see Note 17):
Income from continuing operations	$	1.15		$	0.92		$	3.18		$	2.64
Income (Loss) from discontinued operations		(0.10	)		—			(0.11	)		(0.01	)
Net income	$	1.05		$	0.92		$	3.07		$	2.63
Diluted income per common share (see Note 17):
Income from continuing operations	$	1.13		$	0.90		$	3.11		$	2.58
Income (Loss) from discontinued operations		(0.10	)		—			(0.11	)		(0.01	)
Net income	$	1.03		$	0.90		$	3.00		$	2.57
Weighted average number of shares outstanding used in computing income per common share (see Note 17):
Basic		41,713,958			44,553,898			43,076,120			44,813,952
Diluted		42,581,100			45,465,691			44,023,646			45,806,530

See Notes to Consolidated Condensed Financial Statements.

2

THE WARNACO GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY,
COMPREHENSIVE INCOME AND REDEEMABLE NON-CONTROLLING INTEREST
(Dollars in thousands)
(Unaudited)

			Stockholders’ Equity
							Accumulated
	Redeemable				Additional		Other											Total
	Non-controlling		Common		Paid-in		Comprehensive			Retained		Treasury			Comprehensive			Stockholders’
	Interest		Stock		Capital		Income			Earnings		Stock			Income			Equity
Balance at January 2, 2010	$	—	$	506	$	633,378	$	46,473		$	362,813	$	(127,060	)	$	—		$	916,110
Comprehensive income:
Net income											119,406					119,406			119,406
Other comprehensive income, net of tax:																—
Foreign currency translation adjustments								1,677								1,677			1,677
Change in post-retirement plans								(6	)							(6	)		(6	)
Change in cash flow hedges								(427	)							(427	)		(427	)
Other								11								11			11
Other comprehensive income																1,255			1,255
Comprehensive income															$	120,661			120,661
Stock issued in connection with stock compensation plans				7		8,904													8,911
Compensation expense in connection with employee stock compensation plans						18,080													18,080
Purchase of treasury stock related to stock compensation plans													(3,362	)					(3,362	)
Repurchases of common stock													(80,783	)					(80,783	)
Balance at October 2, 2010	$	—	$	513	$	660,362	$	47,728		$	482,219	$	(211,205	)				$	979,617

				Stockholders’ Equity
								Accumulated
	Redeemable					Additional		Other												Total
	Non-controlling			Common		Paid-in		Comprehensive			Retained			Treasury			Comprehensive			Stockholders’
	Interest			Stock		Capital		Income			Earnings			Stock			Income			Equity
Balance at January 1, 2011	$	—		$	517	$	674,508	$	43,048		$	501,394		$	(246,861	)	$	—		$	972,606
Comprehensive income:
Net income												134,145						134,145			134,145
Other comprehensive income, net of tax:
Foreign currency translation adjustments									(21,453	)								(21,453	)		(21,453	)
Change in cash flow hedges									(1,169	)								(1,169	)		(1,169	)
Other									(5	)								(5	)		(5	)
Other comprehensive income																		(22,627	)		(22,627	)
Comprehensive income																	$	111,518			111,518
Stock issued in connection with stock compensation plans					4		9,018														9,022
Compensation expense in connection with employee stock compensation plans							21,215														21,215
Purchase of treasury stock related to stock compensation plans															(2,406	)					(2,406	)
Repurchases of common stock															(210,788	)					(210,788	)
Acquisition date fair value of redeemable non-controlling interest in joint venture in India		15,200
Net loss attributable to redeemable non-controlling interest		(159	)
Foreign currency translation adjustments attributable to redeemable non-controling interest		(1,604	)
Adjustment to redemption value		1,763										(1,763	)								(1,763	)
Balance at October 1, 2011	$	15,200		$	521	$	704,741	$	20,421		$	633,776		$	(460,055	)				$	899,404

See Notes to Consolidated Condensed Financial Statements.

3

THE WARNACO GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

	Nine Months Ended
	October 1,			October 2,
	2011			2010
Cash flows from operating activities:
Net income	$	133,986		$	119,406
Adjustments to reconcile net income to net cash provided by operating activities:
Foreign exchange loss		2,185			150
Loss from discontinued operations		4,741			373
Depreciation and amortization		43,669			37,507
Stock compensation		21,215			18,080
Provision for trade and other bad debts		2,259			2,170
Inventory writedown		14,581			10,035
Loss on repurchase of Senior Notes		—			3,747
Other		(1,697	)		(467	)
Changes in operating assets and liabilities:
Accounts receivable		(32,383	)		(59,319	)
Inventories		(101,375	)		(74,625	)
Prepaid expenses and other assets		(13,125	)		(10,495	)
Accounts payable, accrued expenses and other liabilities		14,766			61,520
Accrued income taxes		(12,139	)		39,861
Net cash provided by operating activities from continuing operations		76,683			147,943
Net cash provided by (used in) operating activities from discontinued operations		(16,501	)		377
Net cash provided by operating activities		60,182			148,320
Cash flows from investing activities:
Proceeds on disposal of assets		146			189
Purchases of property, plant & equipment		(36,311	)		(29,783	)
Business acquisitions, net of cash acquired		(21,454	)		(8,404	)
Loan to non-controlling shareholder		(6,000	)		—
Disposal of businesses		2,000			1,431
Net cash (used in) investing activities from continuing operations		(61,619	)		(36,567	)
Net cash (used in) investing activities from discontinued operations		—			—
Net cash (used in) investing activities		(61,619	)		(36,567	)
Cash flows from financing activities:
Repurchase of Senior Notes due 2013		—			(164,011	)
Change in short-term notes payable		24,340			15,344
Change in revolving credit loans		—			6,985
Repayment of Italian Note		(13,370	)		—
Proceeds from 2011 Term Loan		200,000			—
Repayment of 2011 Term Loan		(500	)		—
Proceeds from the exercise of employee stock options		8,231			8,157
Payment of deferred financing costs		(5,385	)		(70	)
Purchase of treasury stock		(211,206	)		(84,145	)
Contingent payment related to acquisition of non-controlling interest in Brazilian subsidiary		(11,467	)		(3,442	)
Net cash (used in) financing activities from continuing operations		(9,357	)		(221,182	)
Net cash (used in) financing activities from discontinued operations		—			—
Net cash (used in) financing activities		(9,357	)		(221,182	)
Effect of foreign exchange rate changes on cash and cash equivalents		(1,107	)		2,084
(Decrease) in cash and cash equivalents		(11,901	)		(107,345	)
Cash and cash equivalents at beginning of period		191,227			320,754
Cash and cash equivalents at end of period	$	179,326		$	213,409

See Notes to Consolidated Condensed Financial Statements.

4

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 1—Organization

The Warnaco Group, Inc. (“Warnaco Group” and, collectively with its subsidiaries, the “Company”) was incorporated in Delaware on March 14, 1986 and, on May 10, 1986, acquired substantially all of the outstanding shares of Warnaco Inc. (“Warnaco”). Warnaco is the principal operating subsidiary of Warnaco Group.

Note 2 — Basis of Consolidation and Presentation

The Consolidated Condensed Financial Statements include the accounts of Warnaco Group and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

The accompanying unaudited Consolidated Condensed Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and disclosures necessary for a presentation of the Company’s financial position, results of operations and cash flows in conformity with generally accepted accounting principles in the United States of America (“GAAP”). In the opinion of management, these financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of results for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. These Consolidated Condensed Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for Fiscal 2010 (as defined below). The year-end Consolidated Condensed Balance Sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP.

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Periods Covered: The Company operates on a 52/53 week fiscal year basis ending on the Saturday closest to December 31. As such, the period from January 2, 2011 to December 31, 2011 (“Fiscal 2011”) and the period from January 3, 2010 to January 1, 2011 (“Fiscal 2010”) each contain 52 weeks of operations. Additionally, the period from July 3, 2011 to October 1, 2011 (the “Three Months Ended October 1, 2011”) and the period from July 4, 2010 to October 2, 2010 (the “Three Months Ended October 2, 2010”) each contained thirteen weeks of operations and the period from January 2, 2011 to October 1, 2011 (the “Nine Months Ended October 1, 2011”) and the period from January 3, 2010 to October 2, 2010 (the “Nine Months Ended October 2, 2010”) each contained thirty-nine weeks of operations.

Reclassifications: Amounts related to certain corporate expenses incurred in the U.S. (previously included in Operating income (loss) — Corporate/Other) during the Three Months Ended October 2, 2010 and the Nine Months Ended October 2, 2010 have been reclassified to Operating income (loss) — Sportswear Group, Intimate Apparel Group and Swimwear Group in order to conform to the current period presentation. See Note 6 of Notes to Consolidated Condensed Financial Statements.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-29 “Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”), which amends Topic 805 on business combinations. ASU 2010-29 clarifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for the Company for business combinations for which the acquisition date is on or after January 2, 2011. In the event that the Company enters into a business combination or a series of business combinations that are deemed to be material for financial reporting purposes, the Company will apply the amendments in ASU 2010-29.

5

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

During May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 clarifies that the concept that the fair value of an asset is based on its highest and best use is only relevant when measuring the fair value of nonfinancial assets (and therefore would not apply to financial assets or any liabilities) since financial assets have no alternative use. The new guidance specifies that financial assets are measured based on the fair value of an individual security unless an entity manages its market risks and/or counterparty credit risk exposure within a group (portfolio) of financial instruments on a net basis. ASU 2011-4 requires the following new disclosures related to the Company’s assets and liabilities that are measured at and/or disclosed at fair value: (1) the categorization in the fair value hierarchy of all assets and liabilities that are not measured at fair value on the balance sheet but for which the fair value is required to be disclosed (such as the disclosure of the fair value of long-term debt that is recorded at amortized cost on the balance sheet); (2) all, not just significant, transfers between Level 1 and Level 2 fair value measurements; (3) the reason(s), if applicable, why the current use of a nonfinancial asset, that is recorded or disclosed at fair value, differs from its highest and best use; and (4) certain quantitative and qualitative disclosures related to Level 3 fair value measurements. Assets and liabilities of the Company’s defined benefit pension plans (see Note 8 of Notes to Consolidated Condensed Financial Statements) are not subject to any of these new disclosure requirements. The new requirements are effective for the Company for interim and annual periods beginning on or after January 1, 2012 and will be required prospectively upon adoption. The Company does not expect that the adoption of ASU 2011-04 will have a material effect on its financial position, results of operations or cash flows.

During June 2011, the FASB issued ASU 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires the Company to present items of net income and other comprehensive income in a Statement of Comprehensive Income; either in one continuous statement or in two separate, but consecutive, statements of equal prominence. Presentation of components of comprehensive income in the Statement of Stockholders’ Equity will no longer be allowed. The Company will be required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. Earnings-per-share computation will continue to be based on net income. Components of other comprehensive income will be required to be presented either net of the related tax effects or before the related tax effects with one amount reported for the tax effects of all other comprehensive income items. The Company will also be required to present parenthetically on the face of the statement, or to disclose in the footnotes, the tax allocated to each component of other comprehensive income. The new requirements are effective for all interim and annual periods beginning on or after January 1, 2012. Comparative financial statements of prior periods will be presented to conform to the new guidance. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its financial position, results of operations or cash flows.

During September 2011, the FASB issued ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”), which is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to first perform a “qualitative” assessment to determine whether further quantitative impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. An entity can choose to perform the qualitative assessment on none, some or all of its reporting units. Moreover, an entity can bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the impairment test, and then resume performing the qualitative assessment in any subsequent period. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, an entity can choose to early adopt as of the fourth quarter of 2011. The Company is in the process of determining whether to early adopt ASU 2011-08 for Fiscal 2011.

6

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 3—Acquisitions

Redeemable Non-Controlling Interest — Joint Venture in India

On July 8, 2011, the Company acquired a controlling interest (51%) in the equity of a joint venture with a distributor of its Calvin Klein products in India for cash consideration of approximately $17,771, net of cash acquired of $2,629. The acquisition was accounted for as a business combination and its results were consolidated into the Company’s operations and financial statements from the acquisition date, with the operating results of the non-controlling interest (i.e., the interest in the joint venture not owned by the Company) reported separately (see below). In addition, on July 8, 2011, the Company loaned one of the non-controlling shareholders in the joint venture $6,000 with an interest rate of 5.0% per annum (which loan is collateralized by the non-controlling shareholder’s equity interest in the joint venture). Principal is due on July 8, 2016, the maturity date of the loan, or sooner if the Company purchases the shares of the non-controlling shareholder. Interest on the loan is payable in arrears on the last day of each calendar year.

The Company is in the process of finalizing the allocation of the purchase price attributable to the acquisition of its controlling interest in the joint venture and is also in the process of finalizing the determination of the fair values of the assets acquired and liabilities assumed.

The Shareholders’ Agreement entered into by the parties to the joint venture (the “Shareholders’ Agreement”) contains a put option under which the non-controlling shareholders can require the Company to purchase all or a portion of their shares in the joint venture (i) at any date after July 8, 2011, if the Company commits a material breach, as defined in the Shareholders’ Agreement, that is not cured or becomes insolvent; or (ii) at any date after July 8, 2013, with respect to one of the non-controlling shareholders or after July 8, 2015, with respect to the other non-controlling shareholder. The put price is the fair market value of the shares on the redemption date based upon a multiple of the joint venture’s EBITDA for the prior 12 months less its net debt as of the closing balance sheet of the 12 month period. EBITDA will be derived from the joint venture’s financial statements. The multiple of EBITDA will be based on multiples of comparable companies and specific facts and circumstances of the joint venture. Thus, the redemption value at any date after the acquisition date is the fair value of the redeemable non-controlling interest on that date.

The Shareholders’ Agreement also contains a call option under which the Company can require any of the non-controlling shareholders to sell their shares to the Company (i) at any date after July 8, 2011 in the event that any non-controlling shareholder commits a material breach, as defined in the Shareholders’ Agreement, under any of the agreements related to the joint venture, that is not cured; or (ii) at any date after July 8, 2015. The call price is determined by the same method as the put price (as described above).

Due to the inclusion of a put option in the Shareholders’ Agreement, the Company is accounting for the joint venture as a redeemable non-controlling interest in accordance with ASC 480-10-S99-3A, Distinguishing Liabilities from Equity. The redeemable non-controlling interest is classified as temporary equity and is presented in the mezzanine section of the Company’s Consolidated Condensed Balance Sheets between liabilities and equity at its redemption value. The preliminary estimate of the initial carrying value of the non-controlling interest on July 8, 2011 of $15,200 was its fair value as determined using a discounted cash flow model with a discount rate of 27% and additional discounts for lack of marketability and lack of control by the non-controlling shareholders.

Since it is probable that the non-controlling interest will become redeemable in the future, based on the passage of time, subsequent changes in the redemption value (fair value) of the redeemable non-controlling interest will be recognized immediately as they occur and the carrying amount of the redeemable non-controlling interest will be adjusted to equal the fair value at the end of each reporting period. Thus, the end of each reporting period is viewed as the redemption date. The adjustment to the carrying amount will be determined after attribution of net income or net loss of the non-controlling interest. The offset to the adjustment to the carrying amount of the redeemable non-controlling interest will be retained earnings of the Company. The adjustment to the carrying amount will not impact net income or comprehensive income in the Company’s Consolidated Condensed Financial Statements and will not impact earnings per share since the shares of the redeemable non-controlling interest are redeemable at fair value. At October 1, 2011, the preliminary estimate of the fair value of the redeemable non-controlling interest was $15,200.

As of October 1, 2011, the Company has recorded a preliminary amount of $32,747 for Goodwill in connection with the acquisition of its controlling interest in the joint venture. Goodwill represents synergies and economies of scale resulting from the business combination as well as the value of the business established by the Indian partners before formation of the joint venture, including business relationships, opening stores and hiring of an assembled workforce (see Note 13 of Notes to Consolidated Condensed Financial Statements).

7

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

On July 8, 2011, subsequent to the formation of the joint venture, Calvin Klein Inc. (“CKI”) agreed to amend certain licenses with the Company related to territories in Asia to include the territory of India. The amendments allow the Company to develop, manufacture, distribute and market Calvin Klein Jeans products (including Jeans apparel, Jeans accessories and Bridge merchandise) in India through 2046 (see Trademarks and Licensing Agreements in the Company’s Annual Report on Form 10-K for Fiscal 2010). The Company accounted for rights received to the territory of India as an intangible asset, which was recorded at estimated cost (see Note 13 of Notes to Consolidated Condensed Financial Statements). Changes in the estimate of the cost will be reflected as a change in the carrying amount of the intangible asset.

Acquisition of Business in Taiwan

On January 3, 2011, the Company acquired certain assets, including inventory and leasehold improvements, and leases of the retail stores of its Calvin Klein distributor in Taiwan for cash consideration of approximately $1,450. The acquisition was accounted for as a business combination and its results were consolidated into the Company’s operations and financial statements from the acquisition date.

Acquisition of Remaining Non-Controlling Interest in Brazil

During the fourth quarter of the fiscal year ended January 2, 2010 (“Fiscal 2009”), the Company acquired the remaining non-controlling interest in a Brazilian subsidiary (“WBR”) and eight retail stores in Brazil, collectively, the “Brazilian Acquisition.” As part of the consideration for the Brazilian Acquisition, the Company is required to make three payments through March 31, 2012, which are contingent on the level of operating income achieved (as specified in the acquisition agreement) by WBR during that period. The Company made the second contingent payment of 18,500 Brazilian Real (approximately $11,470 as of March 31, 2011), based on the operating results of WBR for Fiscal 2010, on March 31, 2011. As of October 1, 2011, the Company expects that the third contingent payment will be 18,500 Brazilian Real (approximately $10,100 as of October 1, 2011) based on the anticipated operating results of WBR for Fiscal 2011, which will be paid by March 31, 2012.

Note 4—Discontinued Operations

As disclosed in its Annual Report on Form 10-K for Fiscal 2010, the Company discontinued certain operations in prior periods. Summarized operating results for the discontinued operations of those prior periods are as follows:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Net revenues	$	—		$	6		$	—		$	1,355
(Loss) before income tax (benefit) (a)	$	(4,214	)	$	33		$	(5,090	)	$	(683	)
Income tax (benefit)		(37	)		(24	)		(349	)		(310	)
Income (Loss) from discontinued operations	$	(4,177	)	$	57		$	(4,741	)	$	(373	)

(a) Includes a charge of approximately $4,000 in connection with the Lejaby business (see Note 18 of Notes to Consolidated Condensed Financial Statements — Legal Matters).

8

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Summarized assets and liabilities of the discontinued operations are presented in the Consolidated Condensed Balance Sheets as follows:

	October 1,		January 1,		October 2,
	2011		2011		2010
Accounts receivable, net	$	—	$	18	$	1
Inventories		—		—		2
Prepaid expenses and other current assets		—		107		109
Assets of discontinued operations	$	—	$	125	$	112
Accounts payable	$	5	$	32	$	16
Accrued liabilities		7,043		18,768		8,349
Liabilities of discontinued operations	$	7,048	$	18,800	$	8,365

During February 2011, the Company and Doyle & Bossiere Fund I LLC reached a settlement agreement and mutual release related to the OP Action (see Note 18 of Notes to Consolidated Condensed Financial Statements — Legal Matters). On February 16, 2011, the Company paid $15,000 in full and final settlement of the OP Action in accordance with the terms of the settlement agreement and mutual release.

Note 5—Restructuring Expenses and Other Exit Costs

During the Three and Nine Months Ended October 1, 2011, the Company incurred restructuring charges and other exit costs of $7,547 and $18,990, respectively, primarily related to (i) the rationalization and consolidation of the Company’s international operations ($2,191 and $7,054, respectively); (ii) job eliminations in the U.S. ($840 and $2,871, respectively); (iii) impairment charges and lease contract termination costs in connection with retail store, office and warehouse closures ($4,396 and $8,748, respectively) and (iv) other exit costs ($120 and $317, respectively).

During the Three and Nine Months Ended October 2, 2010, the Company incurred restructuring charges and other exit costs of $1,697 and $3,810, respectively, primarily related to (i) costs associated with workforce reductions to align its cost structure to match current economic conditions ($0 and $1,121, respectively); (ii) the rationalization and consolidation of the Company’s European operations ($323 and $919, respectively) and (iii) other exit activities, including contract termination costs, legal and other costs ($1,374 and $1,770, respectively).

Restructuring charges and other exit costs have been recorded in the Consolidated Condensed Statements of Operations for the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010, as follows:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Cost of goods sold	$	376	$	13	$	1,842	$	287
Selling, general and administrative expenses		7,171		1,684		17,148		3,523
	$	7,547	$	1,697	$	18,990	$	3,810
Cash portion of restructuring items	$	7,547	$	1,697	$	17,823	$	3,810
Non-cash portion of restructuring items		—		—		1,167		—

9

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Changes in liabilities related to restructuring expenses and other exit costs for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010 are summarized below:

Balance at January 2, 2010	$	3,572
Charges for the Nine Months Ended October 2, 2010		3,810
Cash reductions for the Nine Months Ended October 2, 2010		(3,810	)
Non-cash changes and foreign currency effects		(48	)
Balance at October 2, 2010	$	3,524
Balance at January 1, 2011	$	3,582
Charges for the Nine Months Ended October 1, 2011		18,437
Cash reductions for the Nine Months Ended October 1, 2011		(11,720	)
Non-cash changes and foreign currency effects		277
Balance at October 1, 2011 (a)	$	10,576

(a) The balance at October 1, 2011 includes approximately $7,698 recorded in accrued liabilities (part of current liabilities) which amounts are expected to be settled over the next 12 months and approximately $2,878 recorded in other long term liabilities which amounts are expected to be settled over the next two years.

Note 6—Business Segments and Geographic Information

Business Segments: The Company operates in three business segments: (i) Sportswear Group; (ii) Intimate Apparel Group; and (iii) Swimwear Group, which groupings reflect the manner in which the Company’s business is managed and the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker (“CODM”), reviews the Company’s business.

Effective January 2, 2011, in conjunction with an evaluation of the Company’s overall group reporting and to reflect the manner in which the CODM currently evaluates the business, the Company revised its methodology for allocating certain corporate expenses (incurred in the U.S.) to the operating units in each of its business groups. The change in methodology resulted in an increase in the portion of corporate overhead allocated to the business groups for management reporting purposes as well as a change in the manner in which the corporate overhead is allocated between the domestic and international business units. Accordingly, the operating income (loss) for each group and Corporate/Other for the Three and Nine Months Ended October 2, 2010 has been revised to conform to the current period presentation. The revision of the operating income (loss) for each group and Corporate/Other did not have any effect on the Company’s Consolidated Condensed Balance Sheets, Consolidated Condensed Statements of Operations or Consolidated Condensed Statements Cash Flows for any period presented in this Form 10-Q.

The Sportswear Group designs, sources and markets moderate to premium priced men’s and women’s sportswear under the Calvin Klein and Chaps^® brands. As of October 1, 2011, the Sportswear Group operated 565 Calvin Klein retail stores worldwide (consisting of 139 full-price free-standing stores, 56 outlet free-standing stores, 369 shop-in-shop/concession stores and, in the U.S., one on-line store). As of October 1, 2011, there were also 371 retail stores operated by third parties under retail licenses or distributor agreements.

The Intimate Apparel Group designs, sources and markets moderate to premium priced intimate apparel and other products for women and better to premium priced men’s underwear, sleepwear and loungewear under the Calvin Klein, Warner’s^®, Olga^® and Body Nancy Ganz/Bodyslimmers^® brand names. As of October 1, 2011, the Intimate Apparel Group operated 878 Calvin Klein retail stores worldwide (consisting of 99 full-price free-standing stores, 61 outlet free-standing stores and 717 shop-in-shop/concession stores and, in the U.S., one on-line store). As of October 1, 2011, there were also 211 Calvin Klein retail stores operated by third parties under retail licenses or distributor agreements.

The Swimwear Group designs, licenses, sources and markets mass market to premium priced swimwear, fitness apparel, swim accessories and related products under the Speedo^®, Lifeguard^® and Calvin Klein brand names. As of October 1, 2011, the Swimwear Group operated 191 Calvin Klein retail shop-in-shop/concession stores in Europe and one on-line store in the U.S.

10

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Information by business group is set forth below:

				Intimate
	Sportswear			Apparel			Swimwear			Group		Corporate /
	Group			Group			Group			Total		Other			Total
Three Months Ended October 1, 2011
Net revenues	$	357,935		$	247,880		$	39,306		$	645,121	$	—		$	645,121
Operating income (loss)		34,129			38,620			(3,352	)		69,397		(4,641	)		64,756
Depreciation and amortization		8,347			4,413			589			13,349		393			13,742
Restructuring expense		3,545			699			2,988			7,232		315			7,547
Capital expenditures		6,014			7,379			245			13,638		443			14,081
Three Months Ended October 2, 2010
Net revenues	$	337,020		$	223,081		$	36,660		$	596,761	$	—		$	596,761
Operating income (loss) (a)		51,309			39,939			(3,794	)		87,454		(19,557	)		67,897
Depreciation and amortization		8,057			4,294			535			12,886		416			13,302
Restructuring expense		(47	)		9			1,732			1,694		3			1,697
Capital expenditures		12,407			(644	)		86			11,849		680			12,529
Nine Months Ended October 1, 2011
Net revenues	$	983,695		$	695,317		$	219,657		$	1,898,669	$	—		$	1,898,669
Operating income (loss) (c) (d)		88,686			103,627			21,421			213,734		(26,725	)		187,009
Depreciation and amortization		27,010			13,751			1,889			42,650		1,019			43,669
Restructuring expense		7,169			3,619			7,254			18,042		948			18,990
Capital expenditures		17,687			14,863			390			32,940		1,294			34,234
Nine Months Ended October 2, 2010
Net revenues	$	887,410		$	616,139		$	200,710		$	1,704,259	$	—		$	1,704,259
Operating income (loss) (b)		123,834			106,363			17,121			247,318		(44,605	)		202,713
Depreciation and amortization		22,694			11,967			1,705			36,366		1,141			37,507
Restructuring expense		395			122			2,446			2,963		847			3,810
Capital expenditures		26,193			5,747			545			32,485		2,048			34,533
Balance Sheet
Total Assets:
October 1, 2011	$	1,068,298		$	494,482		$	117,949		$	1,680,729	$	132,042		$	1,812,771
January 1, 2011		995,475			381,371			154,831			1,531,677		121,595			1,653,272
October 2, 2010		1,050,685			408,419			112,316			1,571,420		113,048			1,684,468
Property, Plant and Equipment:
October 1, 2011	$	62,317		$	38,486		$	2,472		$	103,275	$	25,930		$	129,205
January 1, 2011		63,555			28,522			3,023			95,100		34,152			129,252
October 2, 2010		46,053			42,527			3,344			91,924		35,233			127,157

(a)	reflects the allocation of $2,467 of corporate expenses to the Sportswear Group ($1,730), the Intimate Apparel Group ($1,052) and the Swimwear Group (($315)), respectively, during the Three Months Ended October 2, 2010 to conform to the presentation for the Three Months Ended October 1, 2011.
(b)	reflects the allocation of $7,422 of corporate expenses to the Sportswear Group ($5,134), the Intimate Apparel Group ($2,809) and the Swimwear Group (($521)), respectively, during the Nine Months Ended October 2, 2010 to conform to the presentation for the Nine Months Ended October 1, 2011.
(c)	includes a gain of $2,000 in the Intimate Apparel Group related to the sale and assignment of the Company’s Nancy Ganz® trademarks in Australia and New Zealand to the Company’s former licensee for cash consideration of $2,000.
(d)	includes a gain of $1,630 related to the recovery of an insurance claim for a fire in a warehouse in Peru, attributable partly to the Sportswear Group and partly to the Intimate Apparel Group.

All inter-company revenues and expenses are eliminated in consolidation. Management does not include inter-company sales when evaluating segment performance. Each segment’s performance is evaluated based upon operating income after restructuring charges and allocations of corporate expenses but before corporate/other expenses.

11

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

The table below summarizes Corporate/Other expenses for each period presented:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Unallocated corporate expenses (a)	$	5,273		$	17,242		$	25,338		$	43,660
Foreign exchange losses (gains)		(971	)		1,956			527			(863	)
Pension income		(369	)		(60	)		(1,107	)		(180	)
Restructuring expense		315			3			948			847
Depreciation and amortization of corporate assets		393			416			1,019			1,141
Corporate/other expenses	$	4,641		$	19,557		$	26,725		$	44,605

(a) the decrease in unallocated corporate expenses is related primarily to a reduction in amounts accrued for performance-based employee cash compensation and other employee compensation and benefits.

A reconciliation of operating income from operating groups to income from continuing operations before provision for income taxes and non-controlling interest is as follows:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Operating income by operating groups	$	69,397		$	87,454		$	213,734		$	247,318
Corporate/other expenses		(4,641	)		(19,557	)		(26,725	)		(44,605	)
Operating income		64,756			67,897			187,009			202,713
Other (income) loss		1,357			(1,899	)		498			5,651
Interest expense		4,986			2,953			11,142			12,190
Interest income		(986	)		(699	)		(2,542	)		(2,192	)
Income from continuing operations before provision for income taxes and non-controlling interest	$	59,399		$	67,542		$	177,911		$	187,064

Geographic Information: Net revenues summarized by geographic region are as follows:

	Three Months Ended
	October 1,					October 2,
	2011		%			2010		%
Net revenues:
United States	$	241,764		37.5	%	$	250,039		41.9	%
Europe		182,265		28.3	%		166,749		27.9	%
Asia		129,985		20.1	%		101,090		17.0	%
Mexico, Central and South America		62,848		9.7	%		48,216		8.1	%
Canada		28,259		4.4	%		30,667		5.1	%
	$	645,121		100.0	%	$	596,761		100.0	%

12

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

	Nine Months Ended
	October 1,					October 2,
	2011		%			2010		%
Net revenues:
United States	$	777,552		41.0	%	$	782,753		45.9	%
Europe		478,827		25.2	%		423,882		25.0	%
Asia		370,546		19.5	%		281,655		16.5	%
Mexico, Central and South America		176,698		9.3	%		129,940		7.6	%
Canada		95,046		5.0	%		86,029		5.0	%
	$	1,898,669		100.0	%	$	1,704,259		100.0	%

Note 7—Income Taxes

The effective tax rates for the Three Months Ended October 1, 2011 and October 2, 2010 were 18.1% and 38.6% respectively. The lower effective tax rate for the Three Months Ended October 1, 2011 primarily reflects a tax benefit of $7,300 recorded during the Three Months Ended October 1, 2011 related to a reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions, as well as a tax benefit of approximately $1,300 recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for Fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011. In addition, certain discrete charges to the tax provision recorded during the Three Months Ended October 2, 2010 (in total $3,600) did not reoccur in the Three Months Ended October 1, 2011.

The effective tax rates for the Nine Months Ended October 1, 2011 and October 2, 2010 were 22.0% and 36.0% respectively. The lower effective tax rate for the Nine Months Ended October 1, 2011 primarily reflects a tax benefit of approximately $11,000, recorded during the Nine Months Ended October 1, 2011, associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as a result of receiving a favorable ruling from that country’s taxing authority during the Nine Months Ended October 1, 2011, a tax benefit of $7,300 recorded during the Three Months Ended October 1, 2011 related to a reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions, as well as a tax benefit of approximately $1,300 recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for Fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011. In addition, certain discrete charges to the tax provision recorded during the Nine Months Ended October 2, 2010 (in total $3,600) did not reoccur in the Nine Months Ended October 1, 2011.

As of October 1, 2011, the Company remains under audit in various taxing jurisdictions. It is, therefore, difficult to predict the final timing and resolution of any particular uncertain tax position. Based upon the Company’s assessment of many factors, including past experience and complex judgments about future events, it is reasonably possible that within the next twelve months the reserve for uncertain tax positions may decrease between $10,000 and $12,000 associated with tax positions expected to be taken during the next 12 months, the reevaluation of current uncertain tax positions arising from developments in examinations, the finalization of tax examinations, or from the closure of tax statutes.

Note 8—Employee Benefit and Retirement Plans

Defined Benefit Pension Plans

The Company has a defined benefit pension plan covering certain full-time non-union domestic employees and certain domestic employees covered by a collective bargaining agreement who had completed service prior to January 1, 2003 (the “Pension Plan”). Participants in the Pension Plan have not earned any additional pension benefits after December 31, 2002. The Company also sponsors defined benefit plans for certain former employees of its United Kingdom and other European entities (the “Foreign Plans”). The Foreign Plans were not considered to be material for any period presented in this Form 10-Q. These pension plans are noncontributory and benefits are based upon years of service. The Company also has health care and life insurance plans that provide post-retirement benefits to certain retired domestic employees (the “Postretirement Plans”). The Postretirement Plans are, in most cases, contributory with retiree contributions adjusted annually.

13

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Each quarter the Company recognizes interest cost of the Pension Plan’s projected benefit obligation offset by the expected return on Pension Plan assets. The Company records pension expense (income) as the effect of actual gains and losses exceeding the expected return on Pension Plan assets (including changes in actuarial assumptions) less changes in the Pension Plan’s projected benefit obligation (including changes in actuarial assumptions) in the fourth quarter of each year. This accounting results in volatility in pension expense or income; therefore, the Company reports pension expense (income) on a separate line of its Statements of Operations in each period.

The Company made contributions of $1,650 and $7,150 to the Pension Plan during the Three and Nine Months Ended October 1, 2011, respectively. The Company’s contributions to the Pension Plan are expected to be $8,800 in total for Fiscal 2011.

The following table includes only the Pension Plan. The Foreign Plans were not considered to be material for any period presented below. The components of net periodic benefit cost are as follows:

	Pension Plans						Postretirement Plans
	Three Months Ended						Three Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Service cost	$	—		$	—		$	62		$	33
Interest cost		2,334			2,358			70			91
Expected return on plan assets		(2,703	)		(2,418	)		—			—
Amortization of actuarial (gain)		—			—			(25	)		(26	)
Net benefit (income) cost (a)	$	(369	)	$	(60	)	$	107		$	98

	Pension Plans						Postretirement Plans
	Nine Months Ended						Nine Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Service cost	$	—		$	—		$	186		$	99
Interest cost		7,002			7,074			210			273
Expected return on plan assets		(8,109	)		(7,254	)		—			—
Amortization of actuarial (gain)		—			—			(75	)		(78	)
Net benefit (income) cost (a)	$	(1,107	)	$	(180	)	$	321		$	294

(a) net benefit (income) cost does not include costs related to the Foreign Plans of $59 and $176 for the Three and Nine Months Ended October 1, 2011, respectively, and $38 and $115 for the Three and Nine Months Ended October 2, 2010, respectively.

Deferred Compensation Plans

The Company’s liability under the employee deferred compensation plan was $4,185, $4,220 and $3,987 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively. This liability is included in other long-term liabilities. The Company’s liability under the director deferred compensation plan was $1,068, $1,015 and $834 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively. This liability is included in other long-term liabilities.

14

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 9—Comprehensive Income

The components of comprehensive income attributable to Warnaco Group Inc. are as follows:

	Three Months Ended						Nine Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Net income	$	44,611		$	41,497		$	134,145		$	119,406
Other comprehensive income, net of tax:
Foreign currency translation adjustments (a)		(63,170	)		44,967			(21,453	)		1,677
Change in fair value of cash flow hedges		440			(2,958	)		(1,169	)		(427	)
Change in actuarial gains (losses), net related to post-retirement medical plans		—			(6	)		—			(6	)
Other		(3	)		(63	)		(5	)		11
Total comprehensive income (loss)	$	(18,122	)	$	83,437		$	111,518		$	120,661

The components of accumulated other comprehensive income as of October 1, 2011, January 1, 2011 and October 2, 2010 are summarized below:

	October 1,			January 1,			October 2,
	2011			2011			2010
Foreign currency translation adjustments (a)	$	24,529		$	45,982		$	50,235
Actuarial losses, net related to post retirement medical plans, net of tax of $1,232, $1,232 and $1,253, as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		(1,099	)		(1,099	)		(1,064	)
(Loss) on cash flow hedges, net of taxes of $2,175, $871 and $803 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		(3,016	)		(1,847	)		(1,454	)
Other		7			12			11
Total accumulated other comprehensive income	$	20,421		$	43,048		$	47,728

(a) Foreign currency translation adjustments reflect the change in the U.S. dollar relative to functional currencies where the Company conducts certain of its operations and the fact that more than 65% of the Company’s assets are based outside of the U.S. The change in foreign currency translation adjustments at October 1, 2011 compared to January 1, 2011 and October 2, 2010 as well as for the Three and Nine Months Ended October 1, 2011 compared to the Three and Nine Months Ended October 2, 2010 reflects the fluctuation of certain foreign currencies (principally the Euro, Canadian Dollar, Korean Won, Brazilian Real and Mexican Peso) relative to the U.S. dollar.

Note 10—Fair Value Measurement

The Company utilizes the market approach to measure fair value for financial assets and liabilities, which primarily relates to derivative contracts. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company classifies its financial instruments in a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy consists of the following three levels:

Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 — Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

15

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Valuation Techniques

The fair value of foreign currency exchange contracts, including forward contracts and zero cost collars, was determined as the net unrealized gains or losses on those contracts, which is the net difference between (i) the U.S. dollars to be received or paid at the contracts’ settlement dates and (ii) the U.S. dollar value of the foreign currency to be sold or purchased at the current forward or spot exchange rate, as applicable. The fair value of these foreign currency exchange contracts is based on quoted prices that include the effects of U.S. and foreign interest rate yield curves and, therefore, meets the definition of Level 2 fair value, as defined above.

The fair value of interest rate caps (see Note 14 of Notes to Consolidated Condensed Financial Statements) was determined using broker quotes, which use discounted cash flows and the then-applicable forward LIBOR rates and, therefore, meets the definition of Level 2 fair value, as defined above.

The fair value of long-lived assets was based on the Company’s best estimates of future cash flows and, therefore, meets the definition of Level 3 fair value, as defined above (see Note 1 of Notes to Consolidated Financial Statements — Nature of Operations and Summary of Significant Accounting Policies — Long-Lived Assets in the Company’s Annual Report on Form 10-K for Fiscal 2010).

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis, as of October 1, 2011, January 1, 2011 and October 2, 2010:

	October 1, 2011						January 1, 2011						October 2, 2010
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets
Foreign currency exchange contracts	$	—	$	4,761	$	—	$	—	$	834	$	—	$	—	$	231	$	—
Interest rate cap		—		7,399		—		—		—		—		—		—		—
Liabilities
Foreign currency exchange contracts	$	—	$	495	$	—	$	—	$	3,282	$	—	$	—	$	4,044	$	—

Cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value. The Company’s CKJEA Notes (as defined below) and other short-term notes, amounts outstanding under the 2008 Credit Agreements (as defined below) and amounts outstanding under the 2011 Term Loan (as defined below) are also reported at carrying value.

During the Nine Months Ended October 1, 2011, the Company recorded impairment charges for the long-lived assets, consisting of leasehold improvements and furniture and fixtures, of certain retail stores in the Sportswear Group and the Intimate Apparel Group, which were scheduled to close as part of a restructuring plan. For the Nine Months Ended October 1, 2011, those assets, measured on a non-recurring basis, had a fair value of $0, based upon projected future cash flows of those retail stores through the dates of closure. The Company recorded a loss of $1,140 related to those assets. For assets measured on a non-recurring basis for Fiscal 2010 see Note 16 of Notes to Consolidated Financial Statements — Financial Instruments in the Company’s Annual Report on Form 10-K for Fiscal 2010. There were no assets or liabilities measured on a non-recurring basis for the Three Months or Nine Months Ended October 2, 2010. See Note 1 of Notes to Consolidated Financial Statements — Nature of Operations and Summary of Significant Accounting Policies — Long-Lived Assets in the Company’s Annual Report on Form 10-K for Fiscal 2010 for a description of the testing of retail stores for impairment.

16

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 11— Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments at October 1, 2011, January 1, 2011 and October 2, 2010 are as follows:

		October 1, 2011				January 1, 2011				October 2, 2010
	Balance Sheet	Carrying		Fair		Carrying		Fair		Carrying		Fair
	Location	Amount		Value		Amount		Value		Amount		Value
Assets:
Accounts receivable	Accounts receivable, net of reserves	$	341,406	$	341,406	$	318,123	$	318,123	$	346,464	$	346,464
Open foreign currency exchange contracts	Prepaid expenses and other current assets		4,761		4,761		834		834		231		231
Interest rate cap	Other assets		7,399		7,399		—		—		—		—
Liabilities:
Accounts payable	Accounts payable	$	182,517	$	182,517	$	152,714	$	152,714	$	165,171	$	165,171
Short-term debt	Short-term debt		43,355		43,355		32,172		32,172		69,607		69,607
Open foreign currency exchange contracts	Accrued liabilities		495		495		3,282		3,282		4,044		4,044
2011 Term loan, current portion	Short-term debt		2,000		1,950		—		—		—		—
2011 Term loan	Long-term debt		197,500		194,513		—		—		—		—

See Note 17 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010 for the methods and assumptions used by the Company in estimating its fair value disclosures for financial instruments. In addition, the 2011 Term Loan (see Note 14 of Notes to Consolidated Condensed Financial Statements) matures on June 17, 2018 and bears a variable rate of interest. The fair value of the 2011 Term Loan was estimated by obtaining quotes from brokers. The fair value of the interest rate cap was determined using broker quotes, which use discounted cash flows and the then-applicable forward LIBOR rates.

Derivative Financial Instruments

Foreign Currency Exchange Forward Contracts

During the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, the Company’s Korean, European, Canadian and Mexican subsidiaries continued their hedging programs, which included foreign exchange forward contracts which were designed to satisfy either up to the first 50% of U.S. dollar denominated purchases of inventory over a maximum 18-month period or payment of 100% of certain minimum royalty and advertising expenses. All of the foregoing forward contracts were designated as cash flow hedges, with gains and losses accumulated on the Consolidated Condensed Balance Sheets in Other Comprehensive Income and recognized in Cost of Goods Sold in the Consolidated Condensed Statement of Operations during the periods in which the underlying transactions occur.

During the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, the Company also continued hedging programs, which were accounted for as economic hedges, with gains and losses recorded directly in Other loss (income) or Selling, general and administrative expense in the Consolidated Condensed Statements of Operations in the period in which they are incurred. Those hedging programs included foreign currency exchange forward contracts and zero cost collars that were designed to fix the number of Euros, Korean Won, Canadian Dollars or Mexican Pesos required to satisfy either (i) the first 50% of U.S. dollar denominated purchases of inventory over a maximum 18-month period; (ii) 50% of intercompany sales of inventory by a Euro functional currency subsidiary to a British subsidiary, whose functional currency is the Pound Sterling or (iii) U.S. dollar denominated intercompany loans and payables. During the Three Months Ended October 1, 2011, the Company initiated foreign currency exchange forward contracts, which were accounted for as economic hedges, in connection with the U.S. Dollar-denominated intercompany loan made upon the formation of the Company’s joint venture in India, which is held by a Singapore Dollar functional currency subsidiary (see Note 3 of Notes to Consolidated Condensed Financial Statements).

Interest Rate Cap

On July 1, 2011, the Company entered into an Interest Rate Cap Agreement (as defined below), which will limit the interest rate payable on average over the term of the Interest Rate Cap Agreement to 5.6975% per annum with respect to the portion of the 2011 Term Loan that equals the notional amount of the interest rate cap. The interest rate cap contracts are designated as cash flow hedges of the exposure to variability in expected future cash flows attributable to a three-month LIBOR rate beyond 1.00%. See Note 14 of Notes to Consolidated Condensed Financial Statements — Interest Rate Cap.

17

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

The following table summarizes the Company’s derivative instruments as of October 1, 2011, January 1, 2011 and October 2, 2010:

		Asset Derivatives							Liability Derivatives
			Fair Value								Fair Value
		Balance Sheet	October 1,		January 1,		October 2,		Balance Sheet		October 1,		January 1,		October 2,
	Type (a)	Location	2011		2011		2010		Location		2011		2011		2010
Derivatives designated as hedging instruments under FASB ASC 815-20
Foreign exchange contracts	CF	Prepaid expenses and other current assets	$	1,873	$	—	$	—		Accrued liabilities	$	—	$	2,290	$	2,094
Interest rate cap	CF	Other assets		7,399		—		—				—		—		—
			$	9,272	$	—	$	—			$	—	$	2,290	$	2,094
Derivatives not designated as hedging instruments under FASB ASC 815-20
Foreign exchange contracts		Prepaid expenses and other current assets	$	2,888	$	834	$	231		Accrued liabilities	$	495	$	992	$	1,950
Total derivatives			$	12,160	$	834	$	231			$	495	$	3,282	$	4,044

(a) CF = cash flow hedge

The following tables summarize the effect of the Company’s derivative instruments on the Consolidated Condensed Statements of Operations for the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010:

Derivatives in FASB ASC		Amount of Gain (Loss)						Location of Gain (Loss) Reclassified from Accumulated	Amount of Gain (Loss) Reclassified						Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized
815-20 Cash Flow Hedging	Nature of Hedged	Recognized in OCI on						OCI into Income	from Accumulated OCI into						on Derivative		in Income on Derivative
Relationships	Transaction	Derivatives (Effective Portion)						(Effective Portion)	Income (Effective Portion)						(Ineffective Portion) (c)		(Ineffective Portion)
		Three Months			Three Months				Three Months			Three Months				Three Months		Three Months
		Ended			Ended				Ended			Ended				Ended		Ended
		October 1,			October 2,				October 1,			October 2,				October 1,		October 2,
		2011			2010				2011			2010				2011		2010
Foreign exchange contracts	Minimum royalty and advertising costs (a)	$	900		$	(1,128	)	cost of goods sold	$	(47	)	$	289		other loss/income	$	35	$	(49	)
Foreign exchange contracts	Purchases of inventory (b)		4,216			(2,842	)	cost of goods sold		(1,069	)		(93	)	other loss/income		149		(99	)
Interest rate cap	Interest expense on 2011 Term Loan		(6,996	)		—		interest expense		—			—		other loss/income		—		—
Total		$	(1,880	)	$	(3,970	)		$	(1,116	)	$	196			$	184	$	(148	)
		Nine Months			Nine Months				Nine Months			Nine Months				Nine Months		Nine Months
		Ended			Ended				Ended			Ended				Ended		Ended
		October 1,			October 2,				October 1,			October 2,				October 1,		October 2,
			2011			2010				2011			2010				2011		2010
Foreign exchange contracts	Minimum royalty and advertising costs (a)	$	(111	)	$	387		cost of goods sold	$	(708	)	$	689		other loss/income	$	16	$	(23	)
Foreign exchange contracts	Purchases of inventory (b)		732			(1,452	)	cost of goods sold		(2,807	)		(911	)	other loss/income		121		(25	)
Interest rate cap	Interest expense on 2011 Term Loan		(6,996	)		—		interest expense		—			—		other loss/income		—		—
Total		$	(6,375	)	$	(1,065	)		$	(3,515	)	$	(222	)		$	137	$	(48	)

(a)	At October 1, 2011, the amount of minimum royalty costs hedged was $11,366; contracts expire through June 2012. At October 2, 2010, the amount of minimum royalty costs hedged was $11,433; contracts expire through September 2011.
(b)	At October 1, 2011, the amount of inventory purchases hedged was $44,700 ; contracts expire through August 2012. At October 2, 2010, the amount of inventory purchases hedged was $60,100; contracts expire through February 2012.
(c)	No amounts were excluded from effectiveness testing

18

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Location of

Gain (Loss)

Derivatives not designated as

Recognized in

Amount of Gain (Loss)

hedging instruments under

Nature of Hedged

Amount

Maturity

Income on

Recognized in Income on

FASB ASC 815-20

Transaction

Instrument

Hedged

Date

Derivative

Derivative

October 1,

Three Months

Nine Months

2011

Ended

Ended

October 1,

October 1,

2011

2011

Foreign exchange contracts (e)

Intercompany sales of inventory

Forward contracts

6,546

July 2012

other loss/income

(313

)

103

Foreign exchange contracts (f)

Minimum royalty and advertising costs

Forward contracts

10,000

July 2012

other loss/income

723

(260

)

Foreign exchange contracts

Intercompany payables

Forward contracts

28,000

April 2012

other loss/income

556

(1,844

)

Foreign exchange contracts

Intercompany loans

Forward contracts

34,500

November 2011

other loss/income

2,460

859

Foreign exchange contracts

Intercompany loans

Forward contracts

—

other loss/income

819

156

Foreign exchange contracts

Intercompany loans

Forward contracts

6,000

July 2012

other loss/income

(495

)

(495

)

Total

$

3,750

$

(1,481

)

Location of

Gain (Loss)

Derivatives not designated as

Recognized in

Amount of Gain (Loss)

hedging instruments under

Nature of Hedged

Amount

Maturity

Income on

Recognized in Income on

FASB ASC 815-20

Transaction

Instrument

Hedged

Date

Derivative

Derivative

October 2,

Three Months

Nine Months

2010

Ended

Ended

October 2,

October 2,

2010

2010

Foreign exchange contracts (d)

Purchases of inventory

Forward contracts

$

—

other loss/income

$

(32

)

$

(142

)

Foreign exchange contracts (e)

Intercompany sales of inventory

Forward contracts

13,936

January 2012

other loss/income

712

(80

)

Foreign exchange contracts (f)

Minimum royalty and advertising costs

Forward contracts

12,500

October 2011

other loss/income

(976

)

(73

)

Foreign exchange contracts

Intercompany loans

Forward contracts

—

other loss/income

—

(94

)

Foreign exchange contracts

Intercompany payables

Forward contracts

35,000

May 2011

other loss/income

(3,115

)

(256

)

Foreign exchange contracts

Intercompany payables

Zero-cost collars

—

other loss/income

—

1,511

Foreign exchange contracts

Intercompany payables

Forward contracts

—

selling, general and administrative

—

398

Foreign exchange contracts

Intercompany payables

Zero-cost collars

—

selling, general and administrative

—

(232

)

Total

$

(3,411

)

$

1,032

(d)	Forward contracts used to offset 50% of U.S. dollar-denominated purchases of inventory by the Company’s foreign subsidiaries whose functional currencies were the Canadian dollar and Mexican peso, entered into by Warnaco Inc. on behalf of foreign subsidiaries.
(e)	Forward contracts used to offset 50% of British Pounds-denominated intercompany sales by a subsidiary whose functional currency is the Euro.
(f)	Forward contracts used to offset payment of minimum royalty and advertising costs related to sales of inventory by the Company’s foreign subsidiary whose functional currency was the Euro, entered into by Warnaco Inc. on behalf of a foreign subsidiary.

19

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

A reconciliation of the balance of Accumulated Other Comprehensive Income during the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010 related to cash flow hedges is as follows:

Balance January 2, 2010	$	(1,414	)
Derivative losses recognized		(1,065	)
Losses amortized to earnings		222
Balance before tax effect		(2,257	)
Tax effect		803
Balance October 2, 2010, net of tax	$	(1,454	)
Balance January 1, 2011	$	(2,331	)
Derivative losses recognized		(6,375	)
Losses amortized to earnings		3,515
Balance before tax effect		(5,191	)
Tax effect		2,175
Balance October 1, 2011, net of tax	$	(3,016	)

During the twelve months following October 1, 2011, the net amount of gains recorded in Other Comprehensive Income at October 1, 2011 that are estimated to be amortized into earnings is $1,415, on a pre-tax basis. During the Nine Months Ended October 1, 2011, the Company expected that all originally forecasted purchases of inventory or payment of minimum royalties, which were covered by cash flow hedges, would occur by the end of the respective originally specified time periods. Therefore, no amount of gains or losses was reclassified into earnings during the Nine Months Ended October 1, 2011 as a result of the discontinuance of those cash flow hedges.

Note 12—Inventories

Inventories are valued at the lower of cost to the Company (using the first-in-first-out method) or market and are summarized as follows:

	October 1,		January 1,		October 2,
	2011		2011		2010
Finished goods	$	390,205	$	310,504	$	324,430
Raw materials		1,868		—		9
	$	392,073	$	310,504	$	324,439

In addition to the amounts of inventory noted above, the Company records deposits related to advance payments to certain third-party suppliers for the future purchase of finished goods. Such deposits are recorded in Prepaid and other current assets on the Company’s Consolidated Condensed Balance Sheets. At October 1, 2011, January 1, 2011 and October 2, 2010, the amount of such deposits was $4,234, $8,841 and $4,792, respectively.

See Note 11 of Notes to Consolidated Condensed Financial Statements for details on the Company’s hedging programs related to purchases of inventory.

20

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 13—Intangible Assets and Goodwill

The following tables set forth intangible assets as of October 1, 2011, January 1, 2011 and October 2, 2010 and the activity in the intangible asset accounts for the Nine Months Ended October 1, 2011:

	October 1, 2011						January 1, 2011						October 2, 2010
	Gross						Gross						Gross
	Carrying		Accumulated				Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net		Amount		Amortization		Net
Finite-lived intangible assets:
Licenses for a term (Company as licensee)	$	323,422	$	61,773	$	261,649	$	327,394	$	54,907	$	272,487	$	328,388	$	52,774	$	275,614
Other		35,009		13,978		21,031		34,258		11,297		22,961		17,170		10,155		7,015
		358,431		75,751		282,680		361,652		66,204		295,448		345,558		62,929		282,629
Indefinite-lived intangible assets:
Trademarks		54,715		—		54,715		54,715		—		54,715		54,715		—		54,715
Licenses in perpetuity		23,113		—		23,113		23,113		—		23,113		23,113		—		23,113
		77,828		—		77,828		77,828		—		77,828		77,828		—		77,828
Intangible Assets	$	436,259	$	75,751	$	360,508	$	439,480	$	66,204	$	373,276	$	423,386	$	62,929	$	360,457

								Other
			Licenses		Licenses			Finite-lived
			in		for a			Intangible
	Trademarks		Perpetuity		Term			Assets			Total
Balance at January 1, 2011	$	54,715	$	23,113	$	272,487		$	22,961		$	373,276
Amortization expense		—		—		(6,866	)		(2,681	)		(9,547	)
Translation adjustments		—		—		(6,472	)		(322	)		(6,794	)
Other (a)		—		—		2,500			1,073			3,573
Balance at October 1, 2011	$	54,715	$	23,113	$	261,649		$	21,031		$	360,508

(a) relates to intangible assets totaling $3,573 for reacquired rights and amendment of a license during the Three Months Ended October 1, 2011, which will be amortized over a weighted average period of 25 years (see Note 3 of Notes to Consolidated Condensed Financial Statements).

The following table summarizes the Company’s estimated amortization expense for intangible assets for the next five years:

2012	$	11,753
2013		11,662
2014		10,284
2015		10,263
2016		10,005

The following table summarizes the changes in the carrying amount of goodwill for the Nine Months Ended October 1, 2011:

				Intimate
	Sportswear			Apparel			Swimwear
	Group			Group			Group		Total
Goodwill balance at January 1, 2011	$	113,016		$	1,620		$	642	$	115,278
Adjustment:
Translation adjustments		(4,672	)		(383	)		—		(5,055	)
Other (a)		29,442			4,023			—		33,465
Goodwill balance at October 1, 2011	$	137,786		$	5,260		$	642	$	143,688

(a) Primarily relates to the acquisition of a controlling interest in the business of the Company’s distributor of Calvin Klein products in India during the Three Months Ended October 1, 2011 ($28,817 in Sportswear Group and $3,930 in Intimate Apparel Group) (see Note 3 of Notes to Consolidated Condensed Financial Statements).

See Note 2 of Notes to Consolidated Condensed Financial Statements — Recent Accounting Pronouncements regarding new guidelines for testing goodwill for impairment.

21

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 14—Debt

Debt was as follows:

	October 1,		January 1,		October 2,
	2011		2011		2010
Short-term debt:
Current portion of 2011 Term Loan	$	2,000	$	—	$	—
CKJEA notes payable and Other		43,355		18,802		48,653
2008 Credit Agreements		—		—		7,174
Premium on interest rate cap - current		2,418		—		—
Italian Note		—		13,370		13,780
		47,773		32,172		69,607
Long-term debt:
2011 Term Loan		197,500		—		—
Premium on interest rate cap		12,052		—		—
		209,552		—		—
Total Debt	$	257,325	$	32,172	$	69,607

2011 Term Loan Agreement

On June 17, 2011, Warnaco Group, Warnaco, Calvin Klein Jeanswear Company (“CK Jeans”), an indirect wholly-owned subsidiary of Warnaco Group, and Warnaco Swimwear Products Inc. (“Warnaco Swimwear”), an indirect wholly-owned subsidiary of Warnaco Group, entered into a term loan agreement (the “2011 Term Loan Agreement”) with the financial institutions which are the lenders thereunder (the “Lenders”). Warnaco, CK Jeans and Warnaco Swimwear are co-borrowers on a joint and several basis under the 2011 Term Loan Agreement (the “Borrowers”).

The 2011 Term Loan Agreement provides for a $200,000 senior secured term loan facility, maturing on June 17, 2018 (the “2011 Term Loan”). In addition, during the term of the 2011 Term Loan Agreement, the Borrowers may request additional credit commitments for incremental term loan facilities in an aggregate amount not to exceed $100,000 plus the aggregate principal amount of the term loans that the Borrowers have voluntarily prepaid prior to the date of such request. The Borrowers may request a greater amount to the extent that Warnaco Group meets certain financial tests set forth in the 2011 Term Loan Agreement. At October 1, 2011, there was $199,500 in term loans outstanding under the 2011 Term Loan Agreement. During June 2011, the Company repaid the outstanding balances of the 2008 Credit Agreements and the Italian Note (as defined below) from the proceeds of the 2011 Term Loan (see below). The Company paid $4,779 in deferred financing costs in connection with the 2011 Term Loan, which are being amortized to interest expense over the term of the loan using the effective interest method. The deferred financing costs were recorded in Other assets on the Consolidated Condensed Balance Sheets.

On the last day of each of the Company’s fiscal quarters, beginning on October 1, 2011, $500 of the outstanding principal amount of the 2011 Term Loans must be repaid. Such amount will be reduced if a portion of the principal amount is prepaid. The remaining principal amount is due on June 17, 2018.

22

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

The 2011 Term Loan Agreement provides interest rate options, at the Borrowers’ election, including a base rate, as defined in the 2011 Term Loan Agreement or at LIBOR (with a floor of 1.00%) plus a margin of 2.75%, in each case, on a per annum basis. Accrued interest will be paid in arrears on the last day of each interest period through the maturity date. Payment dates are the last calendar day (or business day if the last calendar day is not a business day) of each of January, April, July and October, beginning on October 31, 2011. Reset dates are two business days prior to a payment date, beginning on October 29, 2011 (determines the three-month LIBOR variable leg for the following three month period). From inception of the loan through July 29, 2011, the Company elected to use a combination of a base rate and a LIBOR rate of interest, each on a portion of the outstanding balance ($80,000 at 3.75% and $120,000 at a base rate of 5.0%). From July 29, 2011 through October 31, 2011, the interest rate on the entire balance of the 2011 Term Loan is 3.75% (based on three-month LIBOR (with a floor of 1.00%) plus a margin of 2.75%. At October 1, 2011, the loans under the 2011 Term Loan Agreement had a weighted average annual interest rate of 3.75%. In order to match the interest rate on the hedged portion of the 2011 Term Loan with that on the interest rate cap (see below), the Company intends to use successive interest periods of three months and adjusted three-month LIBOR rates (with a LIBOR floor of 1.00% per annum) plus 2.75% on a per annum basis from July 29, 2011 through the maturity date of the 2011 Term Loan.

In addition, the 2011 Term Loan Agreement is subject to a 1.00% prepayment fee in the event it is refinanced on or before June 17, 2012, subject to certain conditions. The Borrowers must make mandatory prepayments of the term loans with the proceeds of asset dispositions and insurance proceeds from casualty events (subject to certain limitations), with a portion of any excess cash flow (as defined in the 2011 Term Loan Agreement) generated by Warnaco Group and with the proceeds of certain issuances of debt (subject to certain exceptions).

The 2011 Term Loan Agreement does not require the Borrowers to comply with any financial maintenance covenants. The 2011 Term Loan Agreement contains customary representations, warranties and affirmative covenants. The 2011 Term Loan Agreement also contains customary negative covenants providing limitations, subject to negotiated carve-outs, with respect to (i) incurrence of indebtedness and liens, (ii) significant corporate changes including mergers and acquisitions with third parties, (iii) investments, (iv) loans, (v) advances and guarantees to or for the benefit of third parties, (vi) hedge agreements, (vii) certain restricted payments and (viii) transactions with affiliates and certain other restrictive agreements, among others.

The 2011 Term Loan Agreement contains customary events of default, such as payment defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency, the occurrence of a “Change of Control” (as defined in the 2011 Term Loan Agreement), or the failure to observe the certain covenants therein. Upon an event of default, the Lenders may, among other things, declare any then outstanding loans due and payable immediately.

The obligations of the Borrowers under the 2011 Term Loan Agreement are guaranteed by Warnaco Group and its indirect domestic subsidiaries (collectively, the “U.S. Guarantors”) pursuant to a Guaranty dated as of June 17, 2011 (the “Guaranty”).

The obligations under the 2011 Term Loan Agreement and the guarantees thereof, are secured by Warnaco Group, the Borrowers and each of the U.S. Guarantors, for the benefit of the Lenders, with a first priority lien on all fixed asset collateral (including, without limitation, pledges of their equity ownership in domestic subsidiaries and up to 66% of their equity ownership in first-tier foreign subsidiaries), intellectual property, and substantially all other personal property of the Borrowers and the U.S. Guarantors not constituting 2008 Credit Agreement Priority Collateral (as defined below), and, in each case, proceeds thereof. In addition, Warnaco Group, the Borrowers and each of the U.S. Guarantors have granted to the Lenders a second priority security interest in accounts receivable, inventory, deposit accounts and cash, checks and certain related assets (the “2008 Credit Agreement Priority Collateral”).

In connection with entering into the 2011 Term Loan Agreement, on June 17, 2011, (i) Warnaco Group, Warnaco and the U.S. Guarantors entered into an amendment to the 2008 Credit Agreement (the “2008 Credit Agreement Amendment”) and (ii) Warnaco Canada, Warnaco Group, Warnaco and the U.S. Guarantors entered into an amendment to the 2008 Canadian Credit Agreement (the “2008 Canadian Credit Agreement Amendment”), in each case, permitting the Borrowers to incur the indebtedness and grant the liens under the 2011 Term Loan Agreement, and providing, among other things, for modifications to the definitions of “Change of Control”, the eligibility criteria for receivables and certain covenants relating to asset sales, prepayments of debt, permitted liens and permitted indebtedness.

In addition, on June 17, 2011, Warnaco Group, the Borrowers and the U.S. Guarantors executed an Intercreditor Agreement (the “Intercreditor Agreement”), establishing certain priorities with respect to the collateral that secures the Borrowers’ obligations under the 2008 Credit Agreements and the 2011 Term Loan Agreement. Pursuant to the Intercreditor Agreement, the secured parties under the existing 2008 Credit Agreements retain a first priority security interest in all 2008 Credit Agreement Priority Collateral and a second priority security interest in all fixed asset collateral (including, without limitation, pledges of their equity ownership in domestic subsidiaries and up to 66% of their equity ownership in first-tier foreign subsidiaries), intellectual property and substantially all other personal property of Warnaco Group, the Borrowers and the U.S. Guarantors not constituting 2008 Credit Agreement Priority Collateral.

23

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Interest Rate Cap Agreement

On July 1, 2011, the Company entered into a deferred premium interest rate cap agreement with HSBC Bank USA (the “Counterparty”), effective July 29, 2011, (notional amount $120,000) (the “Cap Agreement”). The Cap Agreement is a series of 27 individual caplets (in total, the “Cap”) that reset and settle quarterly over the period from October 31, 2011 to April 30, 2018. Under the terms of the Cap Agreement, if three-month LIBOR resets above a strike price of 1.00%, the Company will receive the net difference between the reset rate and the strike price. In addition, on the quarterly settlement dates, the Company will remit the deferred premium payment to the Counterparty. If LIBOR resets below the strike price no payment is made by the Counterparty. However, the Company would still be responsible for payment of the deferred premium. At July 1, 2011, the Company was obligated to make premium payments totaling approximately $16,015, based on an annual rate of 1.9475% on the notional amount of the Cap, over the term of the Cap Agreement. The effect of the Cap Agreement is to limit the interest rate payable on average over the term of the Cap Agreement to 5.6975% per annum with respect to the portion of the 2011 Term Loan that equals the notional amount of the Cap.

The interest rate cap contracts are designated as cash flow hedges of the exposure to variability in expected future cash flows attributable to a three-month LIBOR rate beyond 1.00%. At the inception of the hedging relationship, the fair value of the Cap of $14,395 was allocated to the respective caplets within the Cap on a fair value basis. To the extent that the interest rate cap contracts are effective in offsetting that variability, changes in the Cap’s fair value will be recorded in Accumulated other comprehensive income (AOCI”) in the Company’s Consolidated Condensed Balance Sheets and subsequently recognized in interest expense in the Consolidated Statements of Operations as the underlying interest expense is recognized on the 2011 Term Loan.

On July 1, 2011, the Company recorded the fair value of the Cap of $14,395 in Other assets and the fair value of the deferred premium payments of $14,395 as Deferred premium on interest rate cap in Short-term debt ($1,764) and Long-term debt ($12,631), on the Company’s Consolidated Condensed Balance Sheet. On October 1, 2011, the fair value of the Cap was $7,399, which was recorded in Other assets and the decrease in fair value of $6,996 from July 1, 2011 was recorded in AOCI. On October 1, 2011, Deferred premium on the interest rate cap was $14,470, of which $2,418 was recorded in Short-term debt and $12,052 was recorded in Long-term debt. The accretion of Deferred premium on the interest rate cap of $75 during the Three Months Ended October 1, 2011 was recorded as an increase in interest expense.

2008 Credit Agreements

On August 26, 2008, Warnaco, as borrower, and Warnaco Group, as guarantor, entered into a revolving credit agreement (the “2008 Credit Agreement”) and Warnaco of Canada Company, an indirect wholly-owned subsidiary of Warnaco Group, as borrower, and Warnaco Group, as guarantor, entered into a second revolving credit agreement (the “2008 Canadian Credit Agreement” and, together with the 2008 Credit Agreement, the “2008 Credit Agreements”), in each case with the financial institutions which, from time to time, will act as lenders and issuers of letters of credit. As noted above, on June 17, 2011, the 2008 Credit Agreements were amended in connection with the 2011 Term Loan Agreement.

At October 1, 2011, the 2008 Credit Agreement had interest rate options (dependent on the amount borrowed and the repayment period) of (i) 3.75%, based on a base rate plus 0.50%, or (ii) 1.87%, based on LIBOR plus 1.50%. The 2008 Canadian Credit Agreement had interest rate options of (i) 3.50%, based on the prime rate announced by Bank of America (acting through its Canada branch) plus 0.50%, or (ii) 2.67%, based on the BA Rate (as defined below), in each case, on a per annum basis. The BA Rate is defined as the annual rate of interest quoted by Bank of America (acting through its Canada branch) as its rate of interest rate for bankers’ acceptances in Canadian Dollars for a face amount similar to the amount of the loan and for a term similar to the applicable interest period.

During June 2011, the Company used a portion of the proceeds from the 2011 Term Loan to repay the outstanding balances of the 2008 Credit Agreements. As of October 1, 2011, the Company had no loans and approximately $29,074 in letters of credit outstanding under the 2008 Credit Agreement, leaving approximately $189,662 of availability. As of October 1, 2011, there were no loans and $1,970 in letters of credit outstanding under the 2008 Canadian Credit Agreement and the available line of credit was approximately $20,269. As of October 1, 2011, the Company was in compliance with all financial covenants contained in the 2008 Credit Agreements.

24

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

CKJEA Notes and Other Short-Term Debt

Certain of the Company’s European businesses hold short-term notes payable (the “CKJEA Notes”). The total amounts of CKJEA Notes payable of $39,027 at October 1, 2011, $18,445 at January 1, 2011 and $48,653 at October 2, 2010 each consist of short-term revolving notes with a number of banks at various interest rates (primarily Euro LIBOR plus 1.0%). The weighted average effective interest rate for the outstanding CKJEA notes payable was 3.14% as of October 1, 2011, 4.29% as of January 1, 2011 and 2.45% as of October 2, 2010. All of the CKJEA notes payable are short-term and were renewed during the Nine Months Ended October 1, 2011 for additional terms of no more than 12 months.

In addition, at October 1, 2011, January 1, 2011 and October 2, 2010, the Company’s Brazilian subsidiary, WBR, had lines of credit with several banks, with total outstanding balances of $4,328, $357 and $0, respectively, recorded in Short-term debt in the Company’s Consolidated Condensed Balance Sheets or Consolidated Balance Sheets, which were secured by approximately equal amounts of WBR’s trade accounts receivable.

During September 2011, one of the Company’s Asian subsidiaries entered into a short-term $25,000 revolving credit facility with one lender (the “Asian Credit Facility”) to be used for temporary working capital and general corporate purposes. The Asian Credit Facility bears interest of 1.75% over 1-month LIBOR, which is due monthly. At the end of each month, amounts outstanding under the Asian Credit Facility may be carried forward for further 1-month periods for up to one year. The Asian Credit Facility may be renewed annually. The Asian Credit Facility is subject to certain terms and conditions customary for a credit facility of this type and may be terminated at any time at the discretion of the lender. There were no borrowings during the Three Months Ended October 1, 2011.

Italian Notes

On September 30, 2010, one of the Company’s Italian subsidiaries entered into a €10,000 loan (the “Italian Note”). At January 1, 2011, the principal balance of the Italian Note was €10,000 ($13,370) with an annual interest rate of 3.64%. On June 30, 2011, the Company repaid the full outstanding balance of €6,040 ($8,600) on the Italian Note with a portion of the proceeds of the 2011 Term Loan (see above).

Note 15—Stockholders’ Equity

Preferred Stock

The Company has authorized an aggregate of 20,000,000 shares of preferred stock, par value $0.01 per share, of which 112,500 shares are designated as Series A preferred stock, par value $0.01 per share. There were no shares of preferred stock issued and outstanding at October 1, 2011, January 1, 2011 and October 2, 2010.

Share Repurchase Programs

On May 12, 2010, the Company’s Board of Directors authorized a share repurchase program (the ‘‘2010 Share Repurchase Program’’) for the repurchase of up to 5,000,000 shares of the Company’s common stock. During the Nine Months Ended October 1, 2011, the Company repurchased the remaining 4,060,842 shares of its common stock under the 2010 Share Repurchase Program for an aggregate amount of $205,800 (based on an average of $50.68 per share).

During September 2011, the Company’s Board of Directors approved a new multi-year share repurchase program (the “2011 Share Repurchase Program”) for up to $200,000 of the Company’s outstanding common stock. All repurchases under the 2011 Share Repurchase Program will be made consistent with the terms of the Company’s applicable debt instruments. During the Three Months Ended October 1, 2011, the Company repurchased 104,300 shares under the 2011 Share Repurchase Program for $4,996 (based on an average of $47.90 per share), leaving $195,004 of common stock to be repurchased.

25

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Stock Incentive Plans

The Company granted 12,050 and 360,900 stock options during the Three and Nine Months Ended October 1, 2011, respectively, and 56,096 and 434,746 stock options during the Three and Nine Months Ended October 2, 2010, respectively. The fair values of stock options granted during the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010 were estimated at the dates of grant using the Black-Scholes-Merton option pricing model with the following assumptions:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Weighted average risk free rate of return (a)		0.71	%		1.15	%		1.62	%		1.74	%
Dividend yield		—			—			—			—
Expected volatility of the market price of the Company’s common stock		57.7	%		56.8	%		57.7	%		56.8	%
Expected option life (years)		4.1			4.2			4.1			4.2

(a) based on the quoted yield for U.S. five-year treasury bonds as of the date of grant.

A summary of stock-based compensation expense is as follows:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Stock-based compensation expense before income taxes:
Stock options	$	1,566	$	1,625	$	6,938	$	6,485
Restricted stock grants		3,165		2,681		14,277		11,595
Total		4,731		4,306		21,215		18,080
Income tax benefit:
Stock options		532		570		2,407		2,307
Restricted stock grants		1,121		953		4,776		3,633
Total		1,653		1,523		7,183		5,940
Stock-based compensation expense after income taxes:
Stock options		1,034		1,055		4,531		4,178
Restricted stock grants		2,044		1,728		9,501		7,962
Total	$	3,078	$	2,783	$	14,032	$	12,140

26

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

A summary of stock option award activity under the Company’s stock incentive plans as of and for the Nine Months Ended October 1, 2011 is presented below:

				Weighted
				Average
				Exercise
	Options			Price
Outstanding as of January 1, 2011		1,926,257		$	33.73
Granted		360,900			55.33
Exercised		(286,340	)		28.74
Forfeited / Expired		(62,726	)		41.81
Outstanding as of October 1, 2011		1,938,091		$	38.23
Options Exercisable as of October 1, 2011		1,154,007		$	33.52

A summary of the activity for unvested restricted share/unit awards under the Company’s stock incentive plans (excluding Performance Awards, defined below) as of and for the Nine Months Ended October 1, 2011 is presented below:

				Weighted Average
	Restricted			Grant Date Fair
	shares/units			Value
Unvested as of January 1, 2011		847,664		$	36.93
Granted		227,293			55.33
Vested (a)		(130,501	)		48.96
Forfeited		(58,083	)		26.27
Unvested as of October 1, 2011		886,373		$	39.73

(a) does not include an additional 37,600 restricted units with a grant date fair value per share of $55.57 and 36,750 restricted units with a grant date fair value per share of $43.28, granted to Retirement-Eligible employees (see Note 13 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010) during the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively, for which the requisite service period has been completed on the respective grant dates but the restrictions will not lapse until the end of the three-year vesting period.

During March 2011 and March 2010, share-based compensation awards granted to certain of the Company’s executive officers under Warnaco Group’s 2005 Stock Incentive Plan included 80,050 and 75,750 performance-based restricted stock/restricted unit awards, respectively, (“Performance Awards”) in addition to the service-based stock options and restricted stock awards, included in the preceding tables. The Performance Awards include both a performance condition and a market condition (see Note 13 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010 for further details on the Performance Awards).

Under the performance condition, the estimated compensation expense is based on the grant date fair value (the closing price of the Company’s common stock on the date of grant) and the Company’s current expectations of the probable number of Performance Awards that will ultimately be earned. The fair value of the Performance Awards under the market condition on the respective grant dates ($3,245 at March 1, 2011 and $2,432 at March 3, 2010) is based upon a Monte Carlo simulation model, which encompasses the Company’s relative total shareholder return (“TSR”) (change in closing price of the Company’s common stock on the New York Stock Exchange compared to that of a peer group of companies (“Peer Companies”)) during the Measurement Period. The Measurement Period includes both:

(i) the period from the beginning of Fiscal 2011 to March 1, 2011 (the grant date) for Performance Awards granted on March 1, 2011, and the period from the beginning of Fiscal 2010 to March 3, 2010 (the grant date) for Performance Awards granted on March 3, 2010, for which actual TSR’s are calculated; and

(ii) the periods from the respective grant dates to the end of the fiscal years ending 2012 or 2013, respectively, a total of 2.83 years, (the “Remaining Measurement Period”), for which simulated TSR’s are calculated.

27

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

The calculation of simulated TSR’s under the Monte Carlo model for the Remaining Measurement Period for Performance Awards granted on March 1, 2011 and on March 3, 2010 included the following assumptions:

	March 1, 2011	March 3, 2010
Weighted average risk free rate of return	1.07%	1.25%
Dividend yield	—	—
Expected volatility — Company (a)	61.50%	65.0%
Expected volatility — Peer Companies	38.2% - 113.4%	39.8% - 114.1%
Remaining measurement period (years)	2.83	2.83

(a) Expected volatility — Company for Performance Awards granted on March 1, 2011 and on March 3, 2010 is based on a remaining measurement period of 2.83 years.

The Company recorded compensation expense for the Performance Awards during the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010 based on the performance condition.

Performance Award activity for the Nine Months Ended October 1, 2011 was as follows:

				Weighted Average Grant
	Performance Shares			Date Fair Value
Unvested as of January 1, 2011		75,750		$	43.28
Granted		80,050			55.57
Vested (a)		—			—
Forfeited		(1,300	)		43.28
Unvested as of October 1, 2011 (b)		154,500		$	49.65

(a)	does not include 35,050 and 34,300 Performance Awards granted to Retirement Eligible Employees on March 1, 2011 and March 3, 2010, respectively, for which the requisite service period has been completed on the grant date; the restrictions on such awards will not lapse until the end of the three-year vesting period.
(b)	includes 18,613 shares that the Company is obligated to issue at the end of the three-year performance period based upon the Company’s performance to date.

Note 16—Supplemental Cash Flow Information

	Nine Months Ended
	October 1,			October 2,
	2011			2010
Cash paid (received) during the period for:
Interest expense	$	8,606		$	11,834
Interest income		(1,525	)		(714	)
Income taxes, net of refunds received		51,323			27,424
Supplemental non-cash investing and financing activities:
Accounts payable for purchase of fixed assets		4,930			5,851

28

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 17—Income per Common Share

The following table presents the calculation of both basic and diluted income per common share attributable to Warnaco Group common shareholders, giving effect to participating securities. The Company has determined that based on a review of its share-based awards, only its restricted stock awards are deemed participating securities, which participate equally with common shareholders. The weighted average restricted stock outstanding was 622,969 shares and 587,699 shares for the Three Months Ended October 1, 2011 and the Three Months Ended October 2, 2010, respectively, and 639,980 shares and 582,190 shares for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively. Undistributed income allocated to participating securities is based on the proportion of restricted stock outstanding to the sum of weighted average number of common shares outstanding attributable to Warnaco Group common shareholders and restricted stock outstanding for each period presented below.

	Three Months Ended
	October 1, 2011			October 2, 2010
Numerator for basic and diluted income per common share:
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders and participating securities	$	48,788		$	41,440
Less: allocation to participating securities		(718	)		(540	)
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders	$	48,070		$	40,900
Income (Loss) from discontinued operations, net of tax, attributable to Warnaco Group, Inc. common shareholders and participating securities	$	(4,177	)	$	57
Less: allocation to participating securities		61			—
Income (Loss) from discontinued operations attributable to Warnaco Group, Inc. common shareholders	$	(4,116	)	$	57
Net income attributable to Warnaco Group, Inc. common shareholders and participating securities	$	44,611		$	41,497
Less: allocation to participating securities		(656	)		(540	)
Net income attributable to Warnaco Group, Inc. common shareholders	$	43,955		$	40,957
Basic income per common share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing income per common share		41,713,958			44,553,898
Income per common share from continuing operations	$	1.15		$	0.92
Income (Loss) per common share from discontinued operations		(0.10	)		—
Net income per common share	$	1.05		$	0.92
Diluted income per share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing basic income per common share		41,713,958			44,553,898
Effect of dilutive securities:
Stock options and restricted stock units		867,142			911,793
Weighted average number of shares and share equivalents used in computing income per common share		42,581,100			45,465,691
Income per common share from continuing operations	$	1.13		$	0.90
Income (Loss) per common share from discontinued operations		(0.10	)		—
Net income per common share	$	1.03		$	0.90
Number of anti-dilutive “out-of-the-money” stock options outstanding (a)		355,200			400,067

29

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

	Nine Months Ended
	October 1, 2011			October 2, 2010
Numerator for basic and diluted income per common share:
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders and participating securities	$	138,886		$	119,779
Less: allocation to participating securities		(2,033	)		(1,536	)
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders	$	136,853		$	118,243
(Loss) from discontinued operations, net of tax, attributable to Warnaco Group, Inc. common shareholders and participating securities	$	(4,741	)	$	(373	)
Less: allocation to participating securities		69			5
(Loss) from discontinued operations attributable to Warnaco Group, Inc. common shareholders	$	(4,672	)	$	(368	)
Net income attributable to Warnaco Group, Inc. common shareholders and participating securities	$	134,145		$	119,406
Less: allocation to participating securities		(1,964	)		(1,531	)
Net income attributable to Warnaco Group, Inc. common shareholders	$	132,181		$	117,875
Basic income per common share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing income per common share		43,076,120			44,813,952
Income per common share from continuing operations	$	3.18		$	2.64
(Loss) per common share from discontinued operations		(0.11	)		(0.01	)
Net income per common share	$	3.07		$	2.63
Diluted income per share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing basic income per common share		43,076,120			44,813,952
Effect of dilutive securities:
Stock options and restricted stock units		947,526			992,578
Weighted average number of shares and share equivalents used in computing income per common share		44,023,646			45,806,530
Income per common share from continuing operations	$	3.11		$	2.58
(Loss) per common share from discontinued operations		(0.11	)		(0.01	)
Net income per common share	$	3.00		$	2.57
Number of anti-dilutive “out-of-the-money” stock options outstanding (a)		327,950			399,067

(a) options to purchase shares of common stock at an exercise price greater than the average market price of the underlying shares are anti-dilutive and therefore not included in the computation of diluted income per common share from continuing operations.

30

THE WARNACO GROUP, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Currencies in thousands, excluding per share amounts)
(Unaudited)

Note 18—Legal Matters

Lejaby Claims: On August 18, 2009, Palmers Textil AG (“Palmers”) filed an action against the Company in Le Tribunal de Commerce de Paris (The Paris Commercial Court), alleging that the Company made certain misrepresentations in the sale agreement, and seeking to declare the sale null and void, monetary damages in an unspecified amount and other relief (the “Palmers Suit”). The Company believes that the Palmers Suit is without merit. The Company is defending itself vigorously in this matter. In addition, the Company and Palmers have been unable to agree on certain post-closing adjustments to the purchase price, including adjustments for working capital. The dispute regarding the amount of post-closing adjustments is not a subject of the Palmers Suit. During the Three Months Ended October 1, 2011, the Company recorded a reserve of approximately $4,000 in connection with these matters. In addition, as of October 1, 2011, the Company had a loan receivable recorded in Other assets on the Company’s Consolidated Condensed Balance Sheets of $13,744 from Palmers related to the Company’s sale of its Lejaby business to Palmers on March 10, 2008. The Company believes that its loan receivable from Palmers is valid and collectible.

OP Litigation: On August 19, 2004, the Company acquired 100% of the outstanding common stock of Ocean Pacific Apparel Corp. (“OP”) from Doyle & Bossiere Fund I, LLC (“Doyle”) and certain minority shareholders of OP. The terms of the acquisition agreement required the Company to make certain contingent payments to the sellers of OP under certain circumstances. On November 6, 2006, the Company sold the OP business to a third party. On May 23, 2007, Doyle filed a demand against the Company for arbitration before Judicial Arbitration and Mediation Services (“JAMS”) in Orange County, California, alleging that certain contingent purchase price payments are due to them as a result of the Company’s sale of the OP business in November 2006 (the “OP Action”). On February 7, 2011, the Company and Doyle entered into a settlement agreement and mutual release to the entire action described above. As a result, the entire action was dismissed by JAMS, with prejudice.

Other: In addition, from time to time, the Company is involved in arbitrations or legal proceedings that arise in the ordinary course of its business. The Company cannot predict the timing or outcome of these claims and proceedings. Currently, the Company is not involved in any such arbitration and/or legal proceeding that it expects to have a material effect on its financial condition, results of operations or business.

Note 19 — Commitments and Contingencies

The contractual obligations and commitments in existence as of October 1, 2011 did not differ materially from those disclosed as of January 1, 2011 in the Company’s Annual Report on Form 10-K for Fiscal 2010, except for the following changes, which occurred during the Nine Months Ended October 1, 2011:

	2012		2013		2014		2015		2016		Thereafter		Total
Operating leases	$	15,599	$	14,602	$	10,839	$	7,711	$	5,857	$	10,938	$	65,546
Other contractual obligations		15,198		10,535		8,789		6,945		4,603		193,155		239,225
Total	$	30,797	$	25,137	$	19,628	$	14,656	$	10,460	$	204,093	$	304,771

At October 1, 2011, in the ordinary course of business, the Company had open purchase orders with suppliers of approximately $325,428, of which $155,340 are payable in 2011 and $170,088 are payable in 2012.

As of October 1, 2011, the Company was also party to outstanding hedging instruments (see Note 11 of Notes to the Consolidated Condensed Financial Statements).

As of October 1, 2011, the Company remains under audit in various taxing jurisdictions. It is, therefore, difficult to predict the final timing and resolution of any particular uncertain tax position. Based upon the Company’s assessment of many factors, including past experience and complex judgments about future events, it is reasonably possible that within the next twelve months the reserve for uncertain tax positions may decrease between $10,000 and $12,000 associated with tax positions expected to be taken during the next twelve months, the reevaluation of current uncertain tax positions arising from developments in examinations, the finalization of tax examinations, or from the closure of tax statutes.

31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Warnaco Group, Inc. (“Warnaco Group” and, collectively with its subsidiaries, the “Company”) is subject to certain risks and uncertainties that could cause its future results of operations to differ materially from its historical results of operations and that could affect the market value of the Company’s common stock. This Quarterly Report on Form 10-Q, including the following discussion, but except for the historical information contained herein, contains forward-looking statements that involve risks and uncertainties. See “Statement Regarding Forward-Looking Disclosure.”

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with: (i) the Consolidated Condensed Financial Statements and related notes thereto which are included in this Quarterly Report on Form 10-Q; and (ii) the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (“Fiscal 2010”).

The Company operates on a 52/53 week fiscal year basis ending on the Saturday closest to December 31. As such, the period from January 2, 2011 to December 31, 2011 (“Fiscal 2011”) and the period from January 3, 2010 to January 1, 2011 (“Fiscal 2010”) each contain 52 weeks of operations. Additionally, the period from July 3, 2011 to October 1, 2011 (the “Three Months Ended October 1, 2011”) and the period from July 4, 2010 to October 2, 2010 (the “Three Months Ended October 2, 2010”) each contained thirteen weeks of operations and the period from January 2, 2011 to October 1, 2011 (the “Nine Months Ended October 1, 2011”) and the period from January 3, 2010 to October 2, 2010 (the “Nine Months Ended October 2, 2010”) each contained thirty-nine weeks of operations.

The Company has three operating segments: (i) Sportswear Group; (ii) Intimate Apparel Group; and (iii) Swimwear Group, which groupings reflect the manner in which the Company’s business is managed and the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker, reviews the Company’s business. Amounts related to certain corporate expenses incurred in the U.S. (previously included in Operating income (loss) — Corporate/Other) during the Three and Nine Months Ended October 2, 2010 have been reclassified to Operating income (loss) - Sportswear Group, Intimate Apparel Group and Swimwear Group in order to conform to the current period presentation (see Note 6 of Notes to Consolidated Condensed Financial Statements). In addition, amounts associated with certain sourcing and design related expenses incurred in the U.S. (previously included in domestic Operating income (loss) — Sportswear Group, Intimate Apparel Group and Swimwear Group) during the Three and Nine Months Ended October 2, 2010 have been reclassified to international Operating income (loss) — Sportswear Group, Intimate Apparel Group and Swimwear Group in order to conform to the current period presentation. The revision of the operating income (loss) for each Group and Corporate/Other for the Three and Nine Months Ended October 2, 2010 did not have any effect on the Company’s Consolidated Condensed Balance Sheets, Consolidated Condensed Statements of Operations or Consolidated Condensed Statements of Cash Flows for any period presented in this Form 10-Q.

References to “Calvin Klein Jeans” refer to jeans, accessories and “bridge” products. References to “Core Intimates” refer to the Intimate Apparel Group’s Warner’s^®, Olga^® and Body Nancy Ganz/Bodyslimmers^® brand names and intimate apparel private labels. References to “Retail” within each operating Group refer to the Company’s owned full-price free-standing stores, owned outlet stores, concession / “shop-in-shop” stores and on-line stores. Results related to stores operated by third parties under retail licenses or distributor agreements are included in “Wholesale” within each operating Group. References to “sales mix” refer to the channels of distribution in which the Company’s products are sold. For example, an unfavorable sales mix in a current period relative to a prior period refers to an increase in the percentage of sales of products in low margin channels of distribution (such as the off-price channel) to total sales. References to “allowances” refer to discounts given to wholesale customers based upon the expected rate of retail sales and general economic and retail forecasts.

Overview

Introduction

The Company designs, sources, markets, licenses and distributes sportswear, intimate apparel, and swimwear worldwide through highly recognized brand names. The Company’s products are distributed domestically and internationally in over 100 countries, primarily to wholesale customers through various distribution channels, including major department stores, independent retailers, chain stores, membership clubs, specialty, off-price, mass merchandisers and other stores, and to retail customers, through the Company’s retail stores and the internet.

The Company’s mission is to become the premier global, branded apparel company. To accomplish its mission, the Company has identified the following key strategic objectives, which it continued to implement across its segments during the Nine Months Ended October 1, 2011:

• Build and maintain powerful global brands. The Company believes that one of its strengths is its portfolio of highly recognized brand names. The Company strives to enhance its brand image through superior design, product innovation, focused marketing and high quality product construction. The Company’s major brand is Calvin Klein, which generated 74.8% and 73.2% of the Company’s net revenues for the Nine Months Ended October 1, 2011 and October 2, 2010, respectively.

32

• Grow the Company’s retail business through a combination of new store openings and the selective acquisition of stores operated by distributors of the Company’s products. During the Nine Months Ended October 1, 2011, the Company increased the number of Calvin Klein retail stores in Europe, Asia and South America by 275 retail stores (consisting of 48 free-standing stores (including an increase of 49 full price stores and a decline of one outlet store) and 227 shop-in-shop/concession stores). As of October 1, 2011, the Company operated (i) 1,634 Calvin Klein retail stores worldwide (consisting of 355 free-standing stores (including 238 full price and 117 outlet stores), 1,277 shop-in-shop/concession stores, one Calvin Klein Underwear on-line store and one Calvin Klein Jeans on-line store) and (ii) one Speedo^® on-line store.

• Retail net revenues represented 27.8% of the Company’s net revenues for the Nine Months Ended October 1, 2011 compared to 23.1% of the Company’s net revenues for the Nine Months Ended October 2, 2010.

• On July 8, 2011, the Company acquired a controlling interest (51%) in the business of a distributor of its Calvin Klein products in India for cash consideration of approximately $20.4 million (see Note 3 of Notes to Consolidated Condensed Financial Statements).

• On January 3, 2011, the Company acquired certain assets, including inventory and leasehold improvements, and leases, of the retail stores of its Calvin Klein distributor in Taiwan for cash consideration of approximately $1.4 million.

• The Company expects to continue to expand its retail business, particularly in Europe, Asia and South America.

• Leverage the Company’s international platform. The Company’s global design, sourcing, sales and distribution network allows it to reach consumers around the world. The Company works to effectively utilize its international presence to enhance and expand the worldwide reach of its branded apparel products. Net revenues from international operations represented 59.0% of the Company’s net revenues for the Nine Months Ended October 1, 2011 compared to 54.1% of the Company’s net revenues for the Nine Months Ended October 2, 2010. The Company believes that there are opportunities for continued growth in Europe, Asia and South America.

• Manage heritage businesses for profitability. The Company’s heritage businesses include Chaps^®, Warner’s, Olga (Core Intimates) and Speedo^® brands. During the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010, net revenues of all heritage businesses increased. During these periods, operating income of Speedo and Core Intimates businesses increased $2.7 million and $0.4 million, respectively, while operating income of Chaps products declined $7.1 million. During the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010, operating income of heritage businesses includes an increase of $6.4 million of restructuring expense.

Net Revenues

The Company’s net revenues increased $48.4 million, or 8.1%, to $645.1 million for the Three Months Ended October 1, 2011 compared to $596.8 million for the Three Months Ended October 2, 2010 and increased $194.4 million, or 11.4%, to $1.90 billion for the Nine Months Ended October 1, 2011 compared to $1.70 billion for the Nine Months Ended October 2, 2010. The increase in net revenues was primarily due to:

(i) the favorable effect of foreign currency fluctuations, which increased net revenues by $26.3 million and $65.3 million for the Three Months and Nine Months Ended October 1, 2011, respectively compared to the same periods in the prior year;

(ii) the launch of the ck one product line of men’s and women’s jeanswear and underwear during the first and second quarters of Fiscal 2011 and new product launches of Warner’s and Olga products during the second quarter of Fiscal 2011, which benefited both the Sportswear Group and Intimate Apparel Group;

(iii) the addition of 262,000 square feet of retail space (including space for both the Sportswear Group and the Intimate Apparel Group) through the opening of additional Calvin Klein international retail stores during the fourth quarter of Fiscal 2010 and the Nine Months Ended October 1, 201l and the acquisition of retail stores in Taiwan during the first quarter of Fiscal 2011, in India during the Three Months Ended October 1, 2011and in Italy during the fourth quarter of Fiscal 2010; and

33

(iv) an increase of 1.7% from comparable store sales during the Three Months Ended October 1, 2011 ($123.0 million) compared to the Three Months Ended October 2, 2010 ($120.9 million) and an increase of 4.3% from comparable store sales during the Nine Months Ended October 1, 2011 ($324.7 million) compared to the Nine Months Ended October 2, 2010 ($311.1 million).

Operating Income

The Company’s operating income decreased $3.1 million, or 4.6%, to $64.8 million for the Three Months Ended October 1, 2011 compared to $67.9 million for the Three Months Ended October 2, 2010, reflecting a decline in the Sportswear Group ($17.1 million) and in the Intimate Apparel Group ($1.3 million), partially offset by an increase in the Swimwear Group ($0.4 million) and a decrease in the level of operating loss from Corporate/other ($14.9 million). Operating income includes restructuring charges of $7.5 million for the Three Months Ended October 1, 2011 and $1.7 million for the Three Months Ended October 2, 2010 (see Liquidity and Capital Resources — Restructuring and Note 5 of Notes to Consolidated Condensed Financial Statements).

The Company’s operating income decreased $15.7 million, or 7.7%, to $187.0 million for the Nine Months Ended October 1, 2011 compared to $202.7 million for the Nine Months Ended October 2, 2010, reflecting a $35.2 million decline in the Sportswear Group and a $2.7 million decline in the Intimate Apparel Group, partially offset by an increase in the Swimwear Group ($4.3 million) and a decrease in the level of operating loss from Corporate/other ($17.9 million). Operating income includes restructuring charges of $19.0 million for the Nine Months Ended October 1, 2011and $3.8 million for the Nine Months Ended October 2, 2010.

During the Three and Nine Months Ended October 1, 2011, certain of the Company’s businesses, particularly in the U.S., Asia and Europe, experienced an increase in product and freight costs, which have adversely affected the operating margins of the Company’s businesses. The Company expects that the rate of product cost increases will stabilize or decline during the remainder of Fiscal 2011. The Company was able to partially mitigate the cost increases (and expects to be able to partially mitigate such increases in the future) by selectively increasing the selling prices of its goods, making early purchases of product and implementing other sourcing initiatives.

Foreign Currency Effects

The effects of fluctuations in foreign currencies are reflective of the following: (i) the translation of operating results for the current year period for entities reporting in currencies other than the U.S. dollar into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period); (ii) as relates to entities which purchase inventory in currencies other than that entity’s reporting currency, the effect on cost of goods sold for the current year period compared to the prior year period as a result of differences in the exchange rates in effect at the time the related inventory was purchased; and (iii) gains and losses recorded by the Company as a result of fluctuations in foreign currencies and related to the Company’s foreign currency hedge programs (see Note 11 of Notes to Consolidated Condensed Financial Statements).

As noted above, during the Nine Months Ended October 1, 2011 and October 2, 2010, more than 50% of the Company’s net revenues were generated from foreign operations, a majority of which are conducted in countries whose functional currencies are the Euro, Korean Won, Canadian Dollar, Brazilian Real, Mexican Peso, Chinese Yuan and British Pound.

For the Three Months Ended October 1, 2011 compared to the previous year period, net revenues were favorably affected, while operating income and income from continuing operations were each negatively affected, by fluctuations in certain foreign currencies: net revenues include an increase of $26.3 million, while operating income includes a decrease of $3.2 million and income from continuing operations includes a decrease of $3.9 million ($0.09 per diluted share) due to such fluctuations.

For the Nine Months Ended October 1, 2011 compared to the previous year period, net revenues were favorably affected, while operating income and income from continuing operations were each negatively affected, by fluctuations in certain foreign currencies: net revenues include an increase of $65.3 million, while operating income includes a decrease of $6.3 million and income from continuing operations includes a decrease of $5.5 million ($0.12 per diluted share) due to such fluctuations.

34

Earnings per Share

On a U.S. generally accepted accounting principles (“GAAP”) basis, for the Three Months Ended October 1, 2011 compared to the Three Months Ended October 2, 2010, income from continuing operations per diluted share increased 25.6% to $1.13 per diluted share (from $0.90 per diluted share). On a non-GAAP basis (excluding restructuring expense, pension expense and certain other items (see Non-GAAP Measures, below)), for the Three Months Ended October 1, 2011 compared to the Three Months Ended October 2, 2010, income from continuing operations per diluted share increased 2.9% to $1.07 per diluted share (from $1.04 per diluted share).

On a GAAP basis, for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010, income from continuing operations per diluted share increased 20.5% to $3.11 per diluted share (from $2.58 per diluted share). On a non-GAAP basis (excluding restructuring expense, pension expense and certain other items (see Non-GAAP Measures, below)), for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010, income from continuing operations per diluted share increased 7.1% to $3.03 per diluted share (from $2.83 per diluted share).

Balance Sheet

On June 17, 2011, the Company entered into a $200 million senior secured term loan facility, maturing on June 17, 2018 (see Liquidity and Capital Resources — 2011 Term Loan Agreement, below). At October 1, 2011, the Company’s balance sheet included cash and cash equivalents of $179.3 million and total debt of $257.3 million.

During the Nine Months Ended October 1, 2011, the Company repurchased the remaining 4,060,842 shares of Common Stock under the 2010 Share Repurchase Program for $205.8 million (based on an average of $50.68 per share). See Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During September 2011, the Company’s Board of Directors approved a new multi-year share repurchase program for up to $200 million of the Company’s outstanding common stock. During the Three Months Ended October 1, 2011, the Company repurchased 104,300 shares under the 2011 Share Repurchase Program for $5.0 million (based on an average of $47.90 per share).

Non-GAAP Measures

The Company’s reported financial results are presented in accordance with GAAP. The reported operating income, income from continuing operations and diluted earnings per share from continuing operations reflect certain items which affect the comparability of those reported results. Those financial results are also presented on a non-GAAP basis, as defined by Regulation S-K section 10(e) of the Securities and Exchange Commission (“SEC”), to exclude the effect of these items. The Company’s computation of these non-GAAP measures may vary from others in its industry. These non-GAAP financial measures are not intended to be, and should not be, considered separately from or as an alternative to the most directly comparable GAAP financial measure to which they are reconciled, as presented in the following table:

	Three Months Ended					Nine Months Ended
	October 1,			October 2,		October 1,			October 2,
	2011			2010		2011			2010
	(Dollars in thousands, except per share amounts)
Operating income, as reported (GAAP)	$	64,756		$	67,897	$	187,009		$	202,713
Restructuring charges and pension income (a)		7,238			1,675		18,060			3,745
Brazil acquisition adjustment (b)		—			1,521		—			1,521
State franchise taxes and other (c)		—			1,269		—			1,269
Operating income, as adjusted (non-GAAP)	$	71,994		$	72,362	$	205,069		$	209,248
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders, as reported (GAAP)	$	48,788		$	41,440	$	138,886		$	119,779
Restructuring charges and pension, net of income tax (a)		5,486			1,403		12,825			2,743
Brazil acquisition adjustment, net of income tax (b)		—			1,004		—			1,004
State franchise taxes and other, net of income tax (c)		—			802		—			802
Costs related to the redemption of debt, net of income tax (d)		—			—		—			2,368
Taxation (e)		(8,202	)		3,236		(16,528	)		4,539
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders, as adjusted (non-GAAP)	$	46,072		$	47,885	$	135,183		$	131,235
Diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders, as reported (GAAP)	$	1.13		$	0.90	$	3.11		$	2.58
Restructuring charges and pension , net of income tax (a)		0.13			0.03		0.30			0.06
Brazil acquisition adjustment, net of income tax (b)		—			0.02		—			0.02
State franchise taxes and other, net of income tax (c)		—			0.02		—			0.02
Costs related to the redemption of debt, net of income tax (d)		—			—		—			0.05
Taxation (e)		(0.19	)		0.07		(0.38	)		0.10
Diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders, as adjusted (non-GAAP)	$	1.07		$	1.04	$	3.03		$	2.83

a) For all periods presented, this adjustment seeks to present operating income, income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders without the effects of restructuring charges and pension income. Restructuring charges (on a pre-tax basis) were $7,548 and $18,990 for the Three and Nine Months Ended October 1, 2011, respectively and $1,697 and $3,810 for the Three and Nine Months Ended October 2, 2010, respectively. Pension income (on a pre-tax basis) was $310 and $931 for the Three and Nine Months Ended October 1, 2011, respectively, and $22 and $65 for the Three and Nine Months Ended October 2, 2010, respectively. The income tax rates used to compute the income tax effect related to this adjustment correspond to the local statutory tax rates of the reporting entities that incurred restructuring charges or recognized pension income.

35

b)	For the Three and Nine Months Ended October 2, 2010, this adjustment seeks to present operating income, income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders without the effects of an additional charge related to an adjustment to the contingent consideration to be paid for the business acquired in Brazil in 2009 of $1,521 ($1,004 after tax). The income tax rate used to compute the income tax effect related to this adjustment corresponds to the local statutory tax rate in Brazil.
c)	For the Three and Nine Months Ended October 2, 2010, this adjustment seeks to present operating income, income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders excluding a charge of $1,269 ($802 after tax) for certain franchise taxes recorded during the Three Months Ended October 2, 2010 related to the correction of amounts recorded in prior periods. The amount was not material to any prior period. The income tax rates used to compute the income tax effect related to the above mentioned charge for franchise taxes correspond to the statutory tax rates in the United States.
d)	This adjustment seeks to present income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders without the effect of the charges shown in the table above related to the repurchase of a portion of the Company’s Senior Notes during the Nine Months Ended October 2, 2010. The income tax rates used to compute the income tax effect related to this adjustment correspond to the statutory tax rates in the United States.
e)	For the Three and Nine Months Ended October 1, 2011 and Three and Nine Months Ended October 2, 2010, this adjustment reflects an amount required in order to present income from continuing operations attributable to Warnaco Group, Inc. common shareholders and diluted earnings per share from continuing operations attributable to Warnaco Group, Inc. common shareholders on an adjusted (non-GAAP) basis at the Company’s forecasted normalized tax rates for Fiscal 2011 (31.1%) and Fiscal 2010 (33.5%), respectively. This adjustment excludes the effects of certain tax adjustments related to either changes in estimates in prior period tax provisions or adjustments for certain discrete tax items. Adjustments for discrete items reflect the federal, state and foreign tax effects related to: 1) income taxes associated with legal entity reorganizations and restructurings; 2) tax provision or benefit resulting from statute expirations or the finalization of income tax examinations, and 3) other adjustments not considered part of the Company’s core business activities.

For 2011, this adjustment primarily reflects the following:

a.	The exclusion of a $10,900 tax benefit recorded during the Nine Months Ended October 1, 2011 associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as result of receiving a favorable ruling from that country’s taxing authority during the second quarter of 2011;
b.	The exclusion of a $7,300 tax benefit recorded during the Three Months Ended October 1, 2011 related to the reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions; and
c.	The exclusion of a $1,300 tax benefit recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for Fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011.

For 2010, this adjustment primarily reflects the exclusion of certain tax adjustments related to errors or changes in estimates in prior period tax provisions (approximately $1,900) and adjustments for certain other discrete tax items (approximately $2,600). The adjustment related to prior period errors or estimate changes includes, among other items, a charge of approximately $1,700 recorded during the Nine Months Ended October 2, 2010 associated with the correction of an error in the 2006 through 2009 income tax provisions as a consequence of the loss of a credit related to prior year tax overpayments caused by the delayed filing of tax returns in a U.S. state taxing jurisdiction. This error was not material to any prior period.

The Company believes it is valuable for users of its financial statements to be made aware of the non-GAAP financial information, as such measures are used by management to evaluate the operating performance of the Company’s continuing businesses on a comparable basis and to make operating and strategic decisions. Such non-GAAP measures will also enhance users’ ability to analyze trends in the Company’s business. In addition, the Company uses performance targets based on non-GAAP operating income and diluted earnings per share as a component of the measurement of incentive compensation.

Furthermore, the Warnaco Group is a global company that reports financial information in U.S. dollars in accordance with GAAP. Foreign currency exchange rate fluctuations affect the amounts reported by the Company from translating its foreign revenues and operating results into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results. As a supplement to its reported operating results, the Company presents constant currency financial information, which is a non-GAAP financial measure. The Company uses constant currency information to provide a framework to assess how its businesses performed excluding the effects of changes in foreign currency translation rates. Management believes this information is useful to investors to facilitate comparisons of operating results and better identify trends in the Company’s businesses.

36

To calculate the increase in segment revenues on a constant currency basis, operating results for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

These constant currency net revenues should be viewed in addition to, and not in isolation from, or as a substitute to, the Company’s net revenues calculated in accordance with GAAP. The constant currency information presented in the following table for net revenues may not be comparable to similarly titled measures reported by other companies.

	NET REVENUES ON A CONSTANT CURRENCY BASIS
	(Dollars in thousands)
	Three Months Ended October 1, 2011							Nine Months Ended October 1, 2011
	GAAP		Impact of Foreign			Non-GAAP		GAAP		Impact of Foreign			Non-GAAP
	As Reported		Currency Exchange			Constant Currency		As Reported		Currency Exchange			Constant Currency
By Segment:
Sportswear Group	$	357,935	$	(16,375	)	$	341,560	$	983,695	$	(38,774	)	$	944,921
Intimate Apparel Group		247,880		(9,100	)		238,780		695,317		(23,289	)		672,028
Swimwear Group		39,306		(808	)		38,498		219,657		(3,251	)		216,406
Net revenues	$	645,121	$	(26,283	)	$	618,838	$	1,898,669	$	(65,314	)	$	1,833,355
By Region:
United States	$	241,764	$	—		$	241,764	$	777,552	$	—		$	777,552
Europe		182,265		(14,816	)		167,449		478,827		(29,467	)		449,360
Asia		129,985		(7,001	)		122,984		370,546		(17,523	)		353,023
Mexico, Central and South America		62,848		(2,890	)		59,958		176,698		(12,234	)		164,464
Canada		28,259		(1,576	)		26,683		95,046		(6,090	)		88,956
Total	$	645,121	$	(26,283	)	$	618,838	$	1,898,669	$	(65,314	)	$	1,833,355

Discussion of Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires the Company to use judgment in making certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in its consolidated condensed financial statements and accompanying notes. Critical accounting policies are those that are most important to the portrayal of the Company’s financial condition and results of operations and require difficult, subjective and complex judgments by management in order to make estimates about the effect of matters that are inherently uncertain. During the Nine Months Ended October 1, 2011, there were no significant changes to the Company’s critical accounting policies from those described in the Company’s Annual Report on Form 10-K for Fiscal 2010.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-29 “Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”), which amends Topic 805 on business combinations. ASU 2010-29 clarifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for the Company for business combinations for which the acquisition date is on or after January 2, 2011. In the event that the Company enters into a business combination or a series of business combinations that are deemed to be material for financial reporting purposes, the Company will apply the amendments in ASU 2010-29.

37

During May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 clarifies that the concept that the fair value of an asset is based on its highest and best use is only relevant when measuring the fair value of nonfinancial assets (and therefore would not apply to financial assets or any liabilities) since financial assets have no alternative use. The new guidance specifies that financial assets are measured based on the fair value of an individual security unless an entity manages its market risks and/or counterparty credit risk exposure within a group (portfolio) of financial instruments on a net basis. ASU 2011-4 requires the following new disclosures related to the Company’s assets and liabilities that are measured at and/or disclosed at fair value: (1) the categorization in the fair value hierarchy of all assets and liabilities that are not measured at fair value on the balance sheet but for which the fair value is required to be disclosed (such as the disclosure of the fair value of long-term debt that is recorded at amortized cost on the balance sheet); (2) all, not just significant, transfers between Level 1 and Level 2 fair value measurements; (3) the reason(s), if applicable, why the current use of a nonfinancial asset, that is recorded or disclosed at fair value, differs from its highest and best use; and (4) certain quantitative and qualitative disclosures related to Level 3 fair value measurements. Assets and liabilities of the Company’s defined benefit pension plans (see Note 8 of Notes to Consolidated Condensed Financial Statements) are not subject to any of these new disclosure requirements. The new requirements are effective for the Company for interim and annual periods beginning on or after January 1, 2012 and will be required prospectively upon adoption. The Company does not expect that the adoption of ASU 2011-04 will have a material effect on its financial position, results of operations or cash flows.

During June 2011, the FASB issued ASU 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires the Company to present items of net income and other comprehensive income in a Statement of Comprehensive Income; either in one continuous statement or in two separate, but consecutive, statements of equal prominence. Presentation of components of comprehensive income in the Statement of Stockholders’ Equity will no longer be allowed. The Company will be required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. Earnings-per-share computation will continue to be based on net income. Components of other comprehensive income will be required to be presented either net of the related tax effects or before the related tax effects with one amount reported for the tax effects of all other comprehensive income items. The Company will also be required to present parenthetically on the face of the statement, or to disclose in the footnotes, the tax allocated to each component of other comprehensive income. The new requirements are effective for all interim and annual periods beginning on or after January 1, 2012. Comparative financial statements of prior periods will be presented to conform to the new guidance. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its financial position, results of operations or cash flows.

During September 2011, the FASB issued ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”), which is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to first perform a “qualitative” assessment to determine whether further quantitative impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. An entity can choose to perform the qualitative assessment on none, some or all of its reporting units. Moreover, an entity can bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the impairment test, and then resume performing the qualitative assessment in any subsequent period. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, an entity can choose to early adopt as of the fourth quarter of 2011. The Company is in the process of determining whether to early adopt ASU 2011-08 for Fiscal 2011.

Results of Operations

Statement of Operations (Selected Data)

The following tables summarize the historical results of operations of the Company for the Three and Nine Months Ended October 1, 2011 compared to the Three and Nine Months Ended October 2, 2010. The results of the Company’s discontinued operations are included in “Loss from discontinued operations, net of taxes” for all periods presented.

38

	Three Months						Three Months						Nine Months						Nine Months
	Ended October 1,			% of Net			Ended October 2,			% of Net			Ended October			% of Net			Ended October			% of Net
	2011			Revenues			2010			Revenues			1, 2011			Revenues			2, 2010			Revenues
	(in thousands of dollars)
Net revenues	$	645,121			100.0	%	$	596,761			100.0	%	$	1,898,669			100.0	%	$	1,704,259			100.0	%
Cost of goods sold		365,412			56.6	%		327,736			54.9	%		1,065,552			56.1	%		938,374			55.1	%
Gross profit		279,709			43.4	%		269,025			45.1	%		833,117			43.9	%		765,885			44.9	%
Selling, general and administrative expenses		212,000			32.9	%		198,129			33.2	%		637,491			33.6	%		554,962			32.6	%
Amortization of intangible assets		3,263			0.5	%		3,021			0.5	%		9,548			0.5	%		8,275			0.5	%
Pension income		(310	)		0.0	%		(22	)		0.0	%		(931	)		0.0	%		(65	)		0.0	%
Operating income		64,756			10.0	%		67,897			11.4	%		187,009			9.8	%		202,713			11.9	%
Other income (loss)		1,357						(1,899	)					498						5,651
Interest expense		4,986						2,953						11,142						12,190
Interest income		(986	)					(699	)					(2,542	)					(2,192	)
Income from continuing operations before provision for income taxes and non-controlling interest		59,399						67,542						177,911						187,064
Provision for income taxes		10,770						26,102						39,184						67,285
Income from continuing operations before non-controlling interest		48,629						41,440						138,727						119,779
Income (Loss) from discontinued operations, net of taxes		(4,177	)					57						(4,741	)					(373	)
Net income		44,452						41,497						133,986						119,406
Less: net loss attributable to non-controlling interest		(159	)					—						(159	)					—
Net income attributable to Warnaco Group Inc.	$	44,611					$	41,497					$	134,145					$	119,406

Net Revenues

For the Three and Nine Months Ended October 1, 2011 compared to the Three and Nine Months Ended October 2, 2010, respectively, net revenues increased across all Groups (segments) and within each segment the amount of net revenues increased from both wholesale and retail channels of distribution, except for a decline in net revenues for the Three Months Ended October 1, 2011 in the wholesale channel of the Sportswear Group. In addition, the Company experienced an increase in net revenues in Asia, Europe and in Mexico and Central and South America for the Three and Nine Months Ended October 1, 2011, relative to prior year periods, a decline in net revenues in the U.S. for the Three and Nine Months Ended October 1, 2011, relative to prior year periods, and, in Canada, a decline in net revenues in the Three Months Ended October 1, 2011 but an increase in the Nine Months Ended October 1, 2011, relative to prior year periods. This information is presented in the following tables:

Net revenues by segment were as follows:

	Three Months		Three Months							Nine Months		Nine Months
	Ended		Ended							Ended		Ended
	October 1,		October 2,		Increase		%			October 1,		October 2,		Increase		%
	2011		2010		(Decrease)		Change			2011		2010		(Decrease)		Change
	(in thousands of dollars)
Sportswear Group	$	357,935	$	337,020	$	20,915		6.2	%	$	983,695	$	887,410	$	96,285		10.9	%
Intimate Apparel Group		247,880		223,081		24,799		11.1	%		695,317		616,139		79,178		12.9	%
Swimwear Group		39,306		36,660		2,646		7.2	%		219,657		200,710		18,947		9.4	%
Net revenues	$	645,121	$	596,761	$	48,360		8.1	%	$	1,898,669	$	1,704,259	$	194,410		11.4	%

39

Net revenues by channel of distribution were as follows:

	Three			Three			Nine			Nine
	Months			Months			Months			Months
	Ended			Ended			Ended			Ended
	October			October			October			October
	1, 2011			2, 2010			1, 2011			2, 2010
United States — wholesale
Department stores and independent retailers		9	%		9	%		8	%		11	%
Specialty stores		6	%		6	%		7	%		7	%
Chain stores		7	%		7	%		7	%		8	%
Mass merchandisers		1	%		1	%		2	%		2	%
Membership clubs		3	%		5	%		5	%		6	%
Off price and other		11	%		13	%		11	%		11	%
Total United States — wholesale		37	%		41	%		40	%		45	%
International — wholesale		34	%		35	%		32	%		32	%
Retail (a)		29	%		24	%		28	%		23	%
Net revenues — consolidated		100	%		100	%		100	%		100	%

(a) for the Three Months Ended October 1, 2011 and the Three Months Ended October 2, 2010, 98.5% and 97.6%, respectively, and for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, 98.3% and 97.4%, respectively, of retail net revenues were derived from the Company’s international operations.

Net revenues by geography were as follows:

	Net Revenues													Net Revenues
	Three Months		Three Months											Nine Months		Nine Months
	Ended October		Ended October		Increase /						Constant $ %			Ended October		Ended October		Increase /						Constant $ %
	1, 2011		2, 2010		(Decrease)			% Change			Change (a)			1, 2011		2, 2010		(Decrease)			% Change			Change (a)
	(in thousands of dollars)													(in thousands of dollars)
United States	$	241,764	$	250,039	$	(8,275	)		-3.3	%		-3.3	%	$	777,552	$	782,753	$	(5,201	)		-0.7	%		-0.7	%
Europe		182,265		166,749		15,516			9.3	%		0.4	%		478,827		423,882		54,945			13.0	%		6.0	%
Asia		129,985		101,090		28,895			28.6	%		21.7	%		370,546		281,655		88,891			31.6	%		25.3	%
Mexico, Central and South America		62,848		48,216		14,632			30.3	%		24.4	%		176,698		129,940		46,758			36.0	%		26.6	%
Canada		28,259		30,667		(2,408	)		-7.9	%		-13.0	%		95,046		86,029		9,017			10.5	%		3.4	%
	$	645,121	$	596,761	$	48,360			8.1	%		3.7	%	$	1,898,669	$	1,704,259	$	194,410			11.4	%		7.6	%

(a) constant dollar percent change is a non-GAAP measure. See Non-GAAP Measures, above.

40

The number of retail stores operated by the Company at October 1, 2011, January 1, 2011 and October 2, 2010 was as follows:

	October 1, 2011								January 1, 2011								October 2, 2010
Segments / Brands	Asia		Europe		Americas		Total		Asia		Europe		Americas		Total		Asia		Europe		Americas		Total
Sportswear — Calvin Klein Jeans
Number of Owned Full Price Stores		73		47		19		139		46		41		16		103		40		20		15		75
Number of Owned Outlet Stores		11		44		1		56		10		42		1		53		10		35		1		46
Number of Concession / Shop-in-shop Stores		272		97		—		369		219		87		—		306		224		77		—		301
Total Number of Stores		356		188		20		564		275		170		17		462		274		132		16		422
Intimate Apparel — Calvin Klein Underwear
Number of Owned Full Price Stores		46		23		30		99		39		16		31		86		39		14		31		84
Number of Owned Outlet Stores		8		41		12		61		6		41		18		65		6		40		18		64
Number of Concession / Shop-in-shop Stores		256		429		32		717		176		390		—		566		170		274		—		444
Total Number of Stores		310		493		74		877		221		447		49		717		215		328		49		592
Swimwear — Calvin Klein Swimwear
Number of Owned Full Price Stores		—		—		—		—		—		—		—		—		—		1		—		1
Number of Owned Outlet Stores		—		—		—		—		—		—		—		—		—		2		—		2
Number of Concession / Shop-in-shop Stores		—		191		—		191		—		178		—		178		—		222		—		222
Total Number of Stores		—		191		—		191		—		178		—		178		—		225		—		225
Total Company*
Number of Owned Full Price Stores		119		70		49		238		85		57		47		189		79		35		46		160
Number of Owned Outlet Stores		19		85		13		117		16		83		19		118		16		77		19		112
Number of Concession / Shop-in-shop Stores		528		717		32		1,277		395		655		—		1,050		394		573		—		967
Total Number of Stores		666		872		94		1,632		496		795		66		1,357		489		685		65		1,239
Total Square Footage (thousands)		420.4		486.9		110.8		1018.1		281.4		450.8		123.1		855.2		267.7		367.8		120.5		756.0

* In addition to the stores above, the Company operated one Calvin Klein Jeans on-line store, one Calvin Klein Underwear on-line store and one Speedo on-line store as of October 1, 2011, January 1, 2011 and October 2, 2010.

The effect of fluctuations in foreign currency exchange rates on net revenues was an increase of $26.3 million for the Three Months Ended October 1, 2011 compared to the Three Months Ended October 2, 2010 and an increase of $65.3 million for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010. See Overview, above.

During the Three and Nine Months Ended October 1, 2011, the Company’s top five customers accounted for $124.9 million (19.4% of Company net revenue) and $381.3 million (20.1% of Company net revenue), respectively, as compared to $121.3 million (20% of Company net revenue) and $367.8 million (22% of Company net revenue), respectively, for the Three and Nine Months Ended October 2, 2010. During the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010, no one customer accounted for 10% or more of the Company’s net revenues.

Sportswear Group

Sportswear Group net revenues were as follows:

	Three Months		Three Months								Nine Months		Nine Months
	Ended		Ended								Ended		Ended
	October 1,		October 2,		Increase			%			October 1,		October 2,		Increase			%
	2011		2010		(Decrease)			Change			2011		2010		(Decrease)			Change
	(in thousands of dollars)
Calvin Klein Jeans	$	198,311	$	206,750	$	(8,439	)		-4.1	%	$	524,905	$	525,659	$	(754	)		-0.1	%
Chaps		54,842		56,455		(1,613	)		-2.9	%		155,064		152,406		2,658			1.7	%
Sportswear wholesale		253,153		263,205		(10,052	)		-3.8	%		679,969		678,065		1,904			0.3	%
Calvin Klein Jeans retail		104,782		73,815		30,967			42.0	%		303,726		209,345		94,381			45.1	%
Sportswear Group (a)	$	357,935	$	337,020	$	20,915			6.2	%	$	983,695	$	887,410	$	96,285			10.9	%

(a) Includes net revenues of $47.6 million and $41.0 million for the Three Months Ended October 1, 2011 and the Three Months Ended October 2, 2010, respectively, and $118.9 million and $98.6 million for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively, related to the Calvin Klein accessories business in Europe, Asia, Canada and in Mexico and Central and South America.

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Sportswear Group net revenues increased $20.9 million to $357.9 million for the Three Months Ended October 1, 2011 from $337.0 million for the Three Months Ended October 2, 2010. Sportswear Group net revenues from international operations increased $39.0 million and from domestic operations decreased $18.1 million. The increase in international net revenues includes a $16.4 million increase due to the favorable effect of fluctuations in certain foreign currency exchange rates. See Overview, above.

41

Net revenues from Calvin Klein Jeans increased $22.5 million overall. Wholesale sales of Calvin Klein Jeans decreased $8.4 million, primarily due to decreases of $16.0 million in the U.S. and $6.0 million in Europe, partially offset by increases of $9.5 million in Mexico, Central and South America and $4.4 million in Asia. The decreases and increases in wholesale net revenues were primarily due (in constant currency) to the following:

(i) the decline in the U.S. was primarily due to decreased sales to department stores, which is reflective of weakness in the women’s business, and a decrease in sales to membership clubs, which reflects a weakness in both the men’s and women’s businesses. Those decreases were partially offset by an increase in sales to outlets and the off-price channel of both men’s and women’s products;

(ii) the decline in Europe was primarily due to decreased sales to department stores, independent retailers and distributors, including the conversion of a portion of the Company’s wholesale business to retail in the fourth quarter of Fiscal 2010 when the Company acquired the business of its distributor of Calvin Klein products in Italy;

(iii) the increase in Mexico and Central and South America, was primarily due to an increase in sales to department stores and specialty stores, including an increase in new product offerings and increased penetration within existing customers; and

(iv) a net increase in Asia primarily due to (a) the expansion of the distribution network in the People’s Republic of China, partially offset by (b) a decrease in sales in other regions of Asia and (c) the conversion of the Company’s wholesale businesses in Taiwan (January 2011) and India (July 2011) to retail businesses as a result of the acquisition of distributors’ businesses in those regions.

Net revenues from Calvin Klein Jeans retail sales increased $30.9 million, driven primarily by increases of $13.5 million in Asia and $16.4 million in Europe. The increase in retail net revenues was primarily due (in constant currency) to a 0.4% increase in comparable store sales ($63.6 million for the Three Months Ended October 1, 2011 and $63.3 million for the Three Months Ended October 2, 2010), coupled with the addition of new stores opened by the Company and new stores acquired by the Company (including stores acquired in Taiwan during the first quarter of Fiscal 2011, in India during the third quarter of Fiscal 2011 and in Italy during the fourth quarter of Fiscal 2010).

Net revenues from Chaps decreased $1.6 million, primarily due to a $1.9 million decline in the U.S., which reflects a decrease in sales to the off-price channel and an increase in the level of customer allowances. Those decreases were partially offset by an increase in sales to chain stores in the U.S.

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Sportswear Group net revenues increased $96.3 million to $983.7 million for the Nine Months Ended October 1, 2011 from $887.4 million for the Nine Months Ended October 2, 2010. Sportswear Group net revenues from international operations increased $125.2 million and from domestic operations decreased $28.9 million. The increase in international net revenues includes a $38.8 million increase due to the favorable effect of fluctuations in certain foreign currency exchange rates. See Overview, above.

Net revenues from Calvin Klein Jeans increased $93.6 million overall. Wholesale sales of Calvin Klein Jeans decreased $0.8 million (including a $27.3 million decline in the U.S., partially offset by increases of $26.5 million from international operations). The increase in international wholesale net revenues was primarily driven by increases of $26.5 million in Mexico and Central and South America and $10.3 million in Asia, partially offset by a decrease of $12.4 million in Europe and was primarily due (in constant currency) to the following:

(i) an increase in sales in Mexico and Central and South America to department and specialty stores, including an increase in new product offerings and increased penetration within existing customers; and

(ii) a net increase in Asia primarily due to (a) the expansion of the distribution network in the People’s Republic of China, partially offset by (b) a decline in sales in other regions of Asia and (c) the conversion of the Company’s wholesale businesses in the People’s Republic of China and Singapore (in the second quarter of Fiscal 2010), Taiwan (January 2011) and India (July 2011) to retail businesses as a result of the acquisition of distributors’ businesses in those regions.

42

Those increases were partially offset by:

(iii) a decrease in Europe primarily due to decreased sales of Calvin Klein Jeans and accessories to department, specialty and independent stores and distributors, due in part to the conversion of a portion of the Company’s wholesale businesses in Italy to retail businesses, as a result of the acquisition of the Company’s Italian distributor of Calvin Klein products in the fourth quarter of Fiscal 2010. In addition, the Company believes that deteriorating macro-economic conditions in southern Europe negatively impacted net revenues; and

(iv) a decrease in the U.S. primarily due to decreased sales to department stores and membership clubs, coupled with an increase in the level of customer allowances, both of which are reflective of weakness in the men’s and women’s businesses. Those decreases were partially offset by an increase in sales to the off-price channel of men’s products.

Net revenues from Calvin Klein Jeans retail sales increased $94.4 million (including increases of $45.1 million in Asia, $43.2 million in Europe and $6.0 million in Mexico, Central and South America). The increase in retail net revenues was primarily due (in constant currency) to a 3.7% increase in comparable store sales ($172.1 million for the Nine Months Ended October 1, 2011 and $165.9 million for the Nine Months Ended October 2, 2010), coupled with the addition of new stores opened by the Company and new stores acquired by the Company (including stores acquired in the People’s Republic of China and Singapore in the second quarter of Fiscal 2010, in Taiwan during the first quarter of Fiscal 2011, in India during the third quarter of Fiscal 2011 and in Italy during the fourth quarter of Fiscal 2010).

Net revenues from Chaps increased $2.7 million. The increase primarily reflects an increase in sales in Mexico due primarily to new product offerings and increased penetration within existing department store and membership club customers and, in Canada, increased sales to department stores. Those increases were partially offset by a decrease in net revenues in the U.S. primarily due to an increase in the level of customer allowances, partially offset by increased sales to customers in chain stores and a decrease in sales to the off-price channel.

Intimate Apparel Group

Intimate Apparel Group net revenues were as follows:

	Three Months		Three Months							Nine Months		Nine Months
	Ended		Ended							Ended		Ended
	October 1,		October 2,		Increase		%			October 1,		October 2,		Increase		%
	2011		2010		(Decrease)		Change			2011		2010		(Decrease)		Change
	(in thousands of dollars)
Calvin Klein Underwear	$	130,769	$	119,289	$	11,480		9.6	%	$	346,588	$	314,841	$	31,747		10.1	%
Core Intimates		42,220		40,488		1,732		4.3	%		139,932		131,881		8,051		6.1	%
Intimate Apparel wholesale		172,989		159,777		13,212		8.3	%		486,520		446,722		39,798		8.9	%
Calvin Klein Underwear retail		74,891		63,304		11,587		18.3	%		208,797		169,417		39,380		23.2	%
Intimate Apparel Group	$	247,880	$	223,081	$	24,799		11.1	%	$	695,317	$	616,139	$	79,178		12.9	%

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Intimate Apparel Group net revenues increased $24.8 million to $247.9 million for the Three Months Ended October 1, 2011 from $223.1 million for the Three Months Ended October 2, 2010. Intimate Apparel Group net revenues from international operations increased $15.5 million and from domestic operations increased $9.3 million. The increase in international net revenues includes a $9.1 million increase due to the favorable effect of fluctuations in foreign currency exchange rates. See Overview, above.

Net revenues from Calvin Klein Underwear increased $23.1 million overall and reflects the successful global launch of the ck one product line of Calvin Klein underwear for men and women during the first quarter of Fiscal 2011 and sales of the Calvin Klein X men’s product (which launched during the second and third quarters of Fiscal 2010). Calvin Klein Underwear wholesale sales increased $11.5 million, reflecting increases of $4.6 million from international operations and an increase of $6.9 million in the U.S. The increase in international wholesale net revenue was primarily driven by increases of $3.2 million in Asia and $2.0 million in Mexico and Central and South America, partially offset by a decline of $1.0 million in Canada and was primarily due (in constant currency) to the following:

(i) in Asia primarily due to (a) the expansion of the distribution network in the People’s Republic of China and other regions of Asia, partially offset by (b) the conversion of the Company’s wholesale businesses in Taiwan and India to retail businesses as a result of the acquisition of distributors’ businesses in those regions in January 2011 (Taiwan) and July 2011 (India);

43

(ii) in Mexico and Central and South America, primarily due to increased sales to department stores, including an increase in new product offerings and increased penetration within existing customers;

(iii) in Canada, a decrease in sales to membership clubs.

The increase in net revenues in the U.S. primarily resulted from increased sales volume in the off-price and membership club channels of men’s products.

Net revenues from Calvin Klein Underwear retail sales increased $11.6 million (primarily related to increases of $7.7 million in Asia and $3.8 million in Europe). The increase in net revenues was primarily due (in constant currency) to the addition of new stores opened by the Company and acquired by the Company (including stores acquired in Taiwan during the first quarter of Fiscal 2011, in India during the third quarter of Fiscal 2011 and in Italy in the fourth quarters of Fiscal 2010) and to a 2.6% increase in comparable store sales ($55.6 million for the Three Months Ended October 1, 2011 and $54.2 million for the Three Months Ended October 2, 2010).

Net revenues from Core Intimates increased $1.7 million. The increase primarily reflects an increase in sales in the U.S. primarily due to larger new product launches during the Three Months Ended October 1, 2011 as well as higher sales volumes in the department store, chain store and off-price channels.

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Intimate Apparel Group net revenues increased $79.2 million to $695.3 million for the Nine Months Ended October 1, 2011 from $616.1 million for the Nine Months Ended October 2, 2010. Intimate Apparel Group net revenues from international operations increased $66.2 million and from domestic operations increased $13.0 million. The increase in international net revenues includes a $23.3 million increase due to the favorable effect of fluctuations in foreign currency exchange rates. See Overview, above.

Net revenues from Calvin Klein Underwear increased $71.1 million overall and reflects the successful global launch of the ck one product line of Calvin Klein underwear for men and women during the first quarter of Fiscal 2011. Calvin Klein Underwear wholesale sales increased $31.7 million, reflecting increases of $26.7 million from international operations and an increase of $5.0 million in the U.S. The increase in international wholesale net revenue was primarily driven by increases of $9.0 million in Europe, $8.6 million in Mexico and Central and South America and $7.5 million in Asia and was primarily due (in constant currency) to the following:

(i) in Europe, primarily due to increased sales to customers in department stores and in the off-price channel. In addition, the Company believes that deteriorating macro-economic conditions in southern Europe negatively impacted net revenues;

(ii) in Mexico and Central and South America, primarily due to increased sales to department stores, membership clubs and specialty stores, including an increase in new product offerings and increased penetration within existing customers;

(iii) in Asia primarily due to (a) the expansion of the distribution network in the People’s Republic of China and other regions of Asia, partially offset by (b) the conversion of the Company’s wholesale businesses in the People’s Republic of China and Singapore (in the second quarter of Fiscal 2010), Taiwan (January 2011) and India (July 2011) to retail businesses as a result of the acquisition of distributors’ businesses in those regions; and

(iv) in the U.S. primarily resulting from increased sales volume of men’s products in the department store, off-price, specialty and outlet channels, partially offset by a decrease in sales of women’s products in membership clubs and department stores and an increase in customer allowances.

Net revenues from Calvin Klein Underwear retail sales increased $39.4 million (primarily related to increases of $25.7 million in Asia and $11.4 million in Europe). The increase in net revenues was primarily due (in constant currency) to the addition of new stores opened by the Company and acquired by the Company (including stores acquired in the People’s Republic of China and Singapore during the second quarter of Fiscal 2010, in Taiwan during the first quarter of Fiscal 2011, in India during the third quarter of Fiscal 2011 and in Italy in the fourth quarters of Fiscal 2010) and to a 5.1% increase in comparable store sales ($145.1 million for the Nine Months Ended October 1, 2011 and $138.1 million for the Nine Months Ended October 2, 2010).

44

Net revenues from Core Intimates increased $8.1 million. The increase primarily reflects an increase in sales in the U.S. primarily due to larger new product launches during the Nine Months Ended October 1, 2011 as well as higher sales volumes in membership clubs, chain stores and the off-price channel.

Swimwear Group

Swimwear Group net revenues were as follows:

	Three Months		Three Months							Nine Months		Nine Months
	Ended		Ended							Ended		Ended
	October 1,		October 2,		Increase		%			October 1,		October 2,		Increase		%
	2011		2010		(Decrease)		Change			2011		2010		(Decrease)		Change
	(in thousands of dollars)
Speedo	$	29,594	$	29,325	$	269		0.9	%	$	177,439	$	165,897	$	11,542		7.0	%
Calvin Klein		3,141		1,759		1,382		78.6	%		26,284		20,412		5,872		28.8	%
Swimwear wholesale		32,735		31,084		1,651		5.3	%		203,723		186,309		17,414		9.3	%
Swimwear retail (a)		6,571		5,576		995		17.8	%		15,934		14,401		1,533		10.6	%
Swimwear Group	$	39,306	$	36,660	$	2,646		7.2	%	$	219,657	$	200,710	$	18,947		9.4	%

(a) includes $4.5 million and $3.3 million for the Three Months Ended October 1, 2011 and the Three Months Ended October 2, 2010, respectively, and $9.4 million and $7.3 million for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively, related to Calvin Klein retail swimwear.

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Swimwear Group net revenues increased $2.7 million to $39.3 million for the Three Months Ended October 1, 2011 from $36.6 million for the Three Months Ended October 2, 2010. Swimwear Group net revenues from international operations increased $2.1 million and from domestic operations increased $0.6 million. The increase in international net revenues includes a $0.8 million increase due to the favorable effect of fluctuations in foreign currency exchange rates. See Overview, above.

Net revenues from Speedo increased $0.3 million, primarily in the U.S., related to increased sales to membership clubs and mass merchandisers, partially offset by a decrease in sales to team dealers and sporting goods stores.

Net revenues from Calvin Klein swimwear increased $2.4 million, primarily related to increases in sales to retail outlet stores, partially offset by a decrease in sales to wholesale department and specialty stores in Europe.

The increase in net revenues from Swimwear retail included a 13.6% increase in comparable store sales ($3.8 million for the Three Months Ended October 1, 2011 and $3.3 million for the Three Months Ended October 2, 2010).

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Swimwear Group net revenues increased $18.9 million to $219.6 million for the Nine Months Ended October 1, 2011 from $200.7 million for the Nine Months Ended October 2, 2010. Swimwear Group net revenues from international operations increased $8.3 million and from domestic operations increased $10.6 million. The increase in international net revenues includes a $3.3 million increase due to the favorable effect of fluctuations in foreign currency exchange rates. See Overview, above.

Net revenues from Speedo increased $11.5 million, which primarily represented an increase of $9.2 million in the U.S., primarily due to increased sales to membership clubs, mass merchandisers and specialty stores, partially offset by a decrease in sales to team dealers. In Canada, net revenues increased $1.9 million, primarily due to increased sales to membership clubs.

Net revenues from Calvin Klein swimwear increased $7.4 million, mainly in wholesale sales, primarily due, in the U.S., to increased sales to membership clubs and department stores. In Europe, net revenues increased primarily related to increases in wholesale sales to department and specialty stores and retail outlet stores.

The increase in net revenues from Swimwear retail included a 4.9% increase in comparable store sales ($7.5 million for the Nine Months Ended October 1, 2011 and $7.1 million for the Nine Months Ended October 2, 2010).

45

Gross Profit

Gross profit was as follows:

								% of
	Three Months		% of Brand			Three Months		Brand			Nine Months					Nine Months
	Ended October 1,		Net			Ended October 2,		Net			Ended October 1,		% of Brand			Ended October 2,		% of Brand
	2011		Revenues			2010		Revenues			2011		Net Revenues			2010		Net Revenues
											(in thousands of dollars)
Sportswear Group	$	148,677		41.5	%	$	144,892		43.0	%	$	419,639		42.7	%	$	386,458		43.5	%
Intimate Apparel Group		117,164		47.3	%		111,819		50.1	%		333,315		47.9	%		308,866		50.1	%
Swimwear Group		13,868		35.3	%		12,314		33.6	%		80,163		36.5	%		70,561		35.2	%
Total gross profit	$	279,709		43.4	%	$	269,025		45.1	%	$	833,117		43.9	%	$	765,885		44.9	%

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Gross profit was $279.7 million, or 43.4% of net revenues, for the Three Months Ended October 1, 2011 compared to $269.0 million, or 45.1% of net revenues, for the Three Months Ended October 2, 2010. The $10.7 million (4.0% ) increase in gross profit was primarily generated from the Company’s international retail businesses and is reflective of increased net revenues (see above). Gross profit for the Three Months Ended October 1, 2011 includes an increase of $9.9 million due to the favorable effects of foreign currency fluctuations.

Sportswear Group gross profit increased $3.8 million, and gross margin decreased 150 basis points, for the Three Months Ended October 1, 2011 compared to the Three Months Ended October 2, 2010, reflecting a $16.4 million increase in international operations, partially offset by a $12.6 million decrease in the domestic business. The decline in gross margin reflects a decrease in domestic gross margin (primarily related to an increase in product costs, the effect of an increase in the level of customer allowances and an unfavorable sales mix) and a decrease in international gross margins (primarily related to an unfavorable sales mix, an increase in promotional discounts and an increase in product costs in Europe, partially offset by an increase in sales volume, sales price and a favorable sales mix in Asia and in Mexico and Central and South America).

Intimate Apparel Group gross profit increased $5.4 million and gross margin decreased 280 basis points for the Three Months Ended October 1, 2011 compared to the Three Months Ended October 2, 2010 reflecting a $6.7 million increase in international operations, partially offset by a $1.3 million decrease in the domestic business. The decline in gross margin primarily reflects the effect of an increase in product costs in the U.S. and European businesses, an increase in the level of customer allowances (in Europe) and an unfavorable sales mix in the U.S. and Europe, partially offset by an increase in sales volume and a favorable sales mix in Asia and in Mexico, Central and South America.

Swimwear Group gross profit increased $1.6 million and gross margin increased 170 basis points for the Three Months Ended October 1, 2011 compared to the Three Months Ended October 2, 2010, reflecting a $0.7 million increase in international operations and a $0.9 million increase in the domestic business. The increase in gross profit and gross margin primarily reflects an increase in sales volume and lower production costs, which more than offset the unfavorable sales mix.

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Gross profit was $833.1 million, or 43.9% of net revenues, for the Nine Months Ended October 1, 2011 compared to $765.9 million, or 44.9% of net revenues, for the Nine Months Ended October 2, 2010. The $67.2 million (8.8% ) increase in gross profit was primarily generated from the Company’s international retail businesses and is reflective of increased net revenues (see above), partially offset by increased production costs. Gross profit for the Nine Months Ended October 1, 2011 includes an increase of $24.7 million due to the favorable effects of foreign currency fluctuations.

Sportswear Group gross profit increased $33.2 million, and gross margin decreased 80 basis points, for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010, reflecting a $63.3 million increase in international operations, partially offset by a $30.1 million decrease in the domestic business. The decline in gross margin primarily reflects a decrease in domestic gross margin (primarily related to an increase in product costs, the effect of an increase in the level of customer allowances and an unfavorable sales mix), while international gross margins overall were substantially unchanged (primarily related to an increase in sales volume, sales price and a favorable sales mix in Asia and in Mexico and Central and South America, offset by an unfavorable sales mix, an increase in promotional discounts and an increase in product costs in Europe).

Intimate Apparel Group gross profit increased $24.4 million and gross margin decreased 220 basis points for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010 reflecting a $32.1 million increase in international operations, partially offset by a $7.7 million decrease in the domestic business. The decline in gross margin primarily reflects an increase in product costs and an unfavorable sales mix in the U.S. and European businesses, the effect of an increase in the level of customer allowances in Europe and in Mexico, Central and South America, partially offset by the effect of an increase in sales volume, sales price and a favorable sales mix in Asia and in Mexico and Central and South America.

46

Swimwear Group gross profit increased $9.6 million and gross margin increased 130 basis points for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010, reflecting a $2.9 million increase in international operations and a $6.7 million increase in the domestic business. The increase in gross profit and gross margin primarily reflects an increase in sales volume and lower production costs, which more than offset the unfavorable sales mix.

Selling, General and Administrative Expenses

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Selling, general & administrative (“SG&A”) expenses increased $13.9 million to $212.0 million (32.9% of net revenues) for the Three Months Ended October 1, 2011 compared to $198.1 million (33.2% of net revenues) for the Three Months Ended October 2, 2010. SG&A for the Three Months Ended October 1, 2011 includes an increase of $12.7 million due to the unfavorable effects of foreign currency fluctuations, including a total of $2.0 million of additional expense due to foreign exchange losses noted below in administrative expenses for the Sportswear Group and the Intimate Apparel Group, net of a reduction of administrative expense due to foreign exchange gains for Corporate activities.

Sportswear Group SG&A increased $20.6 million to $104.7 million (16.2% of net revenues) for the Three Months Ended October 1, 2011 compared to $84.1 million (14.1% of net revenues) for the Three Months Ended October 2, 2010. The increase in Sportswear Group SG&A includes:

(i) an increase of $14.4 million in selling and distribution expenses primarily associated with the opening and acquisition of additional retail stores in Europe, Asia, Canada and in Mexico and Central and South America and new warehouses in the Netherlands and the People’s Republic of China;

(ii) a decrease of $0.4 million in marketing expenses, primarily related to advertising expense for Calvin Klein X brand of jeans products in 2010; and

(iii) an increase in administrative expenses of $6.6 million, primarily related to an increase in restructuring charges of $3.5 million (see Note 5 of Notes to Consolidated Condensed Financial Statements) and additional expense due to foreign exchange losses ($3.8 million), partially offset by a decrease in costs related to acquisitions ($1.5 million).

Intimate Apparel Group SG&A increased $6.6 million to $78.0 million (12.1% of net revenues) for the Three Months Ended October 1, 2011 compared to $71.4 million (12.0% of net revenues) for the Three Months Ended October 2, 2010. The increase in Intimate Apparel Group SG&A includes:

(i) an increase of $6.7 million in selling and distribution expenses primarily associated with the opening and acquisition of additional retail stores in Europe, Asia, Canada and in Mexico and Central and South America and new warehouses in the Netherlands and the People’s Republic of China;

(ii) a decrease of $2.9 million in marketing expenses, primarily related to the global launch of the ck one product line of men’s and women’s underwear during the first quarter of Fiscal 2011 compared to expenditures related to the Company’s Calvin Klein X product line of men’s underwear, which was launched during the second and third quarters of Fiscal 2010 and the Envy product line of women’s underwear, which was launched in the third and fourth quarters of Fiscal 2010; and

(iii) an increase in administrative expenses of $2.8 million, primarily related to an increase in restructuring charges of $0.5 million (see Note 5 of Notes to Consolidated Condensed Financial Statements), additional expense due to foreign exchange losses ($1.1 million) and other general administrative expenses ($1.2 million).

Swimwear Group SG&A increased $1.2 million to $17.3 million (2.7% of net revenues) for the Three Months Ended October 1, 2011 compared to $16.1 million (2.7% of net revenues) for the Three Months Ended October 2, 2010. The increase in Swimwear Group SG&A primarily includes:

(i) an increase of $0.3 million in marketing expenses, primarily related to increased advertising in the U.S.; and

(ii) an increase in administrative expenses of $0.8 million, primarily related to an increase in restructuring charges of $1.2 million (see Note 5 of Notes to Consolidated Condensed Financial Statements), partially offset by decreases in other general administrative expenses ($0.4 million).

47

In addition, SG&A related to corporate activities that are not allocated to the three segments decreased $14.5 million to $5.1 million (0.8% of net revenues) for the Three Months Ended October 1, 2011 compared to $19.6 million (3.3% of net revenues) for the Three Months Ended October 2, 2010. The decrease in Corporate SG&A includes decreases in amounts accrued for performance-based employee cash compensation ($8.2 million), salaries and wages ($1.9 million), information technology expense ($1.3 million), other general administrative and legal fees ($1.1 million) and a reduction of expense due to foreign exchange gains ($2.9 million), partially offset by an increase in amounts recorded for stock-based compensation expense ($0.6 million) and restructuring charges ($0.3 million) (see Note 5 of Notes to Consolidated Condensed Financial Statements).

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

SG&A expenses increased $82.5 million to $637.5 million (33.6% of net revenues) for the Nine Months Ended October 1, 2011 compared to $555.0 million (32.6% of net revenues) for the Nine Months Ended October 2, 2010. SG&A for the Nine Months Ended October 1, 2011 includes an increase of $29.7 million due to the unfavorable effects of foreign currency fluctuations, including a total of $6.0 million of additional expense due to foreign exchange losses noted below in administrative expenses for the Sportswear Group, the Intimate Apparel Group and for Corporate activities.

Sportswear Group SG&A increased $67.2 million to $322.5 million (17.0% of net revenues) for the Nine Months Ended October 1, 2011 compared to $255.3 million (15.0% of net revenues) for the Nine Months Ended October 2, 2010. The increase in Sportswear Group SG&A includes:

(i) an increase of $51.0 million in selling and distribution expenses primarily associated with the opening and acquisition of additional retail stores in Europe, Asia, Canada and in Mexico and Central and South America and new warehouses in the Netherlands and the People’s Republic of China, partially offset by the elimination of duplicative costs associated with consolidation of the distribution centers in Europe during Fiscal 2010;

(ii) an increase of $3.0 million in marketing expenses, primarily related to a contractual increase in advertising costs due to increased sales; and

(iii) an increase in administrative expenses of $13.2 million, primarily related to an increase in restructuring charges of $5.9 million (see Note 5 of Notes to Consolidated Condensed Financial Statements), additional expense due to foreign exchange losses ($4.3 million), salaries and wages ($2.0 million) and other general administrative expenses ($2.7 million), partially offset by a decrease in acquisition expense ($1.7 million).

Intimate Apparel Group SG&A increased $27.0 million to $228.5 million (12.0% of net revenues) for the Nine Months Ended October 1, 2011 compared to $201.5 million (11.8% of net revenues) for the Nine Months Ended October 2, 2010. The increase in Intimate Apparel Group SG&A includes:

(i) an increase of $23.1 million in selling and distribution expenses primarily associated with the opening and acquisition of additional retail stores in Europe, Asia, Canada and in Mexico and Central and South America and new warehouses in the Netherlands and the People’s Republic of China, partially offset by the elimination of duplicative costs associated with consolidation of the distribution centers in Europe during Fiscal 2010;

(ii) a decrease of $1.1 million in marketing expenses, primarily related to the global launch of the ck one product line of men’s and women’s underwear during the first quarter of Fiscal 2011 compared to expenditures related to the Company’s Calvin Klein X product line of men’s underwear, which was launched during the second and third quarters of Fiscal 2010 and the Calvin Klein Envy product line of women’s underwear, which was launched during the third and fourth quarters of Fiscal 2010; and

(iii) an increase in administrative expenses of $5.0 million, primarily related to increases in restructuring charges of $2.8 million (see Note 5 of Notes to Consolidated Condensed Financial Statements), wages and salaries ($2.4 million) and other general administrative expenses ($2.3 million) and additional expense due to foreign exchange losses ($0.3 million), partially offset by a gain of $2.0 million on the sale of the Company’s Nancy Ganz trademarks in Australia and New Zealand during the Nine Months Ended October 1, 2011 (see Note 6 of Notes to Consolidated Condensed Financial Statements) and a decrease in amounts recorded for stock-based compensation expense ($0.8 million).

48

Swimwear Group SG&A increased $5.3 million to $58.7 million (3.1% of net revenues) for the Nine Months Ended October 1, 2011 compared to $53.4 million (3.2% of net revenues) for the Nine Months Ended October 2, 2010. The increase in Swimwear Group SG&A includes:

(i) an increase of $0.6 million in selling and distribution expenses primarily associated with the opening and acquisition of additional retail stores in Europe, Asia, Canada and Mexico and Central and South America;

(ii) an increase of $1.9 million in marketing expenses, primarily related to increased advertising in the U.S.; and

(iii) an increase in administrative expenses of $2.8 million, primarily related to an increase in restructuring charges of $4.5 million (see Note 5 of Notes to Consolidated Condensed Financial Statements), partially offset by a decrease in other general administrative expenses ($1.7 million).

In addition, SG&A related to corporate activities that are not allocated to the three segments decreased $17.0 million to $27.8 million (1.5% of net revenues) for the Nine Months Ended October 1, 2011 compared to $44.8 million (2.6% of net revenues) for the Nine Months Ended October 2, 2010. The decrease in Corporate SG&A primarily includes decreases in amounts accrued for performance-based employee cash compensation ($16.0 million), information technology expense ($1.4 million) and other general administrative and legal fees ($2.3 million) and additional expense due to foreign exchange losses ($1.4 million), partially offset by an increase in amounts recorded for stock-based compensation expense ($4.1 million).

Amortization of Intangible Assets

Amortization of intangible assets was $3.3 million for the Three Months Ended October 1, 2011 compared to $3.0 million for the Three Months Ended October 2, 2010 and $9.5 million for the Nine Months Ended October 1, 2011 compared to $8.3 million for the Nine Months Ended October 2, 2010 (see Note 13 of Notes to Consolidated Condensed Financial Statements — Intangible Assets and Goodwill).

Pension Income

Pension income was $0.3 million for the Three Months Ended October 1, 2011 compared to pension income of $0.02 million for the Three Months Ended October 2, 2010 and $0.9 million for the Nine Months Ended October 1, 2011 compared to pension income of $0.07 million for the Nine Months Ended October 2, 2010. See Liquidity and Capital Resources — Pension Plan, below.

Operating Income

The following table presents operating income by Group (segment):

	Three Months			Three Months			Nine Months			Nine Months
	Ended October 1,			Ended October 2,			Ended October 1,			Ended October 2,
	2011			2010			2011			2010
	(in thousands of dollars)
Sportswear Group (a)	$	34,129		$	51,309		$	88,686		$	123,834
Intimate Apparel Group (a)		38,620			39,939			103,627			106,363
Swimwear Group (a)		(3,352	)		(3,794	)		21,421			17,121
Corporate/other expenses (a) (b)		(4,641	)		(19,557	)		(26,725	)		(44,605	)
Operating income (c) (d) (e)	$	64,756		$	67,897		$	187,009		$	202,713
Operating income as a percentage of net revenue		10.0	%		11.4	%		9.8	%		11.9	%

(a)

reflects the allocation of $2.5 million of corporate expenses to the Sportswear Group ($1.7 million), Intimate Apparel Group ($1.1 million) and Swimwear Group (($0.3) million), respectively, during the Three Months Ended October 2, 2010 and $7.4 million of corporate expenses to the Sportswear Group ($5.1 million), Intimate Apparel Group ($2.8 million) and Swimwear Group (($0.5) million), respectively, during the Nine Months Ended October 2, 2010 to conform to the presentation for the Three and Nine Months Ended October 1, 2011, respectively (see Overview, above).

(b)

the decrease in corporate/other expenses for the Three and Nine Months Ended October 1, 2011 compared to the Three and Nine Months Ended October 2, 2010 was primarily related to a reduction in amounts accrued for performance-based employee cash compensation and other employee compensation and benefits and fluctuations in foreign currency exchange rates.

49

(c)	includes approximately $7.5 million and $1.7 million for the Three Months Ended October 1, 2011 and the Three Months Ended October 2, 2010, respectively, and approximately $19.0 million and $3.8 million for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively, related to restructuring expenses. See Note 5 of Notes to Consolidated Condensed Financial Statements.
(d)	includes a gain of $2.0 million for the Nine Months Ended October 1, 2011 related to the sale and assignment of the Company’s Nancy Ganz trademarks in Australia and New Zealand to the Company’s former licensee for cash consideration of $2.0 million.
(e)	includes a gain of $1.6 million for the Nine Months Ended October 1, 2011 related to recovery of an insurance claim related to a fire in a warehouse in Peru.

The effect of fluctuations in the U.S. dollar relative to certain functional currencies where the Company conducts certain of its operations for the Three Months Ended October 1, 2011 compared to the Three Months Ended October 2, 2010 resulted in a $3.2 million decrease in operating income and for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010 resulted in a $6.3 million decrease in operating income (see Overview, above).

Sportswear Group

Sportswear Group operating income was as follows:

	Three Months						Three Months					Nine Months					Nine Months		% of
	Ended October 1,			% of Brand Net			Ended October 2,		% of Brand Net			Ended October 1,		% of Brand			Ended October 2,		Brand Net
	2011 (b)			Revenues			2010 (b)		Revenues			2011 (b)		Net Revenues			2010 (b)		Revenues
	(in thousands of dollars)
Calvin Klein Jeans	$	31,736			16.0	%	$	40,485		19.6	%	$	67,241		12.8	%	$	92,182		17.5	%
Chaps		4,988			9.1	%		6,986		12.4	%		14,731		9.5	%		21,804		14.3	%
Sportswear wholesale		36,724			14.5	%		47,471		18.0	%		81,972		12.1	%		113,986		16.8	%
Calvin Klein Jeans retail		(2,595	)		-2.5	%		3,838		5.2	%		6,714		2.2	%		9,848		4.7	%
Sportswear Group (a)	$	34,129			9.5	%	$	51,309		15.2	%	$	88,686		9.0	%	$	123,834		14.0	%

(a)	includes restructuring charges of $3.5 million and $0 for the Three Months Ended October 1, 2011 and October 2, 2010, respectively, and $7.2 million and $0.4 million for the Nine Months Ended October 1, 2011 and October 2, 2010, respectively.
(b)	includes an allocation of shared services expenses by brand as detailed below:

	Three Months		Three Months		Nine Months		Nine Months
	Ended October		Ended October		Ended October		Ended October
	1, 2011		2, 2010		1, 2011		2, 2010
	(in thousands of dollars)
Calvin Klein Jeans	$	4,447	$	4,492	$	13,219	$	13,511
Chaps		1,982		2,054		5,906		6,077
Sportswear wholesale		6,429		6,546		19,125		19,588
Calvin Klein Jeans retail		541		389		1,688		1,151
Sportswear Group	$	6,970	$	6,935	$	20,813	$	20,739

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Sportswear Group operating income decreased $17.2 million, or 33.5%, as reflected in the table above. Sportswear Group operating income includes a decrease of $2.0 million related to fluctuations in foreign currency exchange rates. The decrease in Sportswear Group operating income reflects the changes in gross profit and SG&A described above.

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Sportswear Group operating income decreased $35.2 million, or 28.4%, as reflected in the table above. Sportswear Group operating income includes a decrease of $2.1 million related to fluctuations in foreign currency exchange rates. The decrease in Sportswear Group operating income reflects the changes in gross profit and SG&A described above.

50

Intimate Apparel Group

Intimate Apparel Group operating income was as follows:

	Three Months					Three Months					Nine Months					Nine Months		% of
	Ended October 1,		% of Brand			Ended October 2,		% of Brand Net			Ended October 1,		% of Brand			Ended October 2,		Brand Net
	2011 (b)		Net Revenues			2010 (b)		Revenues			2011 (b)		Net Revenues			2010 (b)		Revenues
	(in thousands of dollars)
Calvin Klein Underwear	$	25,083		19.2	%	$	23,436		19.6	%	$	60,490		17.5	%	$	63,242		20.1	%
Core Intimates		2,710		6.4	%		3,758		9.3	%		17,222		12.3	%		16,852		12.8	%
Intimate Apparel wholesale		27,793		16.1	%		27,194		17.0	%		77,712		16.0	%		80,094		17.9	%
Calvin Klein Underwear retail		10,827		14.5	%		12,745		20.1	%		25,915		12.4	%		26,269		15.5	%
Intimate Apparel Group (a)	$	38,620		15.6	%	$	39,939		17.9	%	$	103,627		14.9	%	$	106,363		17.3	%

(a)	includes restructuring charges of $0.7 million and $0 for the Three Months Ended October 1, 2011 and the Three Months Ended October 2, 2010, respectively, and $3.6 million and $0.1 million for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively.
(b)	includes an allocation of shared services expenses by brand as detailed below:

	Three Months		Three Months		Nine Months		Nine Months
	Ended October		Ended October		Ended October		Ended October
	1, 2011		2, 2010		1, 2011		2, 2010
	(in thousands of dollars)
Calvin Klein Underwear	$	3,175	$	3,212	$	9,113	$	9,294
Core Intimates		1,535		1,498		4,576		4,481
Intimate Apparel wholesale		4,710		4,710		13,689		13,775
Calvin Klein Underwear retail		376		275		1,098		822
Intimate Apparel Group	$	5,086	$	4,985	$	14,787	$	14,597

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Intimate Apparel Group operating income for the Three Months Ended October 1, 2011 decreased $1.3 million, or 3.3%, as reflected in the table above. Intimate Apparel Group operating income includes a decrease of $2.1 million related to fluctuations in foreign currency exchange rates. The decrease in Intimate Apparel Group operating income reflects the changes in gross profit and SG&A described above.

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Intimate Apparel Group operating income for the Nine Months Ended October 1, 2011 decreased $2.7 million, or 2.6%, as reflected in the table above. Intimate Apparel Group operating income includes a decrease of $3.3 million related to fluctuations in foreign currency exchange rates. The decrease in Intimate Apparel Group operating income reflects the changes in gross profit and SG&A described above.

Swimwear Group

Swimwear Group operating income was as follows:

	Three Months						Three Months						Nine Months						Nine Months			% of
	Ended October 1,			% of Brand Net			Ended October 2,			% of Brand Net			Ended October			% of Brand			Ended October 2,			Brand Net
	2011 (c)			Revenues			2010 (c)			Revenues			1, 2011 (c)			Net Revenues			2010 (c)			Revenues
	(in thousands of dollars)
Speedo	$	(3,721	)		-12.6	%	$	(3,338	)		-11.4	%	$	19,412			10.9	%	$	16,754			10.1	%
Calvin Klein		(587	)		-18.7	%		(1,270	)		-72.2	%		(829	)		-3.2	%		(1,940	)		-9.5	%
Swimwear wholesale		(4,308	)		-13.2	%		(4,608	)		-14.8	%		18,583			9.1	%		14,814			8.0	%
Swimwear retail (a)		956			14.5	%		814			14.6	%		2,838			17.8	%		2,307			16.0	%
Swimwear Group (b)	$	(3,352	)		-8.5	%	$	(3,794	)		-10.3	%	$	21,421			9.8	%	$	17,121			8.5	%

(a)	includes $0.8 million and $0.5 million for the Three Months Ended October 1, 2011 and October 2, 2010, respectively, and $1.9 million and $1.4 million for the Nine Months Ended October 1, 2011 and October 2, 2010, respectively related to Calvin Klein retail swimwear.
(b)	includes restructuring charges of $3.0 million and $1.7 million for the Three Months Ended October 1, 2011 and October 2, 2010, respectively, and $7.3 million and $2.4 million for the Nine Months Ended October 1, 2011 and October 2, 2010, respectively.

51

(c) Includes an allocation of shared services expenses by brand in the following table:

	Three Months		Three Months		Nine Months		Nine Months
	Ended October		Ended October		Ended October		Ended October
	1, 2011		2, 2010		1, 2011		2, 2010
	(in thousands of dollars)
Speedo	$	2,148	$	2,022	$	6,558	$	6,208
Calvin Klein		98		75		712		531
Swimwear wholesale		2,246		2,097		7,270		6,739
Swimwear retail		101		141		302		423
Swimwear Group	$	2,347	$	2,238	$	7,572	$	7,162

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Swimwear Group operating income for the Three Months Ended October 1, 2011 increased $0.4 million, or 11.6%, as reflected in the table above. Swimwear Group operating income includes a decrease of $0.1 million related to fluctuations in foreign currency exchange rates The increase in Swimwear Group operating income reflects the changes in gross profit and SG&A described above.

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Swimwear Group operating income for the Nine Months Ended October 1, 2011 increased $4.3 million, or 25.1%, as reflected in the table above. Swimwear Group operating income includes a decrease of $0.3 million related to fluctuations in foreign currency exchange rates. The increase in Swimwear Group operating income reflects the changes in gross profit and SG&A described above.

Other Loss (Income)

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

Other loss of $1.4 million for the Three Months Ended October 1, 2011 reflects a loss on the current portion of inter-company loans denominated in currency other than that of the foreign subsidiaries’ functional currency that are not hedged with foreign exchange forward contracts, net of gains on foreign currency exchange contracts designed as economic hedges (see Note 11 of Notes to Consolidated Condensed Financial Statements). Other income of $1.9 million for the Three Months Ended October 2, 2010 primarily reflects a gain on the current portion of inter-company loans denominated in currency other than that of the foreign subsidiaries’ functional currency that are not hedged with foreign exchange forward contracts, net of losses on foreign currency exchange contracts designed as economic hedges (see Note 11 to Notes to Consolidated Condensed Financial Statements).

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

Other loss of $0.5 million for the Three Months Ended October 1, 2011 reflects a gain on the current portion of inter-company loans denominated in currency other than that of the foreign subsidiaries’ functional currency that are not hedged with foreign exchange forward contracts, net of losses on foreign currency exchange contracts designed as economic hedges (see Note 11 of Notes to Consolidated Condensed Financial Statements). Other loss of $5.7 million for the Nine Months Ended October 2, 2010 primarily reflects a loss of $3.7 million related to the redemption of $160.9 million of Senior Notes during the Nine Months Ended October 2, 2010 (see Note 14 of Notes to Consolidated Condensed Financial Statements) and a loss on the current portion of inter-company loans denominated in currency other than that of the foreign subsidiaries’ functional currency that are not hedged with foreign exchange forward contracts, partially offset by a gain on foreign currency exchange contracts designed as economic hedges (see Note 11 to Notes to Consolidated Condensed Financial Statements).

Interest Expense

Interest expense increased $2.0 million to $5.0 million for the Three Months Ended October 1, 2011 from $3.0 million for the Three Months Ended October 2, 2010 and decreased $1.1 million to $11.1 million for the Nine Months Ended October 1, 2011 from $12.2 million for the Nine Months Ended October 2, 2010. The changes for each comparative period primarily relate to fluctuations in the balances and interest rates on the Company’s debt facilities including (i) the 2011 Term Loan, which was entered into in June 2011; (ii) the CKJEA Notes payable; (iii) the 2008 Credit Agreements; (iv) the Italian Note, which was entered into in the third quarter of Fiscal 2010 and repaid in June 2011; (v) the Brazilian lines of credit, and (vi) increases in interest expense arising from maturity of caplets and accretion of the deferred premium under the interest rate cap entered into on July 1, 2011 (see Note 14 of Notes to Consolidated Condensed Financial Statements). The change for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010 also relates to the remaining balance ($160.9 million) of the Senior Notes, which were fully redeemed during the first and second quarters of Fiscal 2010 (see Note 12 of Notes to Consolidated Financial Statements in the Company’s Annual Report for Fiscal 2010).

52

Interest Income

Interest income increased $0.3 million to $1.0 million for the Three Months Ended October 1, 2011 from $0.7 million for the Three Months Ended October 2, 2010 and increased $0.3 million to $2.5 million for the Nine Months Ended October 1, 2011 from $2.2 million for the Nine Months Ended October 2, 2010, due primarily to an increase in the average of the Company’s cash balance during the respective comparative periods.

Income Taxes

Three Months Ended October 1, 2011 compared to Three Months Ended October 2, 2010

The effective tax rates for the Three Months Ended October 1, 2011 and October 2, 2010 were 18.1% and 38.6%, respectively. The lower effective tax rate for the Three Months Ended October 1, 2011 primarily reflects a tax benefit of $7.3 million recorded during the Three Months Ended October 1, 2011 related to a reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions, as well as a tax benefit of approximately $1.3 million recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for Fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011. In addition, certain discrete charges to the tax provision recorded during the Three Months Ended October 2, 2010 (in total $3.6 million) did not reoccur in the Three Months Ended October 1, 2011.

Nine Months Ended October 1, 2011 compared to Nine Months Ended October 2, 2010

The effective tax rates for the Nine Months Ended October 1, 2011 and October 2, 2010 were 22.0% and 36.0%, respectively. The lower effective tax rate for the Nine Months Ended October 1, 2011 primarily reflects a tax benefit of approximately $11.0 million, recorded during the Nine Months Ended October 1, 2011, associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as a result of receiving a favorable ruling from that country’s taxing authority during the Nine Months Ended October 1, 2011, a tax benefit of $7.3 million recorded during the Three Months Ended October 1, 2011 related to a reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions, as well as a tax benefit of approximately $1.3 million recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for Fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011. In addition, certain discrete charges to the tax provision recorded during the Nine Months Ended October 2, 2010 (in total $3.6 million) did not reoccur in the Nine Months Ended October 1, 2011.

Discontinued Operations

Loss from discontinued operations, net of taxes, was $4.2 million for the Three Months Ended October 1, 2011 compared to income of $0.1 million for the Three Months Ended October 2, 2010. Loss from discontinued operations, net of taxes, was $4.7 million for the Nine Months Ended October 1, 2011 compared to a loss of $0.4 million for the Nine Months Ended October 2, 2010. The losses for the Three and Nine Months Ended October 1, 2011 were primarily associated with a reserve related to the Lejaby business (see Note 18 of Notes to Consolidated Condensed Financial Statements). Income and loss for the Three and Nine Months Ended October 2, 2010, respectively, were primarily related to the Company’s Ocean Pacific Apparel and Lejaby discontinued businesses. See Note 4 of Notes to Consolidated Condensed Financial Statements.

Liquidity and Capital Resources

Liquidity

The Company’s principal source of operating cash flows is from sales of its products to customers. In constant currencies, sales to customers increased for the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010 (see Overview, Non-GAAP Measures and Results of Operations — Net Revenues, above). The Company’s principal operating outflows of cash relate to purchases of inventory and related costs, SG&A expenses and capital expenditures, primarily related to store fixtures and retail store openings.

53

During the Nine Months Ended October 1, 2011, cash outflows increased primarily related to additional investments in working capital (see Accounts Receivable and Inventories and Cash Flows, below) and an increase in SG&A expenses (see Selling, General and Administrative Expenses, above) in Europe, Asia and in Mexico and Central and South America primarily related to the increase in newly opened and acquired retail stores. In addition, cash outflows resulted from an increase in costs for raw material, labor and freight, particularly in the U.S., Asian and European businesses and have adversely affected the operating margins of the Company’s businesses. The Company expects that the rate of product cost increases will stabilize or decline during the remainder of Fiscal 2011. The Company was able to partially mitigate the cost increases (and expects to be able to partially mitigate such increases in the future) by selectively increasing the selling prices of its goods, early purchases of product and by implementing other sourcing initiatives.

The Company believes that, at October 1, 2011, cash on hand, cash to be generated from future operating activities and cash available under the 2011 Term Loan Agreement, 2008 Credit Agreements, the CKJEA Notes and other short-term debt (see Note 14 of Notes to Consolidated Condensed Financial Statements) will be sufficient to fund its operations, including contractual obligations (see Note 19 of Notes to Consolidated Condensed Financial Statements, above) and capital expenditures (see below) for the next 12 months.

As of October 1, 2011, the Company had working capital (current assets less current liabilities) of $605.1 million. Included in working capital as of October 1, 2011 were (among other items) cash and cash equivalents of $179.3 million and short-term debt of $47.8 million, including $2.0 million under the 2011 Term Loan Agreement, $39.0 million under the CKJEA Notes and $6.8 million of other short-term debt.

2011 Term Loan Agreement

On June 17, 2011, Warnaco Group, Warnaco, Calvin Klein Jeanswear Company (“CK Jeans”), an indirect wholly-owned subsidiary of Warnaco Group, and Warnaco Swimwear Products Inc. (“Warnaco Swimwear”), an indirect wholly-owned subsidiary of Warnaco Group, entered into the 2011 Term Loan Agreement with the financial institutions which are the lenders thereunder (the “Lenders”). Warnaco, CK Jeans and Warnaco Swimwear are co-borrowers on a joint and several basis under the 2011 Term Loan Agreement (the “Borrowers”) (see Note 14 of Notes to Consolidated Condensed Financial Statements).

The 2011 Term Loan Agreement provides for a $200 million senior secured term loan facility, maturing on June 17, 2018. In addition, during the term of the 2011 Term Loan Agreement, the Borrowers may request additional credit commitments for incremental term loan facilities in an aggregate amount not to exceed $100 million plus the aggregate principal amount of the term loans that the Borrowers have voluntarily prepaid prior to the date of such request. The Borrowers may request a greater amount to the extent that Warnaco Group meets certain financial tests set forth in the 2011 Term Loan Agreement. At October 1, 2011, there was $199.5 million in term loans outstanding under the 2011 Term Loan Agreement. The Company paid approximately $5.0 million in financing costs related to the 2011 Term Loan.

On the last day of each of the Company’s fiscal quarters, beginning on October 1, 2011, $500,000 of the outstanding principal amount of the 2011 Term Loan must be repaid. Such amount will be reduced if a portion of the principal amount is prepaid. The remaining principal amount is due on June 17, 2018.

The 2011 Term Loan Agreement provides interest rate options, at the Borrowers’ election, including a base rate, as defined in the 2011 Term Loan Agreement, and LIBOR (with a floor of 1.00%) plus a margin of 2.75%, in each case, on a per annum basis. Accrued interest will be paid in arrears on the last day of each interest period through the maturity date. Payment dates are the last calendar day (or business day if the last calendar day is not a business day) of each of January, April, July and October, beginning on October 31, 2011. Reset dates are two business days prior to a payment date, beginning on October 29, 2011 (determines the three-month LIBOR variable leg for the following three month period). From inception of the loan through July 29, 2011, the Company elected to use a combination of a base rate and a LIBOR rate of interest, each on a portion of the outstanding balance ($80 million at 3.75% and $120 million at a base rate of 5.0%). From July 29, 2011 through October 31, 2011, the interest rate on the entire balance of the 2011 Term Loan is 3.75%, based on three-month LIBOR (with a floor of 1.00%) plus a margin of 2.75%. At October 1, 2011, the loans under the 2011 Term Loan Agreement had a weighted average annual interest rate of 3.75%. In order to match the interest rate on the hedged portion of the 2011 Term Loan with that on the interest rate cap (see below), the Company intends to use successive interest periods of three months and adjusted three-month LIBOR rates (with a LIBOR floor of 1.00%) plus 2.75% on a per annum basis from July 29, 2011 through the maturity date of the 2011 Term Loan.

The 2011 Term Loan Agreement does not require the Borrowers to comply with any financial maintenance covenants but does contain customary representations, warranties and affirmative covenants. The 2011 Term Loan Agreement also contains customary negative covenants providing limitations, subject to negotiated carve-outs, with respect to (i) incurrence of indebtedness and liens, (ii) significant corporate changes including mergers and acquisitions with third parties, (iii) investments, (iv) loans, (v) advances and guarantees to or for the benefit of third parties, (vi) hedge agreements, (vii) certain restricted payments and (viii) transactions with affiliates and certain other restrictive agreements, among others.

54

The 2011 Term Loan Agreement contains customary events of default, such as payment defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency, the occurrence of a “Change of Control” (as defined in the 2011 Term Loan Agreement), or the failure to observe the certain covenants therein. Upon an event of default, the Lenders may, among other things, declare any then outstanding loans due and payable immediately.

The proceeds of the 2011 Term Loan Agreement will be used for general corporate purposes, which include funding acquisitions and internal growth, repaying indebtedness (including, during the second quarter of Fiscal 2011, the 2008 Credit Agreements and the Italian Note, see below), and repurchasing common stock of Warnaco.

Interest Rate Cap Agreement

On July 1, 2011, the Company entered into a deferred premium interest rate cap agreement with HSBC Bank USA (the “Counterparty”), effective July 29, 2011, (notional amount $120 million) (the “Cap Agreement”). The Cap Agreement is a series of 27 individual caplets (in total, the “Cap”) that reset and settle quarterly over the period from October 31, 2011 to April 30, 2018. Under the terms of the Cap Agreement, if three-month LIBOR resets above a strike price of 1.00%, the Company will receive the net difference between the rate and the strike price. In addition, on the quarterly settlement dates, the Company will remit the deferred premium payment to the Counterparty. If LIBOR resets below the strike price no payment is made by the Counterparty. However, the Company would still be responsible for payment of the deferred premium. At July 1, 2011, the Company was obligated to make premium payments totaling approximately $16.0 million, based on an annual rate of 1.9475% on the notional amount of the Cap, over the term of the Cap Agreement. The effect of the Cap Agreement is to limit the interest rate payable on average over the term of the Cap Agreement to 5.6975% with respect to the portion of the 2011 Term Loan that equals the notional amount of the Cap.

Short-Term Borrowings

As of October 1, 2011, under the 2008 Credit Agreement, the Company had no loans and $29.1 million in letters of credit outstanding, leaving approximately $189.7 million of availability, and, under the 2008 Canadian Credit Agreement, no loans and $2.0 million of letters of credit, leaving approximately $20.3 million of availability (see Note 14 of Notes to Consolidated Condensed Financial Statements). During June 2011, the outstanding balances under the 2008 Credit Agreements were repaid with a portion of the proceeds from the 2011 Term Loan.

The revolving credit facilities under the 2008 Credit Agreements reflect funding commitments by a syndicate of banks, including Bank of America N.A., JPMorgan Chase, N.A., Deutsche Bank, HSBC, Royal Bank of Scotland and The Bank of Nova Scotia. The ability of any one or more of those banks to meet its commitment to provide the Company with funding up to the maximum of available credit is dependent on the fair value of the bank’s assets and its legal lending ratio relative to those assets (amount the bank is allowed to lend). The Company believes that, during the Nine Months Ended October 1, 2011, those banks had the ability to make loans up to their respective funding commitments under the 2008 Credit Agreements and that they will continue to be able to make such loans in the future. However, the Company continues to monitor the creditworthiness of the syndicated banks.

The 2008 Credit Agreements contain covenants limiting the Company’s ability to (i) incur additional indebtedness and liens, (ii) make significant corporate changes including mergers and acquisitions with third parties, (iii) make investments, (iv) make loans, advances and guarantees to or for the benefit of third parties, (v) enter into hedge agreements, (vi) make restricted payments (including dividends and stock repurchases), and (vii) enter into transactions with affiliates. The 2008 Credit Agreements also include certain other restrictive covenants. In addition, if Available Credit (as defined in the 2008 Credit Agreements) is less than a threshold amount (as specified in the 2008 Credit Agreements) the Company’s Fixed Charge Coverage ratio (as defined in the 2008 Credit Agreements) must be at least 1.1 to 1.0. In connection with entering into the 2011 Term Loan Agreement, the Company amended the 2008 Credit Agreements to allow the Company to incur indebtedness and grant liens. The Company was in compliance with the covenants of its 2008 Credit Agreements as of October 1, 2011, January 1, 2011 and October 2, 2010.

During the Nine Months Ended October 1, 2011, the Company was able to borrow funds, from time to time, under the 2008 Credit Agreement for seasonal and other cash flow requirements, including repurchase of Common Stock (see Note 15 of Notes to Consolidated Condensed Financial Statements), settlement of the OP litigation (see Notes 4 and 18 of Notes to Consolidated Condensed Financial Statements), funding of the Company’s pension plan, and payment of employee incentive-based compensation. As of October 1, 2011, the Company expects that it will continue to be able to obtain needed funds under the 2008 Credit Agreements when requested. However, in the event that such funds are not available, the Company may have to delay certain capital expenditures or plans to expand its business, to scale back operations and/or to raise capital through the sale of its equity or debt securities. There can be no assurance that the Company would be able to sell its equity or debt securities on terms that are satisfactory.

55

The CKJEA Notes consist of short-term revolving notes with a number of banks at various interest rates (primarily Euro LIBOR plus 1.0%) held by certain of the Company’s European subsidiaries. The outstanding balance under the CKJEA Notes was $39.0 million, $18.4 million, and $48.7 million at October 1, 2011, January 2, 2011 and October 2, 2010, respectively. During the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, the Company was able to borrow funds under the CKJEA Notes, as needed, to fund operations. The Company will continue to renew the CKJEA Notes for additional terms of no more than twelve months and expects that it will continue to be able to borrow funds under the CKJEA Notes in the future. The Company monitors its positions with, and the credit quality of, the counterparty financial institutions that hold the CKJEA Notes and does not currently anticipate non-performance by those counterparties. Management believes that the Company would not suffer a material loss in the event of non-performance by those counterparties.

The Company’s Brazilian subsidiary, WBR, has established lines of credit with several banks in order to improve cash flows and fund operations as needed. The lines of credit are secured by approximately equal amounts of WBR’s trade accounts receivable. At October 1, 2011, January 1, 2011 and October 2, 2010, the total outstanding balances of the lines of credit were approximately $4.3 million, $0.4 million and $0, respectively. During the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, WBR was able to borrow funds under the lines of credit, as needed, to fund operations.

During September 2011, one of the Company’s Asian subsidiaries entered into a short-term $25 million revolving credit facility with one lender (the “Asian Credit Facility”) to be used for temporary working capital and general corporate purposes. The Asian Credit Facility bears interest of 1.75% over 1-month LIBOR, which is due monthly. At the end of each month, amounts outstanding under the Asian Credit Facility may be carried forward for further 1-month periods for up to one year. The Asian Credit Facility may be renewed annually. The Asian Credit Facility is subject to certain terms and conditions customary for a credit facility of this type and may be terminated at any time at the discretion of the lender. There were no borrowings during the Three Months Ended October 1, 2011.

The Italian Note was entered into by one of the Company’s Italian subsidiaries on September 30, 2010 in connection with the acquisition of the business of a distributor of its Calvin Klein products in Italy (see Note 2 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010). The initial principal amount of the Italian Notes was €10.0 million ($13.4 million). On June 30, 2011, the remaining outstanding balance of €6.0 million ($8.6 million) was repaid with a portion of the proceeds from the 2011 Term Loan.

The Company’s corporate or family credit ratings and outlooks at October 1, 2011, are summarized below:

Rating	Corporate/Family
Agency	Rating (a)	Outlook
Standard & Poor’s	BBB-	stable
Moody’s	Ba1	stable

(a) ratings on individual debt instruments can be different from the Company’s corporate or family credit ratings depending on the priority position of creditors holding such debt, collateral related to such debt and other factors. On June 27, 2011, Moody’s upgraded the rating on the Company’s 2008 Credit Agreements to Baa1 from Baa2 (both investment-grade ratings). Standard & Poor’s has assigned a rating of BBB- and Moody’s has assigned a rating of Ba1 to the 2011 Term Loan.

The Company’s credit ratings contribute to its ability to access the credit markets. Factors that can affect the Company’s credit ratings include changes in its operating performance, the economic environment, conditions in the apparel industry, the Company’s financial position, and changes in the Company’s business or financial strategy. If a downgrade of the Company’s credit ratings were to occur, it could adversely affect, among other things, the Company’s future borrowing costs and access to capital markets. Given the Company’s capital structure and its projections for future profitability and cash flow, the Company believes it is well positioned to obtain additional financing, if necessary, to refinance its debt, or, if opportunities present themselves, to make future acquisitions. However, there can be no assurance that such financing, if needed, can be obtained on terms satisfactory to the Company or at such time as a specific need may arise.

Capital Expenditures

During the Nine Months Ended October 1, 2011, the Company leased approximately 133,000 square feet of additional retail store space worldwide from newly opened stores and acquired an additional 25,000 square feet of retail space in Taiwan and an additional 45,000 square feet of retail space in India (see Note 3 of Notes to Consolidated Condensed Financial Statements), which resulted in capital expenditures (primarily related to store fixtures) of approximately $18 million. The Company has targeted an additional 50,000 square feet of new retail space for the remainder of Fiscal 2011, for which it expects to incur additional costs for capital expenditures of approximately $10 million.

56

Restructuring

During the Nine Months Ended October 1, 2011, the Company incurred restructuring and other exit costs of $19.0 million primarily related to the consolidation and restructuring of certain international operations, job eliminations in the U.S. and lease contract termination charges related to retail store, office and warehouse closures, and made payments of approximately $11.7 million related to those activities. During the remainder of Fiscal 2011, the Company expects to incur additional costs of approximately $5 million related to these initiatives. See Note 5 of Notes to Consolidated Condensed Financial Statements for additional information on restructuring and other exit activities.

Business Acquisitions

During the fourth quarter of the Company’s fiscal year ended January 2, 2010, the Company acquired the remaining 49% equity interest in WBR, its subsidiary in Brazil. In addition to the initial cash payment made upon acquisition, the consideration also includes three contingent payments through March 31, 2012. During the first quarter of Fiscal 2011, the Company made the second contingent payment of 18.5 million Brazilian Real (approximately $11.5 million as of March 31, 2011), based upon the operating results of WBR for Fiscal 2010. The Company expects that, based upon the operating results of WBR for Fiscal 2011, the third contingent payment will be 18.5 million Brazilian Real (approximately $10.1 million as of October 1, 2011), which will be paid on March 31, 2012. See Note 3 of Notes to Consolidated Condensed Financial Statements.

During the first quarter of Fiscal 2011, the Company acquired certain assets, including inventory and leasehold improvements and leases of the retail stores of its Calvin Klein distributor in Taiwan for cash consideration of $1.4 million. See Note 3 of Notes to Consolidated Condensed Financial Statements.

On July 8, 2011, the Company acquired a controlling interest (51%) in the equity of a joint venture with a distributor of its Calvin Klein products in India for cash consideration of approximately $17.8 million, net of cash acquired of $2.6 million. In addition, the Company loaned the non-controlling party in the joint venture $6.0 million with an interest rate of 5.0% per annum. The loan matures on July 8, 2016. Interest on the loan is payable in arrears on the last day of each calendar year (see Note 3 of Notes to Consolidated Condensed Financial Statements).

Share Repurchases

During the Nine Months Ended October 1, 2011, the Company repurchased the remaining 4,060,842 shares of its common stock under the 2010 Share Repurchase Program for a total of $205.8 million (based on an average of $50.68 per share). In addition, the Company repurchased 43,563 shares of common stock for a total of $2.4 million (based on an average of $55.24 per share) related to the surrender of shares for the payment of minimum income tax due upon vesting of certain restricted stock awarded by the Company to its employees (see Note 15 of Notes to Consolidated Condensed Financial Statements and Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, below). Repurchased shares are held in treasury pending use for general corporate purposes.

During September 2011, the Company’s Board of Directors approved a new multi-year share repurchase program for up to $200 million of the Company’s outstanding common stock. During the Three Months Ended October 1, 2011, the Company repurchased 104,300 shares under the 2011 Share Repurchase Program for $5.0 million (based on an average of $47.90 per share).

Derivative Financial Instruments

During the Nine Months Ended October 1, 2011, some of the Company’s foreign subsidiaries with functional currencies other than the U.S. dollar made purchases of inventory, paid minimum royalty and advertising costs and /or had intercompany payables, receivables or loans denominated in U.S. dollars or Pounds Sterling. In order to minimize the effects of fluctuations in foreign currency exchange rates of those transactions, the Company uses derivative financial instruments; primarily foreign currency exchange forward contracts. In addition, during July 2011, the Company entered into an interest rate cap, which is being accounted for as a cash flow hedge, to offset fluctuations in the LIBOR rate related to $120.0 million of its 2011 Term Loan (see Notes 11and 14 of Notes to Consolidated Condensed Financial Statements).

57

The Company carries its derivative financial instruments at fair value on the Consolidated Condensed Balance Sheets. The Company utilizes the market approach to measure fair value for financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. At October 1, 2011, the Company’s foreign currency hedging programs included $51.2 million of future inventory purchases, $21.4 million of future minimum royalty and advertising payments and $68.5 million of intercompany payables and loans denominated in non-functional currencies, primarily the U.S. dollar (see Notes 10 and 11 of Notes to Consolidated Condensed Financial Statements for further information on fair value measurement of the Company’s derivative financial instruments).

Pension Plan

The Pension Protection Act of 2006 (the “PPA”) revised the basis and methodology for determining defined benefit plan minimum funding requirements as well as maximum contributions to and benefits paid from tax-qualified plans. The PPA may ultimately require the Company to make additional contributions to its domestic plan. During the Nine Months Ended October 1, 2011, the Company contributed $7.2 million to the domestic pension plan. Contributions for Fiscal 2011 are expected to total $8.8 million and for the following four years are expected to be in the range of $5.4 million and $9.5 million. Actual later year contributions could exceed the Company’s current projections, and may be influenced by future changes in government requirements. Additionally, the Company’s projections concerning timing of the PPA funding requirements are subject to change and may be influenced by factors such as general market conditions affecting trust asset performance, interest rates, and the Company’s future decisions regarding certain elective provisions of the PPA. See Note 8 of Notes to Consolidated Condensed Financial Statements for additional information on the Company’s pension plan.

The fair value of the Pension Plan’s assets, net of expenses, decreased to approximately $117.6 million at October 1, 2011 compared to $127.7 million at January 1, 2011, reflecting an actual annualized rate of return on the Pension Plan’s assets, net of expenses, of 10% (loss) for the Nine Months Ended October 1, 2011. That rate of return was less than the assumed rate of return of 8% (gain) per year on Pension Plan assets which the Company has been using to estimate pension income (expense) on an interim basis, based upon historical results. Based upon the decrease in the fair value of the investment portfolio for the Nine Months Ended October 1, 2011, the Company expects to recognize pension expense of between $9 million and $14 million in the fourth quarter of Fiscal 2011. The Company’s pension income (expense) is also affected by the discount rate used to calculate Pension Plan liabilities, by Pension Plan amendments and by Pension Plan benefit experience compared to assumed experience and other factors. These factors could increase or decrease the amount of pension income or expense ultimately recorded by the Company for Fiscal 2011. Based upon results for Fiscal 2010, a 0.1% increase (decrease) in the discount rate would decrease (increase) pension expense by approximately $1.7 million.

Accounts Receivable and Inventories

Accounts receivable increased $23.3 million to $341.4 million at October 1, 2011 from $318.1 million at January 1, 2011, and decreased $5.1 million to $341.4 million at October 1, 2011 from $346.5 million at October 2, 2010. The balance of accounts receivable at October 1, 2011 compared to the balances at January 1, 2011 and October 2, 2010 includes a decrease of $8.4 million and $9.4 million, respectively, due to fluctuations in exchange rates in the U.S. dollar relative to foreign currencies in connection with transactions in countries where the Company conducts certain of its operations (principally the Euro, Korean Won, Canadian Dollar, Brazilian Real, Chinese Yuan and Mexican Peso). Thus, on a constant currency basis, accounts receivable at October 1, 2011 increased compared to both January 1, 2011 and October 2, 2010.

Inventories increased $81.6 million to $392.1 million at October 1, 2011 from $310.5 million at January 1, 2011 and increased $67.7 million to $392.1 million at October 1, 2011 from $324.4 million at October 2, 2010. The balance of inventories at October 1, 2011 compared to the balances at January 1, 2011 and October 2, 2010 includes a decrease of $7.8 million and $8.9 million, respectively, due to fluctuations in exchange rates in the U.S. dollar relative to foreign currencies in connection with transactions in countries where the Company conducts certain of its operations (principally the Euro, Korean Won, Canadian Dollar, Brazilian Real, Chinese Yuan and Mexican Peso). The inventory increase from October 2, 2010 to October 1, 2011 primarily reflects the expansion of the Company’s retail business (including retail openings and acquisitions), and higher product costs. The Company is comfortable with the quality of its inventory and expects that inventory levels at the end of Fiscal 2011 will be better aligned with sales growth.

58

Cash Flows

The following table summarizes the cash flows from the Company’s operating, investing and financing activities for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010:

	Nine Months Ended
	October 1, 2011			October 2, 2010
	(in thousands of dollars)
Net cash provided by (used in) operating activities:
Continuing operations	$	76,683		$	147,943
Discontinued operations		(16,501	)		377
Net cash (used in) investing activities:
Continuing operations		(61,619	)		(36,567	)
Discontinued operations		—			—
Net cash (used in) financing activities:
Continuing operations		(9,357	)		(221,182	)
Discontinued operations		—			—
Translation adjustments		(1,107	)		2,084
(Decrease) in cash and cash equivalents	$	(11,901	)	$	(107,345	)

For the Nine Months Ended October 1, 2011, cash provided by operating activities from continuing operations was $76.7 million compared to cash provided by operating activities of $147.9 million for Nine Months Ended October 2, 2010. The $71.2 million decrease in cash provided by operating activities was due to an increase in net income, net of non-cash charges, more than offset by an increase in outflows related to changes in working capital.

Working capital changes for the Nine Months Ended October 1, 2011 included cash outflows of $32.4 million related to accounts receivable (due to increased sales in September 2011 compared to December 2010 and the timing of payments), $101.4 million related to inventory (primarily to support the Company’s growth expectations for the remainder of Fiscal 2011 and the beginning of the year ending December 29, 2012), $13.1 million related to prepaid expenses and other assets (primarily related to assets associated with the Company’s hedging activities, prepaid royalty, prepaid rent and prepaid taxes, other than income taxes), and $12.1 million related to accrued income taxes, partially offset by cash inflows of $14.8 million related to accounts payable, accrued expenses and other liabilities (due to the timing of payments for purchases of inventory).

Working capital changes for the Nine Months Ended October 2, 2010 included cash outflows of $59.3 million related to accounts receivable (due to increased sales in September 2010 compared to December 2009 and the timing of payments), $74.6 million related to inventory (to support the Company’s growth expectations for the balance of the year) and $10.5 million related to prepaid expenses and other assets (primarily related to prepaid advertising and royalty expenses), partially offset by cash inflows of $61.5 million related to accounts payable, accrued expenses and other liabilities (due to the timing of payments for purchases of inventory) and $39.9 million related to accrued income taxes.

For the Nine Months Ended October 1, 2011 compared to the Nine Months Ended October 2, 2010, cash used in operating activities from discontinued operations increased $16.9 million primarily related to settlement of the OP litigation (see Notes 4 and 18 of Notes to Consolidated Condensed Financial Statements).

For the Nine Months Ended October 1, 2011, net cash used in investing activities from continuing operations was $61.6 million, mainly attributable to purchases of property, plant and equipment associated with the Company’s retail stores and acquisition of the business of the Company’s distributor of Calvin Klein products in India. For the Nine Months Ended October 2, 2010, net cash used in investing activities from continuing operations was $36.6 million, mainly attributable to purchases of property, plant and equipment, including $29.8 million related to the Company’s new distribution center in the Netherlands and the opening of new retail stores, and $8.4 million related to acquisitions of businesses in Asia.

Net cash used in financing activities for the Nine Months Ended October 1, 2011 was $9.4 million, which primarily reflects cash used of $211.2 million related to the repurchase of treasury stock (in connection with the 2010 Share Repurchase Program, the 2011 Share Repurchase Program and the surrender of shares for the payment of minimum income tax due upon vesting of certain restricted stock awarded by the Company to its employees), repayment of the Italian Note ($13.4 million), $11.5 million related to a contingent payment made during the first quarter of Fiscal 2011 in connection with the acquisition of the equity interest in WBR, which occurred in the fourth quarter of Fiscal 2009 and was accounted for as an equity transaction and $5.3 million in payment of deferred financing costs primarily related to the 2011 Term Loan, partially offset by net cash provided of $200.0 million related to borrowings under the 2011 Term Loan, $24.3 million received from short term borrowings and $8.2 million from the exercise of employee stock options.

59

Net cash used in financing activities for the Nine Months Ended October 2, 2010 was $221.2 million, which primarily reflects net cash used of $164.0 million related to the repurchase of Senior Notes, $84.1 million related to the repurchase of treasury stock (in connection with the 2007 Share Repurchase Program, the 2010 Share Repurchase Program and the surrender of shares for the payment of minimum income tax due upon vesting of certain restricted stock awarded by the Company to its employees) and $3.4 million related to a contingent payment in connection with the acquisition of the equity interest in WBR in the fourth quarter of Fiscal 2009 and was accounted for as an equity transaction, partially offset by cash provided of $15.3 million related to increased balance of short-term notes, $7.0 million related to amounts borrowed under the 2008 Credit Agreements and $8.2 million from the exercise of employee stock options.

Significant Contractual Obligations and Commitments

Contractual obligations and commitments as of October 1, 2011 were not materially different from those disclosed in the Company’s Annual Report on Form 10-K for Fiscal 2010, with the exception of changes related to operating leases and other contractual obligations which occurred during the Nine Months Ended October 1, 2011 (see Note 19 of Notes to Consolidated Condensed Financial Statements).

Off-Balance Sheet Arrangements

None.

Statement Regarding Forward-Looking Disclosure

This Quarterly Report on Form 10-Q, as well as certain other written, electronic and oral disclosures made by the Company from time to time, contains “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties and reflect, when made, the Company’s estimates, objectives, projections, forecasts, plans, strategies, beliefs, intentions, opportunities and expectations. Actual results may differ materially from anticipated results, targets or expectations and investors are cautioned not to place undue reliance on any forward-looking statements. Statements other than statements of historical fact, including, without limitation, future financial targets, are forward-looking statements. These forward-looking statements may be identified by, among other things, the use of forward-looking language, such as the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “may,” “project,” “scheduled to,” “seek,” “should,” “will be,” “will continue,” “will likely result”, “targeted”, or the negative of those terms, or other similar words and phrases or by discussions of intentions or strategies.

The following factors, among others, including those described in this Quarterly Report on Form 10-Q under the heading Item 1A. Risk Factors (as such disclosure may be modified or supplemented from time to time), could cause the Company’s actual results to differ materially from those expressed in any forward-looking statements made by it: the Company’s ability to execute its repositioning and sale initiatives (including achieving enhanced productivity and profitability) previously announced; deterioration in global or regional or other macro-economic conditions that affect the apparel industry, including turmoil in the financial and credit markets; the Company’s failure to anticipate, identify or promptly react to changing trends, styles, or brand preferences; further declines in prices in the apparel industry and other pricing pressures; declining sales resulting from increased competition in the Company’s markets; increases in the prices of raw materials or costs to produce or transport products; events which result in difficulty in procuring or producing the Company’s products on a cost-effective basis; the effect of laws and regulations, including those relating to labor, workplace and the environment; possible additional tax liabilities; changing international trade regulation, including as it relates to the imposition or elimination of quotas on imports of textiles and apparel; the Company’s ability to protect its intellectual property or the costs incurred by the Company related thereto; the risk of product safety issues, defects or other production problems associated with the Company’s products; the Company’s dependence on a limited number of customers; the effects of consolidation in the retail sector; the Company’s dependence on license agreements with third parties including, in particular, its license agreement with CKI, the licensor of the Company’s Calvin Klein brand name; the Company’s dependence on the reputation of its brand names, including, in particular, Calvin Klein; the Company’s exposure to conditions in overseas markets in connection with the Company’s foreign operations and the sourcing of products from foreign third-party vendors; the Company’s foreign currency exposure; unanticipated future internal control deficiencies or weaknesses or ineffective disclosure controls and procedures; the effects of fluctuations in the value of investments of the Company’s pension plan; the sufficiency of cash to fund operations, including capital expenditures; the Company recognizing impairment charges for its long-lived assets; uncertainty over the outcome of litigation matters and other proceedings; the Company’s ability to service its indebtedness, the effect of changes in interest rates on the Company’s indebtedness that is subject to floating interest rates and the limitations imposed on the Company’s operating and financial flexibility by the agreements governing the Company’s indebtedness; the Company’s dependence on its senior management team and other key personnel; the Company’s reliance on information technology; the limitations on purchases under the Company’s share repurchase program contained in the Company’s debt instruments, the number of shares that the Company purchases under such program and the prices paid for such shares; the Company’s inability to achieve its financial targets and strategic objectives, as a result of one or more of the factors described above, changes in the assumptions underlying the targets or goals, or otherwise; the inability to successfully implement restructuring and disposition activities; the failure of acquired businesses to generate expected levels of revenues; the failure of the Company to successfully integrate such businesses with its existing businesses (and as a result, not achieving all or a substantial portion of the anticipated benefits of such acquisitions); and such acquired businesses being adversely affected, including by one or more of the factors described above, and thereby failing to achieve anticipated revenues and earnings growth.

60

The Company encourages investors to read the section entitled Item 1A. Risk Factors and the discussion of the Company’s critical accounting policies in Discussion of Critical Accounting Policies included in the Company’s Annual Report on Form 10-K for Fiscal 2010, as such discussions may be modified or supplemented by subsequent reports that the Company files with the SEC. This discussion of forward-looking statements is not exhaustive but is designed to highlight important factors that may affect actual results. Forward-looking statements speak only as of the date on which they are made, and, except for the Company’s ongoing obligation under the U.S. federal securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to market risk primarily related to changes in hypothetical investment values under certain of the Company’s employee benefit plans, interest rates and foreign currency exchange rates. The Company does not use derivative financial instruments for speculation or for trading purposes. During the Nine Months Ended October 1, 2011, there were no material changes in the qualitative or quantitative aspects of these risks from those disclosed in the Company’s Annual Report on Form 10-K for Fiscal 2010. In addition, on June 17, 2011, the Company entered into the 2011 Term Loan, which bears interest of LIBOR (with a floor of 1%) plus a margin of 2.75% per annum. Changes in LIBOR will affect $80 million of the 2011 Term Loan not subject to the interest rate cap (see Note 14 of Notes to Consolidated Condensed Financial Statements). Changes in LIBOR have been immaterial from June 17, 2011(the date the 2011 Term Loan was initiated) through October 1, 2011.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Three Months Ended October 1, 2011 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

61

PART II
OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this Item 1 of Part II is incorporated herein by reference to Part I, Item 1. Financial Statements, Note 18 Legal Matters.

Item 1A. Risk Factors.

Please refer to Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for Fiscal 2010, filed with the SEC on February 28, 2011 for a description of certain significant risks and uncertainties to which the Company’s business, operations and financial condition are subject. There have been no material changes to these risk factors during the Nine Months Ended October 1, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During May 2010, the Company’s Board of Directors authorized a share repurchase program (the “2010 Share Repurchase Program”), which allows the Company to repurchase up to 5,000,000 shares of its common stock. During the first half of Fiscal 2011, the Company purchased 1,629,651 shares of common stock for a total of $87.6 million (based on $53.75 per share) under the 2010 Share Repurchase Program. During the Three Months Ended October 1, 2011, the Company purchased the remaining 2,431,191 shares of common stock for a total of $118.2 million (based on $48.62 per share) under the 2010 Share Repurchase Program.

During September 2011, the Company’s Board of Directors authorized a new multi-year share repurchase program (the “2011 Share Repurchase Program”) for up to $200 million of the Company’s outstanding common stock. During the Three Months Ended October 1, 2011, the Company repurchased 104,300 shares of common stock for a total of $5.0 million (based on $47.90 per share) under the 2011 Share Repurchase Program. All repurchases of shares under the 2011 Share Repurchase Program will be made consistent with the terms of the Company’s applicable debt instruments.

An aggregate of 6,420 shares included below as repurchased during the Three Months Ended October 1, 2011 reflect the surrender of shares in connection with the vesting of certain restricted stock awarded by the Company to its employees. At the election of an employee, shares having an aggregate value on the vesting date equal to the employee’s withholding tax obligation may be surrendered to the Company in satisfaction thereof. The repurchase of these shares is not a part of the 2010 Share Repurchase Program or the 2011 Share Repurchase Program.

The following table summarizes repurchases of the Company’s common stock during the Three Months Ended October 1, 2011.

					Total Number		Maximum Number (or
					of Shares		Approximate Dollar Value)
	Total Number		Average		Purchased as		of Shares that May Yet Be
	of Shares		Price Paid		Part of Publicly		Repurchased Under
Period	Repurchased		per Share		Announced Programs		the Announced Programs
July 3, 2011 – July 29, 2011		954	$	55.21		—		2,431,191
July 30, 2011 – August 27, 2011		2,432,066	$	48.62		2,431,191		—
August 28, 2011 – October 1, 2011		108,891	$	47.96		104,300	$	195,003,548

In the event that available credit under the 2008 Credit Agreements is less than 25% of the aggregate borrowing limit under the 2008 Credit Agreements, the 2008 Credit Agreements place restrictions on the Company’s ability to pay dividends on the Common Stock and to repurchase shares of the Common Stock. In addition, if an event of default, as defined in the 2011 Term Loan Agreement, has occurred and is continuing or if the consolidated interest coverage ratio, as defined in the 2011 Term Loan Agreement, for the Company’s most recent four fiscal quarters is less than 2.25 to 1.00, the 2011 Term Loan places restrictions on the payment of dividends and repurchases of shares of the Company’s Common Stock that are otherwise allowed to be paid or repurchased up to the cap set forth in the 2011 Term Loan Agreement. At October 1, 2011, the triggering events for restriction on the payment of dividends and repurchase of shares under the 2008 Credit Agreements and under the 2011 Term Loan had not been met. The Company has not paid any dividends on the Common Stock.

62

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits.

The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and:

• were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

• may have been qualified in such agreements by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;

• may apply contract standards of “materiality” that are different from “materiality” under the applicable security laws; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.

The Company acknowledges that notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading.

Exhibit No.		Description of Exhibit
	3.1	Amended and Restated Certificate of Incorporation of The Warnaco Group, Inc. (incorporated by reference to Exhibit 1 to the Form 8-A/A filed by The Warnaco Group, Inc. on February 4, 2003). *
	3.2	Third Amended and Restated Bylaws of The Warnaco Group, Inc. (incorporated by reference to Exhibit 3.2 to the Form 8-K filed by The Warnaco Group, Inc. on July 13, 2010). *
	10.1	Amendment, dated as of July 8, 2011, to the License Agreement, dated as of January 31, 2006, by and among Calvin Klein, Inc., CK Jeanswear Europe S.p.A and WF Overseas Fashion C.V., as amended (underlying agreement filed as Exhibit 10.68 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 31, 2005, filed March 3, 2006). † #
	10.2	Amendment, dated as of July 8, 2011, to the Letter Agreement, dated as of January 31, 2006, by and among Calvin Klein, Inc., CK Jeanswear N.V., CK Jeanswear Europe S.p.A., CK Jeanswear Asia Limited and WF Overseas Fashion C.V. (underlying agreement filed as Exhibit 10.71 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 31, 2005, filed March 3, 2006). † #
	10.3	Amendment, dated as of July 8, 2011, to the License Agreement, dated as of January 31, 2008, by and among Calvin Klein, Inc., WF Overseas Fashion C.V. and CK Jeanswear Europe S.r.l. (underlying agreement filed as Exhibit 10.68 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 29, 2007, filed February 27, 2008). † #
	10.4	Amendment, dated as of July 8, 2011, to the License Agreement, dated as of January 31, 2006, by and among Calvin, Klein, Inc., CK Jeanswear Europe S.p.A and WF Overseas Fashion C.V., as amended (underlying agreement filed as Exhibit 10.69 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 31, 2005, filed March 3, 2006). † #
	10.5	Amendment, dated as of July 8, 2011, to the Amended and Restated License Agreement, dated as of January 1, 1997, by and between Calvin Klein, Inc. and Calvin Klein Jeanswear Asia Ltd., as amended (underlying agreement filed as Exhibit 10.62 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 31, 2005, filed March 3, 2006). † #
	10.6	Amendment, dated as of July 8, 2011, to the Amended and Restated Letter Agreement, dated as of March 6, 2002, by and among Calvin Klein, Inc., CK Jeanswear N.V., CK Jeanswear Asia Limited and CK Jeanswear Europe S.p.A. (underlying agreement filed as Exhibit 10.64 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 31, 2005, filed March 3, 2006). † #
	10.7	Amendment, dated as of July 8, 2011, to the License Agreement, dated as of January 31, 2006, by and among Calvin, Klein, Inc., CK Jeanswear Europe S.p.A, CK Jeanswear Asia Limited and WF Overseas Fashion C.V., as amended (underlying agreement filed as Exhibit 10.70 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 31, 2005, filed March 3, 2006). † #
	10.8	Amendment, dated as of July 8, 2011, to the License Agreement, dated as of January 31, 2008, by and among Calvin Klein, Inc., WF Overseas Fashion C.V., CK Jeanswear Asia Limited and CK Jeanswear Europe S.r.l. (underlying agreement filed as Exhibit 10.70 to The Warnaco Group, Inc.’s Form 10-K for the year ended December 29, 2007, filed February 27, 2008). † #
	10.9	Employment Agreement, dated as of October 31, 2011, by and between The Warnaco Group, Inc. and Martha J. Olson. †
	10.10	First Amendment, dated as of October 31, 2011, to the Amended and Restated Employment Agreement, dated as of December 31, 2008, by and between The Warnaco Group, Inc. and Stanley P. Silverstein (underlying agreement filed as Exhibit 10.30 to The Warnaco Group, Inc.’s Form 10-K for the year ended January 3, 2009, filed March 2, 2009). †

63

Exhibit No.		Description of Exhibit
	10.11	First Amendment, dated as of October 31, 2011, to the Employment Agreement, dated as of August 11, 2008, by and between The Warnaco Group, Inc. and Jay L. Dubiner (underlying agreement filed as Exhibit 10.31 to The Warnaco Group, Inc.’s Form 10-K for the year ended January 3, 2009, filed March 2, 2009). †
	10.12	First Amendment, dated as of October 31, 2011, to the Amended and Restated Employment Agreement, dated as of December 31, 2008, by and between The Warnaco Group, Inc. and Elizabeth Wood (underlying agreement filed as Exhibit 10.33 to The Warnaco Group, Inc.’s Form 10-K for the year ended January 3, 2009, filed March 2, 2009). †
	31.1	Certification of Chief Executive Officer of The Warnaco Group, Inc. pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. †
	31.2	Certification of Chief Financial Officer of The Warnaco Group, Inc. pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. †
	32	Certifications of Chief Executive Officer and Chief Financial Officer of The Warnaco Group, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (furnished herewith)
101.CAL		XBRL Taxonomy Extension Calculation Linkbase. †
101.INS		XBRL Instance Document. †
101.LAB		XBRL Taxonomy Extension Label Linkbase. †
101.PRE		XBRL Taxonomy Extension Presentation Linkbase. †
101.SCH		XBRL Taxonomy Extension Schema Linkbase. †
101.DEF		XBRL Definition Linkbase Document. †

*	Previously filed.
†	Filed herewith.
#	Certain portions of this exhibit omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

64

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE WARNACO GROUP, INC.
Date: November 3, 2011	/s/ Joseph R. Gromek Joseph R. Gromek
	President and Chief Executive Officer
Date: November 3, 2011	/s/ Lawrence R. Rutkowski Lawrence R. Rutkowski
	Executive Vice President and
	Chief Financial Officer

65

EX-10.1

Exhibit 10.1

PORTIONS OF THIS EXHIBIT 10.1 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

W
Bridge Apparel WS (+India)
30 June 2011

July 8, 2011

Warnaco Italy S.r.l. as successor to CK Jeanswear Europe S.p.A. (“CKJE”)
WF Overseas Fashion C.V. (“WFOF”)
(the “CKJ Group Entities”, and together with their respective affiliates and successors within the
Warnaco family of companies, hereinafter all collectively the “CKJ Entities” or “W” or “Warnaco”)

Re: Calvin Klein, Inc. (“CKI”) and CKJE/WFOF “CK/Calvin Klein” Bridge Apparel License d. 31 Jan 06 as amended (“Bridge Apparel License”)

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the Bridge Apparel License, as follows:

A. The parties contemplate that W will be entering into and forming, together with Murjani India, Ltd. (“Murjani”) a joint venture arrangement for the sale of products and conduct of business in India (the “India Joint Venture”).

B. CKI hereby confirms that it has provided its consent to the grant of rights by W hereunder to the India Joint Venture, provided they are consistent with the terms and conditions of this Amendment (and, as applicable, the Bridge Apparel License).

C. The parties confirm, acknowledge and agree that W and the India Joint Venture may enter into additional written agreements to give full effect to the grant of rights by W to the India Joint Venture, as contemplated herein (the “Additional Agreements”). The Additional Agreements shall be prepared in accordance with the terms, conditions and obligations of W under the Bridge Apparel License, as amended hereby.

D. CKI and W hereby confirm and agree that the following amendments shall be made to the Bridge Apparel License to add India to the Territory thereunder and to set forth the obligations of W (and W’s delegation of such rights and obligations to the India Joint Venture, provided W guarantees performance of all such obligations by said India Joint Venture) with respect to India.

1. The “Territory” as defined under the Bridge Apparel License shall, from and after the Effective Date include India as a separate region.

2. The “Percentage Fees” solely with respect to the India region under the Bridge Apparel License shall be as follows:

a.	***
b.	***

3. The current Section 4.1.3 of the Bridge Apparel License is hereby restated (and amended) as set forth on Schedule A, annexed hereto and made a part hereof.

4. The “Minimum Guaranteed Fees” (“MGF”) solely with respect to the India region under the Bridge Apparel License shall be as follows:

Year	MGF US$
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

***

5. The “Minimum Advertising Expenditures” (“MAE”) solely with respect to the India region under the Bridge Apparel License shall be ***.

a.	***
b.	***

6. Commencing in 2019, the “Minimum Net Sales Thresholds” (“MNST”) solely with respect to the India region under Bridge Apparel License shall be as follows:

a.	***
b.	***

7.	MGF’s and MAE’s shall separately apply and be separately credited towards earned Percentage Fees and earned advertising expenditure as to the sales in India only, not aggregated with those for other jurisdictions or regions under the Bridge Apparel License.
8.	Section 4.1.4 of the Bridge Apparel License *** is hereby deleted.

9. This amendment to the Bridge Apparel License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.

10. Except as set forth herein, the Bridge Apparel License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the Bridge Apparel License. Except as otherwise indicated herein, all terms and conditions of the Bridge Apparel License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Italy S.r.l.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Acknowledged by:
[India Joint Venture]
By:	/s/ Stanley Silverstein

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Schedule A

Section 4.1.3:

“Minimum Guaranteed Fees. In respect of each Annual Period or portion thereof during the License Period, the Licensee shall pay to CKI ***.

Annual	Minimum Guaranteed Fee (MGF)
Period/Year	(Euros)
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
	***

EX-10.2

Exhibit 10.2

PORTIONS OF THIS EXHIBIT 10.2 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

W
Bridge Apparel (Stores) (+India)
July 6, 2011/ July 7, 2011

July 8, 2011

Warnaco Italy S.r.l. as successor to CK Jeanswear Europe S.p.A.(“CKJE”)
CK Jeanswear N.V. (“CKJNV”)
WF Overseas Fashion C.V. (“WFOF”)
(the “CKJ Group Entities”, and together with their respective affiliates and successors within the
Warnaco family of companies, hereinafter all collectively, the “CKJ Entities” or “W” or “Warnaco”)

Re:	Calvin Klein, Inc. (“CKI”) and WFOF “CK/Calvin Klein” Bridge Apparel Store License d. 31 Jan 06 (“Bridge Apparel Store License”)
	CKI and CKJE/WFOF “CK/Calvin Klein Bridge Apparel License” d. 31 Jan 06 as amended, including such amendment adding India to the Territory (the “India Bridge Apparel Amendment”), (the “Bridge Apparel License”)

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the Bridge Apparel Store License, as follows:

A. Simultaneously herewith, W and CKI are entering into an amendment to the Bridge Apparel License (as defined and described therein), pursuant to which, among other things, India is added to the Territory thereunder; and the parties acknowledge the formation between W and Murjani of the India Joint Venture (all as defined and described therein) and the grant of rights by W to the India Joint Venture, as specified therein (the “India Bridge Apparel Amendment”).

B. In addition to the India Bridge Apparel Amendment, the parties hereby also agree to amend the Bridge Apparel Store License to add India as a separate region to the Territory, and otherwise as specifically provided herein.

C. The following shall constitute amendments to the Bridge Apparel Store License to coincide with and give full effect to the India Bridge Apparel Amendment.

1. There shall be a separate “Roll-Out Schedule” for India for CK/Calvin Klein Bridge Apparel only Stores as set forth on Schedule RO, annexed hereto and made a part hereof. Anticipated cities in which full price CK/Calvin Klein Bridge Apparel Stores are to be opened are: ***. Locations in India in which full price Stores are to be opened and maintained are: *** (“Key Cities”).

2. The “Percentage Fees” solely with respect to the India region under the Bridge Apparel Store License shall be ***.

3. The Advertising obligations solely with respect to the India region under the Bridge Apparel Store License shall be ***.

4. Warnaco will open the *** full price CK/Calvin Klein Bridge Apparel Stores in ***.

5. ***

6. This amendment to the Bridge Apparel Store License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

7. Except as set forth herein, the Bridge Apparel Store License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the Bridge Apparel Store License. Except as otherwise indicated herein, all terms and conditions of the Bridge Apparel Store License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Italy S.r.l.
By:	/s/ Stanley Silverstein
CK Jeanswear N.V.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Acknowledged by:
[India Joint Venture]
By:	/s/ Stanley Silverstein

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

[Schedule RO]

ROLL-OUT SCHEDULE # STORES
CK/CALVIN KLEIN BRIDGE FULL PRICE BRIDGE APPAREL

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Yr 6

Yr 7

Yr 8

Yr 13

Yr 18

Yr 23

Yr 28

***

***

***

***

***

***

***

***

***

***

***

***

CK/Calvin Klein bridge apparel Stores

Total:

***

***

***

***

***

***

***

***

***

***

***

***

***

EX-10.3

Exhibit 10.3

PORTIONS OF THIS EXHIBIT 10.3 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

W
Bridge Accessories (Stores) (+India)
29 June 2011/ 7 July 2011

July 8, 2011

Warnaco Italy S.r.l. as successor to CK Jeanswear Europe S.p.A.(“CKJE”)
WF Overseas Fashion C.V. (“WFOF”)
(the “CKJ Group Entities”, and together with their respective affiliates and successors within
the Warnaco family of companies, hereinafter all collectively, the “CKJ Entities” or “W” or “Warnaco”)

Re:	Calvin Klein, Inc. (“CKI”) and WFOF “CK/Calvin Klein” Bridge Accessories only Store License (Europe), for the sale therein of Bridge Accessories Articles only d. 31 January 2008 (“Bridge Accessories Store License”)
	CKI and CKJE/WFOF “CK/Calvin Klein” Bridge Accessories License d. 31 Jan 06 as amended, including such amendment adding India to the Territory (the “India Bridge Accessories Amendment”), (the “Bridge Accessories License”).

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the Bridge Accessories Store License, as follows:

A. Simultaneously herewith, W and CKI are entering into an amendment to the Bridge Accessories License (as defined and described therein), pursuant to which, among other things, India is added to the Territory thereunder; and the parties acknowledge the formation between W and Murjani of the India Joint Venture (all as defined and described therein) and the grant of rights by W to the India Joint Venture, as specified therein (the “India Bridge Accessories Amendment”).

B. In addition to the India Bridge Accessories Amendment, the parties hereby also agree to amend the Bridge Accessories Store License to add India as a separate region to the Territory, and otherwise as specifically provided herein.

C. The following shall constitute amendments to the Bridge Accessories Store License to coincide with and give full effect to the India Bridge Accessories Amendment.

1. There shall be a separate “Roll-Out Schedule” for India for CK/Calvin Klein Bridge accessories only Stores to be provided to CKI ***. Anticipated cities in which full price CK/Calvin Klein Bridge accessories only Stores are to be opened are: ***. Locations in India in which full price Stores are to be opened and maintained are: *** (“Key Cities”).

2. The “Percentage Fees” solely with respect to the India region under the Bridge Accessories Store License shall be ***.

3. The Advertising obligations solely with respect to the India region under the Bridge Accessories Store License shall be ***.

4. “Exclusive Merchandise” and “Merchandise” shall be as defined in the Bridge Accessories Store License.

5. This amendment to the Bridge Accessories Store License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

6. Except as set forth herein, the Bridge Accessories Store License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the Bridge Accessories Store License. Except as otherwise indicated herein, all terms and conditions of the Bridge Accessories Store License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Italy S.r.l.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Acknowledged by:
[India Joint Venture]
By:	/s/ Stanley Silverstein

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Schedule RO

[Blank]

EX-10.4

Exhibit 10.4

PORTIONS OF THIS EXHIBIT 10.4 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

W
Bridge Accessories WS (+India)
29 June 2011/ 7 July 2011

July 8, 2011

Warnaco Italy S.r.l. as successor to CK Jeanswear Europe S.p.A. (“CKJE”)
WF Overseas Fashion C.V. (“WFOF”)
(the “CKJ Group Entities”, and together with their respective affiliates and successors within
the Warnaco family of companies, hereinafter all collectively the “CKJ Entities” or “W” or “Warnaco”)

Re: Calvin Klein, Inc. (“CKI”) and CKJE/WFOF “CK/Calvin Klein” Bridge Accessories License d. 31 Jan 06 as amended (“Bridge Accessories License”)

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the Bridge Accessories License, as follows:

A. The parties contemplate that W will be entering into and forming, together with Murjani India, Ltd. (“Murjani”) a joint venture arrangement for the sale of products and conduct of business in India (the “India Joint Venture”).

B. CKI hereby confirms that it has provided its consent to the grant of rights by W hereunder to the India Joint Venture, provided they are consistent with the terms and conditions of this Amendment (and, as applicable, the Bridge Accessories License).

C. The parties confirm, acknowledge and agree that W and the India Joint Venture may enter into additional written agreements to give full effect to the grant of rights by W to the India Joint Venture, as contemplated herein (the “Additional Agreements”). The Additional Agreements shall be prepared in accordance with the terms, conditions and obligations of W under the Bridge Accessories License, as amended hereby.

D. CKI and W hereby confirm and agree that the following amendments shall be made to the Bridge Accessories License to add India to the Territory thereunder and to set forth the obligations of W (and W’s delegation of such rights and obligations to the India Joint Venture, provided W guarantees performance of all such obligations by said India Joint Venture) with respect to India.

1. The “Territory” as defined under the Bridge Accessories License shall, from and after the Effective Date include India as a separate region.

2. The “Percentage Fees” solely with respect to the India region under the Bridge Accessories License shall be as follows:

a.	***
b.	***

3. The current Section 4.1.3 of the Bridge Accessories License is hereby restated (and amended) as set forth on Schedule A, annexed hereto and made a part hereof.

4. The “Minimum Guaranteed Fees” (“MGF”) solely with respect to the India region under the Bridge Accessories License shall be as follows:

Year	MGF US$
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
	***

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

5. The “Minimum Advertising Expenditures” (“MAE”) solely with respect to the India region under the Bridge Accessories License shall be ***.

a.	***
b.	***

6. Commencing in 2019, the “Minimum Net Sales Thresholds” (“MNST”) solely with respect to the India region under Bridge Accessories License shall be as follows:

a.	***
b.	***

7.	MGF’s and MAE’s shall separately apply and be separately credited towards earned Percentage Fees and earned advertising expenditure as to the sales in India only, not aggregated with those for other jurisdictions or regions under the Bridge Accessories License.
8.	Section 4.1.4 of the Bridge Accessories License *** is hereby deleted.

9. This amendment to the Bridge Accessories License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.

10. Except as set forth herein, the Bridge Accessories License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the Bridge Accessories License. Except as otherwise indicated herein, all terms and conditions of the Bridge Accessories License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Italy S.r.l.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Acknowledged by:
[India Joint Venture]
By:	/s/ Stanley Silverstein

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Schedule A

Section 4.1.3:

“Minimum Guaranteed Fees. In respect of each Annual Period or portion thereof during the License Period, the Licensee shall pay to CKI ***.

Annual	Minimum Guaranteed Fee (MGF)
Period/Year	(Euros)
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
***	***
	***

EX-10.5

Exhibit 10.5

PORTIONS OF THIS EXHIBIT 10.5 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

DMG — W
Jeans Apparel WS (+India)
23 June 2011/27 June 11/ 7 July 2011 July 8, 2011

Warnaco Asia Limited as successor to CK Jeanswear Asia Limited (“CKJA”)
CK Jeanswear Australia, Ltd. (“CKJ Aus”)
CK Jeanswear New Zealand, Ltd. (“CKJNZ”)
CK Jeanswear Korea, Ltd. (“CKJK”)
CK Jeanswear Shanghai, Ltd. (“CKJS”)
WF Overseas Fashion C.V. (“WFOF”)
(“CKJA Group Entities”)

Warnaco B.V. as successor to CKJ Jeanswear N.V. (as “guarantor”) (“CKJNV” together with the CKJA Group Entities and their respective affiliates and successors within the Warnaco family of companies, hereinafter all collectively (the “CKJ Entities” or “W” or “Warnaco”)

Re: Calvin Klein, Inc. (“CKI”) CKJA et alia Jeans Apparel License Agreement (May 1996, Amended and Restated d. as of 1 January 1997 as amended (“CK Jeans Asia Jeans Apparel License”), including as to assigned portions to CKJ Aus (Australia), CKJNZ (New Zealand), CKJ Korea (S. Korea), CKJS (PRC China) and CKJE (Japan), sometimes “Assigned Licenses”

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the CK Jeans Asia Jeans Apparel License, as follows:

A. The parties contemplate that W will be entering into and forming, together with Murjani India, Ltd. (“Murjani”) a joint venture arrangement for the sale of products and conduct of business in India (the “India Joint Venture”).

B. CKI hereby confirms that it has provided its consent to the grant of rights by W hereunder to the India Joint Venture, provided they are consistent with the terms and conditions of this Amendment (and, as applicable, the CK Jeans Asia Jeans Apparel License).

C. The parties confirm, acknowledge and agree that W and the India Joint Venture may enter into additional written agreements to give full effect to the grant of rights by W to the India Joint Venture, as contemplated herein (the “Additional Agreements”). The Additional Agreements shall be prepared in accordance with the terms, conditions and obligations of W under the CK Jeans Asia Jeans License as amended hereby.

D. CKI and W hereby confirm and agree that the following amendments shall be made to the CK Jeans Asia Jeans Apparel License to add India to the Territory thereunder and to set forth the obligations of W (and W’s delegation of such rights and obligations to the India Joint Venture provided W guarantees performance of all such obligations by said India Joint Venture) with respect to India.

1. The “Territory” as defined under the CK Jeans Asia Jeans Apparel License shall, from and after the Effective Date include India as a separate region.

2. The “Percentage Fees” solely with respect to the India region under the CK Jeans Asia Jeans Apparel License shall be as follows:

a.	***
b.	***
c.	***

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

3. The “Minimum Guaranteed Fees” (“MGF”) solely with respect to the India region under the CK Jeans Asia Jeans Apparel License shall be as follows:

Year/Annual Period	Minimum Guaranteed Fees (in US$)
***	***
***	***
***	***
***	***
***	****
***	****
***	****
***	****
***	****
***	****

* In each case rounded up to the next US$10K.

4. The “Minimum Advertising Expenditures” (“MAE”) solely with respect to the India region under the CK Jeans Asia Jeans Apparel License shall be as follows:

a.	***
b.	***

5. Commencing in ***, the “Minimum Net Sales Thresholds” (“MNST”) solely with respect to the India region under the CK Jeans Asia Jeans Apparel License shall be as follows:

a.	***
b.	***

6. MGF’s and MAE’s shall separately apply and be separately credited towards earned Percentage Fees and earned advertising expenditure amounts as to the sales in India, notwithstanding the provisions of the CK Jeans Asia Jeans Apparel License.

7. The parties agree that Section 3 of the Amendment dated 31 January 2006 is hereby corrected to read in the Minimum Guaranteed Fee for the 26th through 30th Annual Period, subsection (y) “25th” instead of “15th”.

8. This amendment to the CK Jeans Asia Jeans Apparel License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.

9. Except as set forth herein, the CK Jeans Asia Jeans Apparel License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the CK Jeans Asia Jeans Apparel License. Except as otherwise indicated herein, all terms and conditions of the CK Jeans Asia Jeans Apparel License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Asia Limited
By:	/s/ Stanley Silverstein
CK Jeanswear Australia, Ltd.
CK Jeanswear New Zealand, Ltd.
CK Jeanswear Korea, Ltd.
CK Jeanswear Shanghai, Ltd.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Acknowledged by:
[India Joint Venture]
By:	/s/ Stanley Silverstein

EX-10.6

Exhibit 10.6

PORTIONS OF THIS EXHIBIT 10.6 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

DMG — W
Jeans Apparel Retail (+India)
23 June 2011/27 June 2011/ 7 July 2011

July 8, 2011

Warnaco Asia Limited as successor to CK Jeanswear Asia Limited (“CKJA”)
CK Jeanswear Australia, Ltd. (“CKJ Aus”)
CK Jeanswear New Zealand, Ltd. (“CKJNZ”)
CK Jeanswear Korea, Ltd. (“CKJK”)
CK Jeanswear Shanghai, Ltd. (“CKJS”)
WF Overseas Fashion C.V. (“WFOF”)

Warnaco Italy S.r.l. as successor to CK Jeanswear Europe S.p.A.(“CKJE”)
(“CKJA Group Entities”)

Warnaco B.V. as successor to CKJ Jeanswear N.V. (as “guarantor”)(“CKJNV” together with the CKJA Group Entities and their respective affiliates and successors within the Warnaco family of companies, hereinafter all collectively, the “CKJ Entities” or “W” or “Warnaco”)

Re:

Calvin Klein, Inc. (“CKI”) and CKJ Entities as parties (as applicable) to the Amended and Restated “Calvin Klein Jeans” Jeans Apparel Store License d. 6 March 2002 as amended (“Jeans Apparel Store License”)

CKI and CKJA et alia Jeans Apparel License Agreement (May 1996, Amended and Restated d. as of 1 January 1997 as amended, including such amendment adding India to the Territory (the “India Jeans Amendment”), (“CK Jeans Asia Jeans Apparel License”), including as to assigned portions to CKJ Aus (Australia), CKJNZ (New Zealand), CKJ Korea (S. Korea), CKJS (PRC China) and CKJE (Japan), sometimes “Assigned Licenses”.

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the Jeans Apparel Store License, as follows:

A. Simultaneously herewith, W and CKI are entering into an amendment to the CK Jeans Asia Jeans Apparel License (as defined and described therein), pursuant to which, among other things, India is added to the Territory thereunder; and the parties acknowledge the formation between W and Murjani of the India Joint Venture (all as defined and described therein) and the grant of rights by W to the India Joint Venture, as specified therein (the “India Jeans Amendment”).

B.	In addition to the India Jeans Amendment, the parties hereby also agree to amend the Jeans Apparel Store License to add India to the Territory, and otherwise as specifically provided herein.
C.	The following shall constitute amendments to the Jeans Apparel Store License to coincide with and give full effect to the India Jeans Amendment.

1.	The “Territory” as defined under the Jeans Apparel Store License shall, from and after the Effective Date include India as a separate region.
2.	There shall be a separate “Roll-Out Schedule” for India for full price Calvin Klein Jeans jeans apparel stores for *** through *** then thereafter every *** years, as set forth in Schedule RO, annexed hereto and made a part hereof. Anticipated cities in which full price Calvin Klein Jeans jeans apparel Stores are to be opened are: ***. Locations in India in which full price stores are to be opened and maintained are: *** (“Key Cities”).
3.	The “Percentage Fees” solely with respect to the India region under the Jeans Apparel Store License shall be as follows:

a.	***
b.	***

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

4. The advertising obligations with respect to the India Region under the Jeans Apparel Store License shall be as follows:

a.	***
b.	***

5.	For purposes hereof, “Exclusive Merchandise” and “Merchandise” shall be as defined in the Jeans Apparel Store License.
6.	This amendment to the Jeans Apparel Store License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.
7.	Except as set forth herein, the Jeans Apparel Store License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the Jeans Apparel Store License. Except as otherwise indicated herein, all terms and conditions of the Jeans Apparel Store License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Asia Limited
By:	/s/ Stanley Silverstein
CK Jeanswear Australia, Ltd.
CK Jeanswear New Zealand, Ltd.
CK Jeanswear Korea, Ltd.
CK Jeanswear Shanghai, Ltd.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Warnaco B.V.
By:	/s/ Amy Greenfield
Acknowledged by: [India Joint Venture]
By:	/s/ Stanley Silverstein

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Schedule RO

ROLL-OUT SCHEDULE # STORES
CALVIN KLEIN JEANS FULL PRICE JEANS APPAREL

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Yr 6

Yr 7

Yr 8

Yr 13

Yr 18

Yr 23

Yr 28

***

***

***

***

***

***

***

***

***

***

***

***

Calvin Klein Jeans jeans apparel Stores

Total:

***

***

***

***

***

***

***

***

***

***

***

***

EX-10.7

Exhibit 10.7

PORTIONS OF THIS EXHIBIT 10.7 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

DMG — W
Jeans Accessories WS (+India)
23 June 2011/27 Jun 11/ 7 July 2011

July 8, 2011

Warnaco Asia Limited as successor to CK Jeanswear Asia Limited (“CKJA”)
CK Jeanswear Australia, Ltd. (“CKJ Aus”)
CK Jeanswear New Zealand, Ltd. (“CKJNZ”)
CK Jeanswear Korea, Ltd. (“CKJK”)
CK Jeanswear Shanghai, Ltd. (“CKJS”)
WF Overseas Fashion C.V. (“WFOF”)
(“CKJA Group Entities”)

Warnaco B.V. as successor to CKJ Jeanswear N.V. (as “guarantor”) (“CKJNV” together with the CKJA Group Entities and their respective affiliates and successors within the Warnaco family of companies, hereinafter all collectively (the “CKJ Entities” or “W” or “Warnaco”)

Re: Calvin Klein, Inc. (“CKI”) and CKJE, CKJA and WFOF “Calvin Klein Jeans” Jeans Accessories License d. 31 Jan 06 as amended (“Jeans Accessories License”)

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the Jeans Accessories License, as follows:

A.	The parties contemplate that W will be entering into and forming, together with Murjani India, Ltd. (“Murjani”) a joint venture arrangement for the sale of products and conduct of business in India (the “India Joint Venture”).
B.	CKI hereby confirms that it has provided its consent to the grant of rights by W hereunder to the India Joint Venture, provided that they are consistent with the terms and conditions of this Amendment (and, as applicable, the Jeans Accessories License).
C.	The parties confirm, acknowledge and agree that W and the India Joint Venture may enter into additional written agreements to give full effect to the grant of rights by W to the India Joint Venture, as contemplated herein (the “Additional Agreements”). The Additional Agreements shall be prepared in accordance with the terms, conditions and obligations of W under the Jeans Accessories License as amended hereby.
D.	CKI and W hereby confirm and agree that the following amendments shall be made to the Jeans Accessories License to add India to the Territory thereunder and to set forth the obligations of W (and W’s delegation of such rights and obligations to the India Joint Venture provided W guarantees performance of all such obligations by said India Joint Venture) with respect to India.

1. The “Territory” as defined under the Jeans Accessories License shall, from and after the Effective Date include India as a separate region.

2. The “Percentage Fees” solely with respect to the India region under the Jeans Accessories License shall be as follows:

a.	***
b.	***
c.	***

3. The “Minimum Guaranteed Fees” (“MGF”) solely with respect to the India region under the Jeans Accessories License shall be as follows:

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Year/Annual Period	MGF US$
***		***
***		***
***		***
***		***
***		***
***		***
***		***
***		***
***		***
***		***
		***

4. The “Minimum Advertising Expenditures” (“MAE”) solely with respect to the India region under the Jeans Accessories License shall be as follows:

a. ***

b. ***

5. Commencing in ***, the “Minimum Net Sales Thresholds” (“MNST”) solely with respect to the India region under Jeans Accessories License shall be as follows:

a. ***

b. ***

6. MGF’s and MAE’s shall separately apply and be separately credited towards earned Percentage Fees and earned advertising expenditure as to the sales in India only, not aggregated with those for other jurisdictions or regions under the Jeans Accessories License.

7. This amendment to the Jeans Accessories License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.

8. Except as set forth herein, the Jeans Accessories License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the Jeans Accessories License. Except as otherwise indicated herein, all terms and conditions of the Jeans Accessories License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Asia Limited
By:	/s/ Stanley Silverstein
CK Jeanswear Australia, Ltd.
CK Jeanswear New Zealand, Ltd.
CK Jeanswear Korea, Ltd.
CK Jeanswear Shanghai, Ltd.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Acknowledged by: [India Joint Venture]
By:	/s/ Stanley Silverstein

EX-10.8

Exhibit 10.8

PORTIONS OF THIS EXHIBIT 10.8 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

DMG — W
Jeans Accessories Retail (+India)
23 June 2011/July 6, 2011/ July 7, 2011

July 8, 2011

Warnaco Asia Limited as successor to CK Jeanswear Asia Limited (“CKJA”)
CK Jeanswear Australia, Ltd. (“CKJ Aus”)
CK Jeanswear New Zealand, Ltd. (“CKJNZ”)
CK Jeanswear Korea, Ltd. (“CKJK”)
CK Jeanswear Shanghai, Ltd. (“CKJS”)
WF Overseas Fashion C.V. (“WFOF”)

Warnaco Italy S.r.l. as successor to CK Jeanswear Europe S.p.A.(“CKJE”)
(“CKJA Group Entities”)

Warnaco B.V. as successor to CKJ Jeanswear N.V. (as “guarantor”) (“CKJNV” together with the CKJA Group Entities and their respective affiliates and successors within the Warnaco family of companies, hereinafter all collectively, the “CKJ Entities” or “W” or “Warnaco”)

Re: Calvin Klein, Inc. (“CKI”) and CKJE, CKJA and WFOF “Calvin Klein Jeans” Jeans Accessories only Store License, for the sale therein of Jeans Accessories Articles only d. 31 Jan 08 (the “Jeans Accessories Store License”),

CKI and CKJE, CKJA and WFOF “Calvin Klein Jeans” Jeans Accessories License d. 31 Jan 06 as amended, including such amendment adding India to the Territory (the “India Jeans Accessories Amendment”), (the “Jeans Accessories License”).

Ladies and Gentlemen:

The CKJ Entities have requested and CKI hereby agrees, effective July 8, 2011 (the “Effective Date”), to add India to the “Territory” covered under the Jeans Accessories Store License, as follows:

A.	Simultaneously herewith, W and CKI are entering into an amendment to the Jeans Accessories License (as defined and described therein), pursuant to which, among other things, India is added to the Territory thereunder; and the parties acknowledge the formation between W and Murjani of the India Joint Venture (all as defined and described therein) and the grant of rights by W to the India Joint Venture, as specified therein (the “India Jeans Accessories Amendment”).
B.	In addition to the India Jeans Accessories Amendment, the parties hereby also agree to amend the Jeans Accessories Store License to add India to the Territory, and otherwise as specifically provided herein.
C.	The following shall constitute amendments to the Jeans Accessories Store License to coincide with and give full effect to the India Jeans Accessories Amendment.

1. The “Territory” as defined under the Jeans Accessories Store License shall, from and after the Effective Date include India as a separate region.

2. There shall be a separate “Roll-Out Schedule” for India for Calvin Klein Jeans jeans accessories only Stores to be provided to CKI ***. Anticipated cities in which full price Calvin Klein Jeans jeans accessories only Stores are to be opened are: ***. Locations in India in which full price Stores are to be opened and maintained are: *** (“Key Cities”).

3. The “Percentage Fees” solely with respect to the India region under the Jeans Accessories Store License shall be as follows:

a. ***

b. ***

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

4. The Advertising obligations solely with respect to the India region under the Jeans Accessories Store License shall be as follows:

a. ***

b. ***

5. “Exclusive Merchandise” and “Merchandise” shall be as defined in the Jeans Accessories Store License.

6. This amendment to the Jeans Accessories Store License shall be considered as having been entered into in the State of New York and shall be construed and interpreted in accordance with the laws of that state applicable to agreements made and to be performed therein.

7. Except as set forth herein, the Jeans Accessories Store License remains in full force and effect as set forth therein. Defined terms, unless otherwise provided herein, shall have the meaning assigned to each of them in the Jeans Accessories Store License. Except as otherwise indicated herein, all terms and conditions of the Jeans Accessories Store License shall continue to apply. This amendment may not be amended or modified, or terminated except in writing signed by all parties hereto and exchanged amongst them.

The parties have executed this amendment as of the date first written above.

[Signature Page Follows]

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Calvin Klein, Inc.
By:	/s/ Pamela Bradford
Warnaco Asia Limited
By:	/s/ Stanley Silverstein
CK Jeanswear Australia, Ltd.
CK Jeanswear New Zealand, Ltd.
CK Jeanswear Korea, Ltd.
CK Jeanswear Shanghai, Ltd.
By:	/s/ Stanley Silverstein
WFOF Overseas Fashion C.V.
By:	/s/ Marissa Pagnani
Warnaco B.V.
By:	/s/ Amy Greenfield
Acknowledged by: [India Joint Venture]
By:	/s/ Stanley Silverstein

CONFIDENTIAL TREATMENT REQUESTED BY THE WARNACO GROUP, INC.

Schedule RO

[Blank]

EX-10.9

Exhibit 10.9

EMPLOYMENT AGREEMENT

This AGREEMENT (“Agreement”) is made and entered into as of October 31, 2011 (the “Effective Date”) by and between THE WARNACO GROUP, INC., a Delaware corporation (together with its successors and assigns, the “Company”), and MARTHA J. OLSON (the “Executive”).

W I T N E S S E T H :

WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment and the Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement; and

WHEREAS, this Agreement supersedes in its entirety the Executive’s current employment agreement, dated as of December 3, 2008.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive (individually a “Party” and together the “Parties”) agree as follows:

1. Certain Definitions.

(a) “Affiliate” of a specified person or entity shall mean a person or entity that directly or indirectly controls, is controlled by, or is under common control with, the person or entity specified.

(b) “Board” shall mean the Board of Directors of The Warnaco Group, Inc.

(c) “Cause” shall mean:

(i) willful misconduct by the Executive which causes material harm to the interests of the Company or any of its Affiliates;

(ii) willful and material breach of duty by the Executive in the course of her employment, which, if curable, is not cured within 10 days after Executive’s receipt of written notice from the Company;

(iii) willful failure by the Executive, after having been given written notice from the Company, to perform her duties other than a failure resulting from Executive’s incapacity due to physical or mental illness;

(iv) indictment of the Executive for a felony, a crime involving moral turpitude or any crime involving the business of the Company or any of its Affiliates which, in the case of such crime involving the business of the Company or any of its Affiliates, is injurious to such business; or

(v) failure of the Executive to give 90 days prior written notice of a voluntary resignation (other than for Good Reason or Disability), unless such failure is waived in writing by an authorized officer of the Company or the Company shortens the notice period in accordance with Section 5(c) hereof.

For purposes of this Cause definition, no act or failure to act, on the part of the Executive, shall be considered willful unless it is done, or omitted to be done, by her in bad faith and without reasonable belief that her action was in the best interests of the Company. The determination to terminate the Executive’s employment for Cause shall be made by the full Board by no less than majority vote and prior to such determination the Executive and her legal representatives shall have the right to appear before the Board or a committee designated by the Board.

(d) “Change in Control” shall mean any of the following:

(i) any “person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended) or group of persons acting jointly or in concert, but excluding a person who owns more than 5% of the outstanding shares of the Company as of the Effective Date, becomes a “beneficial owner” (as such term is used in Rule 13d-3 promulgated under that Act), of 50% or more of the Voting Stock of the Company;

(ii) all or substantially all of the assets of the Company are disposed of pursuant to a merger, consolidation or other transaction (unless the shareholders of the Company immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Company all of the Voting Stock or other ownership interests of the entity or entities, if any, that succeed to the business of the Company); or

(iii) approval by the shareholders of the Company of a complete liquidation or dissolution of all or substantially all of the assets of the Company.

For purposes of this Change in Control definition, “Voting Stock” shall mean the capital stock of any class or classes having general voting power, in the absence of specified contingencies, to elect the directors of the Company.

2

(e) “Date of Termination” shall mean:

(i) if the Executive’s employment is terminated by the Company, the date specified in the notice by the Company to the Executive that her employment is so terminated; provided that for a termination for Cause such notice is delivered after the Board determination as set forth in Section 1(c) hereof;

(ii) if the Executive voluntarily resigns her employment, 90 days after receipt by the Company of written notice from the Executive that the Executive is terminating her employment or, if the Company shortens the required notice period in accordance with Section 5(c), the date of termination specified in such notice;

(iii) if the Executive’s employment is terminated by reason of death, the date of death;

(iv) if the Executive’s employment is terminated for Disability, 30 days after written notice is given as specified in Section 1(f) below; or

(v) if the Executive resigns her employment for Good Reason, 30 days after receipt by the Company of timely written notice from the Executive in accordance with Section 1(g) below unless the Company cures the event or events giving rise to Good Reason within 30 days after receipt of such written notice.

(f) “Disability” shall mean the Executive’s inability, due to physical or mental incapacity, to substantially perform her duties and responsibilities for a period of 120 consecutive days as determined by a medical doctor selected by the Company and reasonably acceptable to the Executive. In no event shall any termination of the Executive’s employment for Disability occur until the Party terminating her employment gives written notice to the other Party in accordance with Section 14 below.

(g) “Good Reason” shall mean the occurrence of any of the following without the Executive’s prior written consent:

(i) a material diminution by the Company in the Executive’s authority, duties or responsibilities as Group President, Intimate Apparel and Swimwear or the assignment to the Executive by the Company of any duties materially inconsistent with such position;

(ii) a reduction in (A) Base Salary or (B) Target Bonus opportunity as a percentage of Base Salary;

(iii) in connection with or following a Change in Control, a change in reporting structure such that the Executive reports to an executive officer position (such as Chief Operating Officer or Chief Financial Officer) other than the executive officer position she was reporting to immediately prior to the Change in Control;

3

(iv) the removal by the Company of the Executive as Group President, Intimate Apparel and Swimwear of the Company or the failure by the Board to elect or reelect the Executive as an executive officer of the Company;

(v) requiring the Executive to be principally based at any office or location more than 50 miles from her current place of employment; or

(vi) the failure of a successor to all or substantially all of the assets of the Company to assume the Company’s obligations under this Agreement either in writing or as a matter of law within 15 days after a merger, consolidation, sale or similar transaction.

Anything herein to the contrary notwithstanding, the Executive shall not be entitled to resign for Good Reason (i) if the occurrence of the event otherwise constituting Good Reason is the result of Disability, a termination by the Company for which notification has been given or a voluntary resignation by the Executive other than for Good Reason and (ii) unless the Executive gives the Company written notice of the event constituting “Good Reason” within 90 days of the occurrence of such event and the Company fails to cure such event within 30 days after receipt of such notice.

(h) “Notice Period” means the period from the date of a notice of termination as set forth in Section 1(e)(ii) (for a voluntary resignation by the Executive) through the Date of Termination.

(i) “Separation From Service” shall mean a termination of the Executive’s employment in a manner consistent with Final Treasury Regulations 1.409A-1(h).

2. Position; Term.

During the Term, the Executive shall be employed by the Company as Group President, Intimate Apparel and Swimwear and shall perform such duties and responsibilities as determined by the Company’s Chief Operating Officer or such other executive officer position which the Executive reports to, in all cases consistent with such position. The Executive shall devote her full business time and attention to the satisfactory performance of such duties. Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from (i) subject to reasonable approval of the Board, serving on the boards of directors of trade associations and/or charitable organizations or other business corporations (provided such service is not prohibited under Section 7(a)(i) below), (ii) engaging in charitable activities and community affairs and (iii) managing her personal investments and affairs, provided that the activities described in the preceding clauses (i) through (iii) do not materially interfere with the proper performance of the Executive’s duties and responsibilities hereunder. The term of the Executive’s employment hereunder shall begin on January 1, 2011 (the “Commencement Date”) and end at the close of business on December 31, 2012; provided, however, that the Term shall thereafter be automatically extended for additional one-year periods, unless either the Company or the Executive gives the other written notice at least 120 days prior to the then-scheduled expiration of the Term that such Party is electing not to so extend the Term (the initial term plus any extension thereof in accordance herewith being referred to herein as the “Term”). Notwithstanding the foregoing, the Term shall end on the date on which the Executive’s employment is terminated by either Party in accordance with the provisions herein.

4

3. Compensation.

(a) Base Salary. During the Term, the Executive shall be paid an annualized Base Salary of $650,000 (“Base Salary”), payable in accordance with the regular payroll practices of the Company, subject to annual review by the Board (or the Compensation Committee of the Board) in its sole discretion. During the Term, the Base Salary may not be decreased without the Executive’s prior written consent. The Executive shall not be entitled to any compensation for service as an officer or member of any board of directors of any Affiliate. After any increase in base salary approved by the Board (or the Compensation Committee of the Board), the term “Base Salary” as used in this Agreement shall thereafter refer to the increased amount.

(b) Annual Incentive Awards. During the Term (including for fiscal year 2011 and thereafter), the Executive shall be eligible to receive an annual incentive award (provided the Executive was employed continuously during the applicable fiscal year) pursuant to the Company’s Incentive Compensation Plan, as amended (or such other annual incentive plan as may be approved by its shareholders), in effect for the applicable fiscal year (“Bonus Plan”). During the Term, the Executive’s annual incentive award for fiscal year 2011 and thereafter shall have a target of 85% of Base Salary (“Target Bonus”), with a potential maximum award as set forth in the Bonus Plan. Any bonus shall, in all events, be based on the Executive’s achievement of annual performance and other targets approved by the committee administering the Bonus Plan. The amount and payment of any annual incentive award shall be determined in accordance with the Bonus Plan and shall be payable to the Executive when bonuses for the applicable performance period are paid to other senior executives of the Company, but in all events no later than the 70^th day following the end of the fiscal year for which the annual incentive award has been earned. After any increase in the Executive’s target annual bonus opportunity as a percentage of Base Salary as approved by the Board (or the Compensation Committee of the Board), the term “Target Bonus” as used in this Agreement shall thereafter refer to the increased target opportunity.

(c) Long-Term Incentive Awards. Subject to Section 5 hereof, the Executive was granted the following equity awards on September 9, 2008: 4,100 shares of restricted stock (“Restricted Stock”) and an option to purchase 10,000 shares of the common stock of The Warnaco Group, Inc. (“Option”) in accordance with the applicable equity plan. The Restricted Stock will cliff vest on September 9, 2011 and the Option shall vest (and become exercisable) in three equal annual installments on September 9, 2009, September 9, 2010 and September 9, 2011, provided in both cases that the Executive is employed by the Company through such applicable vesting date and has not given notice to the Company that the Executive is voluntarily resigning without Good Reason prior to such applicable vesting date. Thereafter, commencing in fiscal year 2011 and provided the Term is in effect and the Executive continues to be employed by the Company, the Executive shall be eligible to participate in the Company’s equity incentive plans (“Stock Incentive Plan”). Except as otherwise provided herein, all equity grants shall be governed by the applicable equity plan and/or award agreement. The Executive shall be subject to the equity ownership, retention and other requirements applicable to senior executives of the Company.

5

(d) Supplemental Award. During the Term beginning with fiscal year 2011, provided the Executive is employed by the Company on the applicable grant date, the Executive shall be entitled to an annual award with an aggregate grant date value equal to 10% of the sum of Base Salary plus Annual Bonus as defined in this paragraph 3(d) if the Executive will be less than less than age 60 at the end of the applicable fiscal year and 13% of such amount if the Executive will be age 60 or older by the end of the applicable fiscal year (“Supplemental Award”). For this purpose, Base Salary shall be the Base Salary paid to the Executive for the fiscal year prior to the award year and Annual Bonus shall be the annual bonus awarded to the Executive by the Board for such fiscal year. The Supplemental Award shall not be awarded to the Executive until after the determination by the Board of the Executive’s annual bonus for the prior fiscal year and 50% of the value of the Supplemental Award shall be awarded in the form of restricted shares pursuant to the applicable Stock Incentive Plan (“Career Shares”) and 50% shall be awarded in the form of a credit to a bookkeeping account maintained by the Company for the Executive’s account (the “Notional Account”). Any Career Shares awarded hereunder shall be governed by the applicable Stock Incentive Plan and, if applicable, any award agreement. For purposes of this Section 3(d), each Career Share shall be valued at the closing price of a share of the Company’s common stock (“Share”) on the date that the Supplemental Award is made. For the Notional Account, the Company shall select the investment alternatives available to the Executive under the Company’s 401(k) plan. The balance in the Notional Account shall periodically be credited (or debited) with the deemed positive (or negative) return based on returns of the permissible investment alternative or alternatives under the Company’s 401(k) plan as selected in advance by the Executive (and in accordance with the applicable rules of such plan or investment alternative) to apply to such Notional Account, with such deemed returns calculated in the same manner and at the same times as the return on such investment alternative(s). The Company’s obligation to pay the amount credited to the Notional Account, including any return thereon provided for in this Section 3(d), shall be an unfunded obligation to be satisfied from the general funds of the Company. Except as otherwise provided in Section 5 below or the applicable Stock Incentive Plan and provided that the Executive is employed by the Company on such vesting date, any Supplemental Award granted in the form of Career Shares will vest as follows: 50% of the Career Shares will vest on the earlier of the Executive’s 62nd birthday or upon the Executive’s obtaining 15 years of “Vesting Service” and 100% of the Career Shares will vest on the earliest of (i) the Executive’s 65th birthday, (ii) upon the Executive obtaining 20 years of “Vesting Service” or (iii) 10th anniversary of the date of grant. Except as otherwise provided in Section 5 below, and provided that the Executive is employed by the Company on such vesting date, any Supplemental Award granted as a credit to the Notional Account (as adjusted for any returns thereon) (“Adjusted Notional Account”)) shall vest as follows: 50% on the earlier of the Executive’s 62nd birthday or upon the Executive obtaining 5 years of “Vesting Service” and 100% on the earlier of the Executive’s 65th birthday and upon the Executive obtaining 10 years of “Vesting Service”. In addition, any unvested Adjusted Notional Account shall vest upon a Change in Control as defined in Section 1(d)(i) or (ii) hereof. For purposes of this Section 3(d), “Vesting Service” shall mean the period of time that the Executive is employed by the Company as an executive officer. Subject to Section 15(b) hereof, upon vesting the Career Shares will be delivered to the Executive in the form of Shares. The vested balance in the Adjusted Notional Account, if any, shall not be distributed to the Executive until there has been a Separation From Service or, if earlier, there has been a Change in Control as defined in Section 1(d)(i) or (ii) hereof and, at such time, shall only be distributed at the earliest time that

6

satisfies the requirements of this Section 3(d). Upon a Change in Control as defined in Section 1(d)(i) or (ii), the vested Adjusted Notional Account, subject to Section 15(b) hereof, shall be paid to the Executive in a lump-sum cash payment. In addition, if the Executive’s employment is terminated for any reason, after taking into account Section 5 hereof, any unvested Supplemental Awards (whether in the form of Career Shares or the Adjusted Notional Account) shall be forfeited and any vested balance in the Adjusted Notional Account, subject to Section 15(b) hereof, shall be paid to the Executive in a cash lump-sum payment immediately following the Executive’s Separation From Service; provided, however, that if the Executive is a “specified employee” as determined pursuant to Section 409A of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), and the regulations promulgated thereunder (“Section 409A”) as of the date of the Executive’s Separation From Service, such distribution shall not be made until the first business day of the seventh calendar month following the month in which the Executive’s Separation From Service occurs. The Executive can elect to delay the time and/or form of payment of the Adjusted Notional Account under this Section 3(d), provided such election is delivered to the Company in writing at least 12 months before the scheduled payment date for such payment and the new payment date for such payment is not earlier than (i) the Executive’s death, (ii) the Executive’s “disability” which satisfies the requirements of Section 409A(a)(2)(C) of the Code and its implementing regulations, or (iii) five (5) years from the originally scheduled payment date. Upon the expiration or termination of the Term, the vesting and payment dates in this Section 3(d) (without regard to Section 5, except as otherwise expressly provided in Section 5(d) of this Agreement) and the election right in this Section 3(d) shall continue to apply to any outstanding Supplemental Award.

4. Employee Benefits.

(a) Employee Benefit Programs. During the Term, subject to the Company’s right to amend, modify or terminate any benefit plan or program, the Executive shall be entitled to participate in all employee savings and welfare benefit plans and programs generally made available to the Company’s senior-level executives as such plans or programs may be in effect from time to time. During the Term, the Executive shall also be entitled to a paid annual physical medical exam as approved by the Company and Company-paid term life insurance with a benefit equal to $1 million, provided the Company can obtain such insurance at commercially reasonable premium levels and the Executive complies with any underwriting requirements by the insurance provider. During the Term, the Executive shall be entitled to four weeks paid vacation per calendar year.

(b) Business Expenses. During the Term, the Company shall reimburse the Executive for all reasonable business expenses incurred by her in performance of her duties hereunder in accordance with Company policy, including, but not limited to, the proper documentation of such expenses. The Company’s business travel policy shall apply to the Executive.

(c) Perquisites. During the Term, the Executive shall be entitled to perquisites provided to other senior-level executives, including a monthly car allowance of up to a maximum of $1,000.

7

(d) General Limitation. Notwithstanding anything elsewhere to the contrary, except to the extent any reimbursement, payment or entitlement pursuant to this Section 4 does not constitute a “deferral of compensation” within the meaning of Section 409A, (i) the amount of expenses eligible for reimbursement or the provision of any in-kind benefit (as defined in Section 409A) to the Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or provided as in-kind benefits to the Executive in any other calendar year, (ii) the payments or reimbursements for expenses for which the Executive is entitled shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits may not be liquidated or exchanged for any other benefit.

5. Termination of Employment. The Term of this Agreement and the Executive’s employment hereunder shall terminate as of the Date of Termination in the following circumstances:

(a) Termination Without Cause by the Company or Resignation for Good Reason by the Executive. In the event that during the Term the Executive’s employment is terminated without Cause by the Company (other than due to Disability) or the Executive resigns for Good Reason and Section 5(d) below does not apply, subject to Section 15(c) hereof and delivering a valid Release as required in Section 5(g) hereof, the Executive shall be entitled to:

(i) payment of Base Salary through the Date of Termination, payable on the first regularly scheduled payroll date following the Date of Termination;

(ii) payment of an amount equal to one times Base Salary, payable in a cash lump sum to the Executive on the 60th day following the Date of Termination;

(iii) a pro-rata annual bonus determined by multiplying the amount of the annual bonus the Executive would have received had her employment continued through the end of the fiscal year in which the Date of Termination occurs by a fraction, the numerator of which is the number of days during such fiscal year that the Executive was employed by the Company and the denominator of which is 365, payable when bonuses for such fiscal year are paid to other Company executives (but in all events in the fiscal year following the fiscal year in which the Date of Termination occurs and no later than 60 days after the end of fiscal year in which the Date of Termination occurs);

(iv) immediate vesting as of the Date of Termination of 50% of any restricted stock (other than the Career Shares) that remains unvested as of the Date of Termination;

(v) with respect to any stock options granted on or after the Effective Date and which are vested and outstanding as of the Date of Termination, continued exercisability for 12 months following the Date of Termination or the remainder of the option term, if shorter

8

(vi) continued participation on the same terms as immediately prior to the Date of Termination for the Executive and her eligible dependents in the Company’s medical and dental plans in which she and her eligible dependents were participating immediately prior to the Date of Termination until the earlier of (a) 12 months following the Date of Termination, and (b) the date, or dates, the Executive receives coverage under the plans or programs of a subsequent employer provided that in no event shall there be any gross-up provided by the Company for any income tax liabilities or otherwise; and

(vii) any amount due the Executive as of the Date of Termination that remains unpaid by the Company (without duplication of any payment or entitlement hereunder), payable on the first regularly scheduled payroll date following the Date of Termination or, if later, in accordance with the applicable plan or policy.

(b) Termination upon Death or due to Disability. In the event that during the Term the Executive’s employment is terminated upon death or due to Disability, subject to Section 15(c) hereof, the Executive (or her estate or legal representative, as the case may be) shall be entitled to:

(i) payment of Base Salary through the Date of Termination, payable on the first regularly scheduled payroll date following the Date of Termination;

(ii) a pro-rata annual bonus determined by multiplying the amount of the annual bonus the Executive would have received had her employment continued through the end of the fiscal year in which the Date of Termination occurs by a fraction, the numerator of which is the number of days during such fiscal year that the Executive was employed by the Company and the denominator of which is 365, payable when bonuses for such fiscal year are paid to other Company executives (but in all events in the fiscal year following the fiscal year in which the Date of Termination occurs and no later than 60 days after the end of fiscal year in which the Date of Termination occurs);

(iii) immediate vesting as of the Date of Termination of 50% of any restricted stock (other than Career Shares) that remains unvested as of the Date of Termination; and

(iv) immediate vesting as of the Date of Termination of 50% of any previously granted Supplemental Award that remains unvested as of the Date of Termination, payable in accordance with Section 3(d) above; and

(v) any amount due the Executive as of the Date of Termination that remains unpaid by the Company (without duplication of any payment or entitlement hereunder), payable on the first regularly scheduled payroll date following the Date of Termination or, if later, in accordance with the applicable plan or policy.

9

(c) Termination by the Company for Cause or a Voluntary Resignation by the Executive. In the event that during the Term the Company terminates the Executive’s employment for Cause or the Executive voluntarily resigns, the Executive shall be entitled to her Base Salary and employee benefits through the Date of Termination. A voluntary resignation by the Executive of her employment shall be effective upon 90 days prior written notice by the Executive to the Company and failure by the Executive to provide such notice shall be deemed to be a breach of this Agreement.

(d) Termination without Cause by the Company or Resignation for Good Reason by the Executive Upon or Following a Change in Control. In the event that the Executive’s employment is terminated without Cause by the Company (other than due to Disability) or the Executive resigns for Good Reason, in both cases upon or within one year following a Change in Control (provided the Term is still in effect or has expired during this one-year period), subject to Section 15(c) hereof delivering a valid Release as required in Section 5(g) hereof, the Executive shall be entitled to:

(i) payment of Base Salary through the Date of Termination, payable on the first regularly scheduled payroll date following the Date of Termination;

(ii) an amount equal to 2 times the sum of (a) Base Salary plus (b) Target Bonus, payable in a cash lump sum on the 60^th day following the Date of Termination;

(iii) a pro-rata Target Bonus for the year of termination, determined by multiplying the Target Bonus by a fraction, the numerator of which is the number of days the Executive was employed by the Company during the year in which the Date of Termination occurs and the denominator of which is 365, payable in a cash lump sum on the 60^th day following the Date of Termination;

(iv) immediate vesting as of the Date of Termination of all outstanding equity awards (other than Career Shares), with any vested and outstanding stock options granted on or after the Effective Date remaining exercisable for 24 months following the Date of Termination or the remainder of the option term, if shorter;

(v) immediate vesting as of the Date of Termination of any previously granted Supplemental Award, payable in accordance with Section 3(d) above;

(vi) continued participation on the same terms as immediately prior to the Date of Termination for the Executive and her eligible dependents in the Company’s welfare benefit plans in which she and her eligible dependents were participating immediately prior to the Date of Termination until the earlier of (a) 24 months following the Date of Termination, and (b) the date, or dates, the Executive receives substantially equivalent coverage under the plans or programs of a subsequent employer; provided that in no event shall there be any gross up provided by the Company for any tax liabilities or otherwise; and

10

(vii) any amount due the Executive as of the Date of Termination that remains unpaid by the Company (without duplication of any payment or entitlement hereunder), payable on the first regularly scheduled payroll date following the Date of Termination or, if later, in accordance with the applicable plan or policy.

(e) Obligations During Notice Period. In the event that the Executive voluntarily resigns her employment (other than for Good Reason), the Executive shall continue to be an employee of the Company during the Notice Period. As such, her fiduciary duties and other obligations as an employee of the Company shall continue during the Notice Period and the Executive agrees to cooperate in the transition of her responsibilities during such period. The Company shall have the right to direct the Executive to no longer come to work, or not to perform any work for the Company, during the Notice Period and, if the Company so directs, in addition to her fiduciary duties and other obligations as an employee and her commitments pursuant to Sections 6, 7, 8 and 9 hereof, the Executive agrees to refrain during the Notice Period from contacting any customers, clients, advertisers, suppliers, agents, professional advisors or employees of the Company or any of its Affiliates. In the case of a voluntary resignation by the Executive, the Company may shorten the Notice Period by providing written notice to the Executive, in which event the Executive’s employment shall terminate on the date stated in such notice; provided that the Company shall continue to pay the Executive her Base Salary through the end of the original Notice Period.

(f) Termination of the Executive’s Employment by the Company Upon or After the Expiration of the Term. If the Company provides written notice to the Executive in accordance with Section 2 above that the Term shall not renew and upon, or at any time after, such expiration of the Term the Company terminates the Executive’s employment under circumstances that during the Term would constitute a termination of employment without Cause, the Executive shall be entitled to the same payments, benefits and entitlements as a Termination without Cause under Section 5(a) hereof; provided that if such notice of non-renewal of the Term and such termination both occur on or within one year following a Change in Control, then the Executive shall be entitled to the payments, benefits and entitlements under Section 5(d) hereof, in all cases subject to Section 15(c) and delivering a valid Release as required in Section 5(g) hereof.

(g) Exclusivity of Benefits; Releases of Claims. Any payments provided pursuant to Section 5(a), Section 5(d) or Section 5(f) above shall be in lieu of any salary continuation arrangements under any other severance program of the Company or any Affiliate and, in all events, the Executive shall not be entitled to duplication of any benefit or entitlement (whether pursuant to this Agreement, any other plan, policy, arrangement of, or other agreement with, the Company or any Affiliate or pursuant to law). In order to be entitled to any payments, rights and other entitlements pursuant to this Agreement or otherwise, the Executive must comply with the covenants and/or acknowledgements contained in Sections 6, 7, 8 and 9 of this Agreement. As a condition of receiving the severance and benefits pursuant to Section 5(a), Section 5(d) or Section 5(f), as the case may be (except for those payments or benefits required to be paid or provided by applicable law), the Executive shall be required to execute and deliver to the Company a general release of claims in the form attached hereto as Exhibit A (the “Release”) no later than 45 days following the Date of Termination and not revoke such release within the applicable revocation period. In the event the Executive revokes the Release, the Executive shall not be entitled to the payments, rights or other entitlements hereunder other than as required by applicable law.

11

(h) Nature of Payments; No Mitigation. Any amounts due under this Section 5 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty. In the event of termination of her employment for any reason in compliance with this Agreement, the Executive shall be under no obligation to seek other employment and, except as specifically provided for in this Section 5 (including, without limitation, Section 5(g) hereof), there shall be no offset against amounts due to her on account of any remuneration or benefits provided by any subsequent employment she may obtain.

(i) Resignation. Notwithstanding any other provision of this Agreement, upon the termination of the Executive’s employment for any reason or, if earlier, upon commencement of the Notice Period, unless otherwise requested by the Company, the Executive shall immediately resign, if applicable, from all boards of directors of the Company and of any Affiliate of the Company of which she may be a member, and as a trustee of, or fiduciary to, any employee benefit plans of the Company or any Affiliate. The Executive hereby agrees to execute any and all documentation of such resignations upon request by the Company, but she shall be treated for all purposes as having so resigned upon termination of her employment or commencement of the Notice Period, as the case may be, regardless of when or whether she executes any such documentation.

(j) Section 409A. Notwithstanding anything to the contrary in this Agreement or elsewhere (except for Section 3(d) of this Agreement), if the Executive is a “specified employee” as determined pursuant to Section 409A as of the date of the Separation From Service and if any payment, benefit or entitlement provided for in this Agreement or otherwise both (x) constitutes a “deferral of compensation” within the meaning of Section 409A and (y) cannot be paid or provided in a manner otherwise provided herein or otherwise without subjecting the Executive to additional tax, interest or penalties under Section 409A, then any such payment, benefit or entitlement that is payable during the first six months following the Executive’s Separation From Service shall be paid or provided to the Executive in a cash lump-sum on the earlier of the Executive’s death or the first business day of the seventh calendar month following the month in which the Executive’s Separation From Service occurs. In addition, any payment, benefit or entitlement due upon a termination of the Executive’s employment that represents a “deferral of compensation” within the meaning of Section 409A (other than any payment due pursuant to Section 3(d) of this Agreement) shall only be paid or provided to Executive upon a Separation From Service, in which case any reference to “Date of Termination” in connection with such payment, benefit or entitlement shall be deemed to be a reference to “Separation From Service”, and the actual payment date within the time specified in the applicable provision of Section 5 shall be within the Company’s sole discretion. Notwithstanding anything to the contrary in this Section 5 or otherwise, any payment or benefit under this Section 5 or otherwise which is exempt from Section 409A pursuant to Final Treasury Regulation 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Executive only to the extent the expenses are not incurred or the benefits are not provided beyond the last day of the second taxable year of the Executive following the taxable year of the Executive in which the Separation From Service occurs; and provided further that the Company reimburses such expenses no later than the last day of the third taxable year following the taxable year of the Executive in which the Separation From Service occurs. Finally, to the extent that the provision of any benefit pursuant to Section 5(a)(vi) or Section 5(d)(vi) hereof is taxable to the Executive, any such reimbursement shall be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the expense is incurred and such reimbursement shall not be subject to liquidation or exchange for any other benefit.

12

6. Protection of Confidential Information and Company Property.

(a) During the Term and thereafter, other than in the ordinary course of performing the Executive’s duties for the Company or as required in connection with providing any cooperation to the Company pursuant to Section 9 below, the Executive agrees that the Executive shall not disclose to anyone or make use of any trade secret or proprietary or confidential information of the Company or any Affiliate of the Company, including such trade secret or proprietary or confidential information of any customer or other entity to which the Company owes an obligation not to disclose such information, which the Executive acquires during the course of the Executive’s employment (“Confidential Information”), including, but not limited to, records kept in the ordinary course of business, except when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent or actual jurisdiction to order the Executive to divulge, disclose or make accessible such information. “Confidential Information” shall not include information that (i) was known to the public prior to its disclosure by the Executive; or (ii) becomes known to the public through no wrongful disclosure by or act of the Executive or any representative of the Executive. In the event the Executive is requested by subpoena, court order, investigative demand, search warrant or other legal process to disclose any Confidential Information, the Executive agrees, unless prohibited by law or Securities and Exchange Commission regulation, to give the Company’s General Counsel prompt written notice of any request for disclosure in advance of the Executive’s making such disclosure and the Executive agrees not to disclose such information unless and until the Company has expressly authorized the Executive to do so in writing or the Company has had a reasonable opportunity to object to such request or to litigate the matter (of which the Company agrees to keep the Executive reasonably informed) and has failed to do so.

(b) The Executive hereby sells, assigns and transfers to the Company all of the Executive’s right, title and interest in and to all inventions, discoveries, improvements and copyrightable subject matter (the “Rights”) which during the period of the Executive’s employment are made or conceived by the Executive, alone or with others, and which are within or arise out of any general field of the Company’s business or arise out of any work the Executive performs, or information the Executive receives regarding the business of the Company, while employed by the Company. The Executive shall fully disclose to the Company as promptly as available all information known or possessed by the Executive concerning any Rights, and upon request by the Company and without any further remuneration in any form to the Executive by the Company, but at the expense of the Company, execute all applications for patents and for copyright registration, assignments thereof and other instruments and do all things which the Company may deem necessary to vest and maintain in it the entire right, title and interest in and to all such Rights.

13

(c) The Executive agrees upon termination of employment (whether during or after the expiration of the Term and whether such termination is at the instance of the Executive or the Company), and regardless of the reasons therefor, or at any time as the Company may request, the Executive will promptly deliver to the Company’s General Counsel, and not keep or deliver to anyone else, any and all of the following which is in the Executive’s possession or control: (i) Company property (including, without limitation, credit cards, computers, communication devices, home office equipment and other Company tangible property) and (ii) notes, files, memoranda, papers and, in general, any and all physical matter and computer files containing confidential or proprietary information of the Company or any of its Affiliates, including any and all documents relating to the conduct of the business of the Company or any of its Affiliates and any and all documents containing confidential or proprietary information of the customers of the Company or any of its Affiliates, except for (x) any documents for which the Company’s General Counsel has given written consent to removal at the time of termination of the Executive’s employment and (y) any information necessary for the Executive to retain for the Executive’s tax purposes (provided the Executive maintains the confidentiality of such information in accordance with Section 6(a) above).

7. Additional Covenants.

(a) The Executive acknowledges that in the Executive’s capacity in management the Executive has had or will have a great deal of exposure and access to the trade secrets of the Company or its Affiliates and other Confidential Information. Therefore, to protect such trade secrets and other Confidential Information, the Executive agrees as follows:

(i) during the Executive’s employment with the Company or any Affiliate, including during any Notice Period (whether such employment is during the Term or thereafter) and, if the Executive receives severance pursuant to Section 5(a), 5(d) or 5(f) for 12 months following termination of such employment (whether or not the Term is in effect), the Executive shall not, other than in the ordinary course of performing the Executive’s duties hereunder or as agreed by the Company in writing, engage in a “Competitive Business,” directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any relationship or capacity, in any geographic location in which the Company or any of its Affiliates is engaged in business. The Executive shall not be deemed to be in violation of this Section 7(a) by reason of the fact that the Executive owns or acquires, solely as an investment, up to two percent (2%) of the outstanding equity securities (measured by value) of any entity. “Competitive Business” shall mean a business engaged in (x) apparel design and/or apparel wholesaling or (y) retailing in competition with any business that the Company or any of its Affiliates is conducting at the time of the alleged violation; and

14

(ii) during the Executive’s employment with the Company or any Affiliate and for 18 months following termination of such employment for any reason (whether during the Term or thereafter), including, without limitation, during any Notice Period, the Executive shall not, other than in the ordinary course of the Company’s business or with the Company’s prior written consent, directly or indirectly, solicit or encourage any customer of the Company or any of its Affiliates to reduce or cease its business with the Company or any such Affiliate or otherwise interfere with the relationship of the Company or any Affiliate with its customers.

(b) The Executive agrees that during the Executive’s employment with the Company or any Affiliate and for 18 months following termination of such employment for any reason (whether during the Term or thereafter), including, without limitation, during any Notice Period, the Executive shall not, other than in the ordinary course of the Company’s business or with the Company’s prior written consent, directly or indirectly, hire any employee of the Company or any of its Affiliates, or solicit or encourage any such employee to leave the employ of the Company or its Affiliates, as the case may be.

(c) Upon commencement of the Notice Period and following the termination of the Executive’s employment for any reason (whether during the Term or thereafter), the Executive and the Company each agree to refrain from making any statements or comments, whether oral or written, of a defamatory or disparaging nature to third parties regarding each other (and, in the case of the Executive’s commitment hereunder, the “Company” shall include an Affiliate of the Company and the Company’s officers, directors, personnel and products). The Executive and the Company each understand that either party should be entitled to respond truthfully and accurately to statements about such party made publicly by the Executive or the Company, as the case may be, provided that such response is consistent with the responding party’s obligation not to make any statements or comments of a defamatory or disparaging nature as set forth herein.

8. Injunctive and Other Relief.

(a) The Executive acknowledges that the restrictions and commitments set forth in Sections 6, 7 and 9 of this Agreement are necessary to prevent the improper use and disclosure of Confidential Information and to otherwise protect the legitimate business interests of the Company and any of its Affiliates. The Executive further acknowledges that the restrictions set forth in Sections 6, 7 and 9 of this Agreement are reasonable in all respects, including, without limitation, duration, territory and scope of activity. The Executive expressly agrees and acknowledges that any breach or threatened breach by the Executive or any third party of any obligation by the Executive under this Agreement, including, without limitation, any breach or threatened breach of Section 6, 7 or 9 of this Agreement will cause the Company immediate, immeasurable and irreparable harm for which there is no adequate remedy at law, and as a result of this, in addition to its other remedies, the Company shall be entitled to the issuance by a court of competent jurisdiction of an injunction, restraining order, specific performance or other equitable relief in favor of itself, without the necessity of posting a bond, restraining the Executive or any third party from committing or continuing to commit any such violation.

15

(b) If any restriction set forth in Section 6, 7 or 9 of this Agreement is found by any arbitrator or court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it will be interpreted to extend over the maximum period of time, range of activities or geographic area as to which it may be enforceable. If any provision of Section 6, 7 or 9 of this Agreement is declared to be invalid or unenforceable, in whole or in part, for any reason, such invalidity will not affect the remaining provisions of such Section which will remain in full force and effect.

9. Cooperation.

Following the Executive’s termination of employment for any reason (whether during or after the expiration of the Term), upon reasonable request by the Company, the Executive shall cooperate with the Company or any of its Affiliates with respect to any legal or investigatory proceeding, including any government or regulatory investigation, or any litigation or other dispute relating to any matter in which the Executive was involved or had knowledge during the Executive’s employment with the Company, subject to the Executive’s reasonable personal and business schedules. The Company shall reimburse the Executive for all reasonable out-of-pocket costs, such as travel, hotel and meal expenses and reasonable attorneys’ fees, incurred by the Executive in providing any cooperation pursuant to this Section 9; provided such expenses shall be paid to the Executive as soon as practicable but in no event later than the end of the calendar year following the calendar year in which the expenses are incurred, subject in all cases to the Executive providing appropriate documentation to the Company. The Company shall also pay the Executive a reasonable per diem amount for the Executive’s time (other than for time spent preparing for or providing testimony) which shall be based upon the Executive’s Base Salary at the Date of Termination, with such per diem paid to the Executive in the calendar month following the month in which she provides such assistance. Any reimbursement or payment under this Section 9 shall not affect the amount of the reimbursement or payment to the Executive in any other taxable year. The right to payment or reimbursement pursuant to this Section 9 shall not be liquidated or exchanged for any other benefit.

10. Tax Matters.

(a) If any amount, entitlement, or benefit paid or payable to the Executive or provided for her benefit under this Agreement and under any other agreement, plan or program of the Company or any Affiliate (such payments, entitlements and benefits referred to as a “Payment”) is subject to the excise tax imposed under Code Section 4999, or any similar federal or state law (an “Excise Tax”), then notwithstanding anything contained in this Agreement to the contrary, to the extent that any or all Payments would be subject to the imposition of an Excise Tax, the Payments shall be reduced (but not below zero) if and to the extent that such reduction would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the imposition of the Excise Tax), than if the Executive received all of the Payments (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). The Company shall reduce or eliminate the Payments by first reducing or eliminating the payments or benefits payable in cash and then by reducing or eliminating the non-cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as defined below).

16

(b) All calculations under this Section 10 shall be made by a nationally recognized accounting firm designated by the Company and reasonably acceptable to the Executive (other than the accounting firm that is regularly engaged by any party who has effectuated a Change in Control) (the “Accounting Firm”). The Company shall pay all fees and expenses of such Accounting Firm. The Accounting Firm shall provide its calculations, together with detailed supporting documentation, both to the Company and the Executive within 45 days after the Change in Control or the Date of Termination, whichever is later (or such earlier time as is requested by the Company) and, with respect to the Limited Payment Amount, shall deliver its opinion to the Executive that she is not required to report any Excise Tax on her federal income tax return with respect to the Limited Payment Amount (collectively, the “Determination”). Within 5 days of the Executive’s receipt of the Determination, the Executive shall have the right to dispute the Determination (the “Dispute”). The existence of the Dispute shall not in any way affect the right of the Executive to receive the Payments in accordance with the Determination. If there is no Dispute, the Determination by the Accounting Firm shall be final binding and conclusive upon the Company and the Executive (except as provided in subsection (c) below).

(c) If, after the Payments have been made to the Executive, it is established that the Payments made to, or provided for the benefit of, the Executive exceed the limitations provided in subsection (a) above (an “Excess Payment”) or are less than such limitations (an “Underpayment”), as the case may be, then the provisions of this subsection (c) shall apply. If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, the Executive shall repay the Excess Payment to the Company within 20 days following the determination of such Excess Payment. In the event that it is determined by (i) the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to the satisfaction of the Executive of the Dispute, that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Executive within 10 days of such determination or resolution together with interest on such amount at the applicable federal short-term rate, as defined under Section 1274(d) of the Code and as in effect on the first date that such amount should have been paid to the Executive under this Agreement, from such date until the date that such Underpayment is made to the Executive.

11. Representations.

The Executive represents and warrants that she has the free and unfettered right to enter into this Agreement and to perform her obligations under it and that she knows of no agreement between her and any other person, firm or organization, or any law or regulation, that would be violated by the performance of her obligations under this Agreement. The Executive agrees that she will not use or disclose any confidential or proprietary information of any prior employer in the course of performing her duties for the Company or any of its Affiliates.

17

12. Indemnification and Liability Insurance.

The Company hereby agrees during, and after termination of, her employment to indemnify the Executive and hold her harmless, both during the Term and thereafter, to the fullest extent permitted by law and under the certificate of incorporation and by-laws of the Company against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses, amounts paid in settlement to the extent approved by the Company, and damages resulting from the Executive’s good faith performance of her duties as an officer or director of the Company or any Affiliate of the Company. The Company shall reimburse the Executive for expenses incurred by her in connection with any proceeding hereunder upon written request from the Executive for such reimbursement and the submission by the Executive of the appropriate documentation associated with these expenses. Such request shall include an undertaking by the Executive to repay the amount of such advance or reimbursement if it shall ultimately be determined that she is not entitled to be indemnified hereunder against such costs and expenses. The Company shall use commercially reasonable efforts to obtain and maintain directors’ and officers’ liability insurance covering the Executive to the same extent as the Company covers its other officers and directors.

13. Resolution of Disputes.

Except as otherwise provided in Section 8 above, any controversy, dispute or claim arising under or relating to this Agreement, the Executive’s employment with the Company or any Affiliate or the termination thereof shall, at the election of the Executive or the Company (unless otherwise provided in an applicable Company plan, program or agreement), be resolved by confidential, binding and final arbitration, to be held in the borough of Manhattan in New York City in accordance with the rules and procedures of the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof and shall be binding upon the Parties. The Executive consents to the personal and exclusive jurisdiction of the courts of the State of New York (including the United States District Court for the Southern District of New York) in any proceedings hereunder, including, without limitation, any proceeding for equitable relief. The Executive further agrees not to interpose any objection for improper venue in any such proceeding. Each Party shall be responsible for its own costs and expenses, including attorneys’ fees, and neither Party shall be liable for punitive or exemplary damages, provided that if the Executive substantially prevails with respect to all claims that are the subject matter of the dispute, her costs, including attorneys’ fees, shall be borne by the Company and if such costs are not reimbursed by the Company in a dispute exempt pursuant to Treasury Regulation 1.409A-1(b)(11) then such payment shall be made by the Company to the Executive in the year following the year in which the dispute is resolved.

14. Notices.

Any notice given to a Party shall be in writing and shall be deemed to have been given (i) when delivered personally, (ii) three days after being sent by certified or registered mail, postage prepaid, return receipt requested or (iii) two days after being sent by overnight courier (provided that a written acknowledgement of receipt is obtained by the overnight courier), with any such notice duly addressed to the Party concerned at the address indicated below or to such other address as such Party may subsequently designate by written notice in accordance with this Section 14:

If to the Company:	The Warnaco Group, Inc.
	501 Seventh Avenue
	New York, New York 10018
	Attention: General Counsel
If to the Executive:	The most recent address in the Company’s records.

18

15. Miscellaneous Provisions.

(a) This Agreement shall be governed by and construed and interpreted in accordance with the laws of New York without reference to principles of conflicts of law; provided, however, that Federal law shall apply to the interpretation or enforcement of the arbitration provisions of Section 13 hereof.

(b) This Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and, as of the Effective Date, shall supersede all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto (including the employment agreement between the Parties dates as of December 9, 2008 but not including any equity awards or related equity agreements that remain outstanding as of the Effective Date which shall be governed by the applicable provisions of any prior employment and/or equity agreement, as applicable). No provision of this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. The respective rights and obligations of the Parties hereunder, including, without limitation, Section 6 (protection of confidential information and company property), Section 7 (additional covenants), Section 8 (injunctive and other relief), Section 9 (cooperation) and Section 13 (resolution of disputes) shall survive any expiration of the Term, including expiration thereof upon the Executive’s termination of employment for whatever reason, to the extent necessary to the intended preservation of such rights and obligations.

(c) The Company may withhold from any amounts, payments or benefits under this Agreement such Federal, state, local or other taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(d) This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Executive under this Agreement may be assigned or transferred by the Executive other than her rights to compensation and benefits, which may be transferred only by will, operation of law or in accordance with any applicable Company plan, program or agreement.

(e) In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable by an arbitrator or court of competent jurisdiction for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

19

(f) The headings and subheadings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

(g) This Agreement may be executed in two or more counterparts.

[Signatures on next page.]

20

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

THE WARNACO GROUP, INC.
By:	/s/ Joseph R. Gromek
	Name:	Joseph R. Gromek
	Title:	Chief Executive Officer
THE EXECUTIVE
/s/ Martha J. Olson
Martha J. Olson

21

Exhibit A

AGREEMENT AND RELEASE OF CLAIMS

THIS AGREEMENT AND RELEASE is executed by the undersigned (the “Executive”) as of the date hereof.

WHEREAS, the Executive and The Warnaco Group, Inc. (the “Company”) entered into an employment agreement dated October 31, 2011 (the “Employment Agreement”);

WHEREAS, the Executive has certain entitlements pursuant to the Employment Agreement subject to the Executive’s executing this Agreement and Release and complying with its terms.

NOW, THEREFORE, in consideration of the payments set forth in Section 5 of the Employment Agreement and other good and valuable consideration, the Executive agrees as follows:

The Executive, on behalf of herself and her dependents, heirs, administrators, agents, executors, successors and assigns (the “Executive Releasors”), hereby releases and forever discharges the Company and its affiliated companies and their past and present parents, subsidiaries, successors and assigns and all of the aforesaid companies’ past and present officers, directors, employees, trustees, shareholders, representatives and agents (the “Company Releasees”), from any and all claims, demands, obligations, liabilities and causes of action of any kind or description whatsoever, in law, equity or otherwise, whether known or unknown, that any Executive Releasor had, may have had or now has against the Company or any other Company Releasee as of the date of execution of this Agreement and Release arising out of or relating to the Executive’s employment relationship, or the termination of that relationship, with the Company (or any affiliate), including, but not limited to, any claim, demand, obligation, liability or cause of action arising under any Federal, state, or local employment law or ordinance (including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Americans With Disabilities Act of 1991, the Workers Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act (other than any claim for vested benefits), the Family and Medical Leave Act, and the Age Discrimination in Employment Act, as amended by the Older Workers’ Benefit Protection Act (“ADEA”)), tort, contract, or alleged violation of any other legal obligation (collectively “Released Executive Claims”). In addition, in consideration of the promises and covenants of the Company, the Executive, on behalf of herself and the other Executive Releasors, further agrees to waive any and all rights under the laws of any jurisdiction in the United States, or any other country, that limit a general release to any of the foregoing actions, causes of action, claims or charges that are known or suspected to exist in the Executive’s favor as of the date of this Agreement and Release. Anything to the contrary notwithstanding in this Agreement and Release or the Employment Agreement, nothing herein shall release any Company Releasee from any claims or damages based on (i) any right or claim that arises after the date of this Agreement and Release pertaining to a matter that arises after such date, (ii) any right the Executive may have to enforce Sections 5, 10 and 12 of the Employment Agreement, (iii) any right or claim the Executive may have to benefits or equity awards that have accrued or vested as of the Date of Termination or any right pursuant to any qualified retirement plan or (iv) any right the Executive may have to be indemnified by the Company to the extent such indemnification by the Company or any Affiliate is permitted by applicable law or the Company’s by-laws.

22

The Executive agrees that she shall continue to be bound by, and will comply with, the provisions of Sections 6, 7, 9 and 13 of the Employment Agreement and the provisions of such sections, along with Section 8 of the Employment Agreement, shall be incorporated fully into this Agreement and Release.

The Executive acknowledges that she has been provided a period of at least 21 calendar days (45 calendar days in the case of any termination covered by Section 7(f)(1)(F)(ii) of ADEA) in which to consider and execute this Agreement and Release. The Executive further acknowledges and understands that she has seven calendar days from the date on which she executes this Agreement and Release to revoke her acceptance by delivering to the Company written notification of her intention to revoke this Agreement and Release in accordance with Section 14 of the Employment Agreement. This Agreement and Release becomes effective when signed unless revoked in writing and in accordance with this seven-day provision. To the extent that the Executive has not otherwise done so, the Executive is advised to consult with an attorney prior to executing this Agreement and Release.

This Agreement and Release shall be governed by and construed and interpreted in accordance with the laws of New York without reference to principles of conflicts of law. Capitalized terms, unless defined herein, shall have the meaning ascribed to such terms in the Employment Agreement.

IN WITNESS WHEREOF, the Executive has executed this Agreement and Release as of the date hereof.

Date:

23

EX-10.10

Exhibit 10.10

First Amendment to Employment Agreement

This First Amendment to the employment agreement by and between THE WARNACO GROUP, INC., a Delaware corporation (together with its successors and assigns, the “Company”), and STANLEY P. SILVERSTEIN (the “Executive”), dated as of December 31, 2008 (the “Agreement”), is made and entered into on the date written below. All definitions not defined herein have the meaning ascribed to such terms in the Agreement.

WHEREAS, the Company desires to amend the Agreement to provide a pro-rata bonus for the Executive upon certain terminations of employment without Cause or for Good Reason;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive agree as follows:

1. Section 6(a) of the Agreement is amended by deleting the “and” at the end of Section 6(a)(iii), replacing the period at the end of Section 6(a)(iv) with “; and”, and adding the following new clause (v) at the end of Section 6(a):

(v) a pro-rata annual bonus determined by multiplying the amount of the annual bonus the Executive would have received had his employment continued through the end of the fiscal year in which the Date of Termination occurs by a fraction, the numerator of which is the number of days during such fiscal year that the Executive was employed by the Company and the denominator of which is 365, payable when bonuses for such fiscal year are paid to other Company executives (but in all events in the fiscal year following the fiscal year in which the Date of Termination occurs and no later than 60 days after the end of fiscal year in which the Date of Termination occurs).

2. Except as otherwise set forth herein, the Agreement continues in full force and effect.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date written below.

THE WARNACO GROUP, INC.
By:	/s/ Joseph R. Gromek
	Name:	Joseph R. Gromek
	Title:	Chief Executive Officer
THE EXECUTIVE
/s/ Stanley P. Silverstein
STANLEY P. SILVERSTEIN

Date: October 31, 2011

EX-10.11

Exhibit 10.11

First Amendment to Employment Agreement

This First Amendment to the employment agreement by and between THE WARNACO GROUP, INC., a Delaware corporation (together with its successors and assigns, the “Company”), and JAY DUBINER (the “Executive”), dated as of August 11, 2008 (the “Agreement”), is made and entered into on the date written below. All definitions not defined herein have the meaning ascribed to such terms in the Agreement.

WHEREAS, the Company desires to amend the Agreement to provide a pro-rata bonus for the Executive upon certain terminations of employment without Cause or for Good Reason;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive agree as follows:

1. Section 5(a)(iv) of the Agreement is amended by deleting the phrase “if the Date of Termination occurs after Joseph Gromek is no longer Chief Executive Officers of the Company”.

2. Except as otherwise set forth herein, the Agreement continues in full force and effect.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date written below.

THE WARNACO GROUP, INC.
By:	/s/ Joseph R. Gromek
	Name:	Joseph R. Gromek
	Title:	Chief Executive Officer
THE EXECUTIVE
/s/ Jay Dubiner
JAY DUBINER

Date: October 31, 2011

EX-10.12

Exhibit 10.12

First Amendment to Employment Agreement

This First Amendment to the employment agreement by and between THE WARNACO GROUP, INC., a Delaware corporation (together with its successors and assigns, the “Company”), and ELIZABETH WOOD (the “Executive”), dated as of December 31, 2008 (the “Agreement”), is made and entered into on the date written below. All definitions not defined herein have the meaning ascribed to such terms in the Agreement.

WHEREAS, the Company desires to amend the Agreement to provide a pro-rata bonus for the Executive upon certain terminations of employment without Cause or for Good Reason;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive agree as follows:

1. Section 6(a) of the Agreement is amended by deleting the “and” at the end of Section 6(a)(iii), replacing the period at the end of Section 6(a)(iv) with “; and”, and adding the following new clause (v) at the end of Section 6(a):

(v) a pro-rata annual bonus determined by multiplying the amount of the annual bonus the Executive would have received had her employment continued through the end of the fiscal year in which the Date of Termination occurs by a fraction, the numerator of which is the number of days during such fiscal year that the Executive was employed by the Company and the denominator of which is 365, payable when bonuses for such fiscal year are paid to other Company executives (but in all events in the fiscal year following the fiscal year in which the Date of Termination occurs and no later than 60 days after the end of fiscal year in which the Date of Termination occurs).

2. Except as otherwise set forth herein, the Agreement continues in full force and effect.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date written below.

THE WARNACO GROUP, INC.
By:	/s/ Joseph R. Gromek
	Name:	Joseph R. Gromek
	Title:	Chief Executive Officer
THE EXECUTIVE
/s/ Elizabeth Wood
ELIZABETH WOOD

Date: October 31, 2011

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Joseph R. Gromek, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The Warnaco Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2011	By:	/s/ Joseph R. Gromek Joseph R. Gromek
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Lawrence R. Rutkowski, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The Warnaco Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2011	By:	/s/ Lawrence R. Rutkowski Lawrence R. Rutkowski
		Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATIONS OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
OF THE WARNACO GROUP, INC.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The Warnaco Group, Inc. (the “Company”) for the quarterly period ended October 1, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Joseph R. Gromek, as Chief Executive Officer of the Company, and Lawrence R. Rutkowski, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge, based upon a review of the Report:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joseph R. Gromek Name: Joseph R. Gromek	/s/ Lawrence R. Rutkowski Name: Lawrence R. Rutkowski
Title: Chief Executive Officer	Title: Chief Financial Officer
Date: November 3, 2011	Date: November 3, 2011

XML

Income per Common Share (Details) (USD $) In Thousands, except Share data	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Schedule of Earnings Per Share Basic and Diluted by Common Class [Line Items]
Less: allocation to participating securities	$ (656)	$ (540)	$ (1,964)	$ (1,531)
Numerator for basic and diluted income per common share:
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders and participating securities	48,788	41,440	138,886	119,779
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders	48,070	40,900	136,853	118,243
Income (Loss) from discontinued operations, net of tax, attributable to Warnaco Group, Inc. common shareholders and participating securities	(4,177)	57	(4,741)	(373)
Income (loss) from discontinued operations, net of tax attributable to Warnaco Group, Inc. common shareholders	(4,116)	57	(4,672)	(368)
Net income	44,611	41,497	134,145	119,406
Less: allocation to participating securities	(656)	(540)	(1,964)	(1,531)
Net income attributable to Warnaco Group, Inc. common shareholders	43,955	40,957	132,181	117,875
Basic income per common share (see Note 17):
Weighted average number of common shares outstanding used in computing income per common share	41,713,958	44,553,898	43,076,120	44,813,952
Income per common share from continuing operations	$ 1.15	$ 0.92	$ 3.18	$ 2.64
(Loss) per common share from discontinued operations	$ (0.10)		$ (0.11)	$ (0.01)
Net income per common share	$ 1.05	$ 0.92	$ 3.07	$ 2.63
Weighted average number of shares and share equivalents used in computing income per common share	42,581,100	45,465,691	44,023,646	45,806,530
Income per common share from continuing operations	$ 1.13	$ 0.90	$ 3.11	$ 2.58
(Loss) per common share from discontinued operations	$ (0.10)		$ (0.11)	$ (0.01)
Net income per common share	$ 1.03	$ 0.90	$ 3.00	$ 2.57
Number of anti-dilutive "out-of-the-money" stock options outstanding	355,200	400,067	327,950	399,067
Effect of dilutive securities:
Stock options and restricted stock units	867,142	911,793	947,526	992,578
Calculation of basic and diluted income per common share (Textual) [Abstract]
Weighted average restricted stock outstanding	622,969	587,699	639,980	582,190
Segment, Continuing Operations [Member]
Schedule of Earnings Per Share Basic and Diluted by Common Class [Line Items]
Less: allocation to participating securities	718	540	2,033	1,536
Numerator for basic and diluted income per common share:
Less: allocation to participating securities	718	540	2,033	1,536
Segment, Discontinued Operations [Member]
Schedule of Earnings Per Share Basic and Diluted by Common Class [Line Items]
Less: allocation to participating securities	(61)		(69)	(5)
Numerator for basic and diluted income per common share:
Less: allocation to participating securities	$ (61)		$ (69)	$ (5)

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Income Taxes (Textual) [Abstract]
Effective tax rates	18.10%	38.60%	22.00%	36.00%
Possible decrease in unrecognized tax benefits within the next twelve months			between $10000 and $12000
Income tax benefit	$ 7,300		$ 11,000
Minimum possible decrease in unrecognized tax benefits	10,000		10,000
Maximum possible decrease in unrecognized tax benefits	12,000		12,000
Reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions, as well as a tax benefit	1,300
Discreet charges to tax provision		$ 3,600		$ 3,600

XML

Consolidated Condensed Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Current assets:
Reserves, accounts receivable	$ 89,798	$ 95,639	$ 82,594
Deferred income taxes included in prepaid expenses and other current assets	59,781	58,270	53,402
Other assets:
Deferred income taxes included in other assets	24,695	11,769	15,459
Current liabilities:
Deferred income taxes included in accrued income taxes payable	1,320	262	1,094
Deferred income taxes included in other long-term liabilities	$ 76,410	$ 74,233	$ 69,478
Stockholders' equity:
Common stock, par value	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	112,500,000	112,500,000	112,500,000
Common stock, shares issued	52,134,522	51,712,674	51,255,219
Treasury stock, shares	11,653,871	7,445,166	6,751,793

XML

Consolidated Condensed Statements of Operations (Unaudited) (USD $) In Thousands, except Share data	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Consolidated Condensed Statements of Operations [Abstract]
Net revenues	$ 645,121	$ 596,761	$ 1,898,669	$ 1,704,259
Cost of goods sold	365,412	327,736	1,065,552	938,374
Gross profit	279,709	269,025	833,117	765,885
Selling, general and administrative expenses	212,000	198,129	637,491	554,962
Amortization of intangible assets	3,263	3,021	9,548	8,275
Pension income	(310)	(22)	(931)	(65)
Operating income	64,756	67,897	187,009	202,713
Other loss (income)	1,357	(1,899)	498	5,651
Interest expense	4,986	2,953	11,142	12,190
Interest income	(986)	(699)	(2,542)	(2,192)
Income from continuing operations before provision for income taxes and non-controlling interest	59,399	67,542	177,911	187,064
Provision for income taxes	10,770	26,102	39,184	67,285
Income from continuing operations before non-controlling interest	48,629	41,440	138,727	119,779
Income (Loss) from discontinued operations, net of taxes	(4,177)	57	(4,741)	(373)
Net Income	44,452	41,497	133,986	119,406
Less : net income attributable to non-controlling interest	(159)		(159)
Net income attributable to Warnaco Group, Inc.	44,611	41,497	134,145	119,406
Amounts attributable to Warnaco Group, Inc. common shareholders:
Income from continuing operations, net of tax	48,788	41,440	138,886	119,779
Income (Loss) from discontinued operations, net of taxes	(4,177)	57	(4,741)	(373)
Net income	$ 44,611	$ 41,497	$ 134,145	$ 119,406
Basic income per common share (see Note 17):
Income from continuing operations	$ 1.15	$ 0.92	$ 3.18	$ 2.64
Income (Loss) from discontinued operations	$ (0.10)		$ (0.11)	$ (0.01)
Net income	$ 1.05	$ 0.92	$ 3.07	$ 2.63
Diluted income per common share (see Note 17):
Income from continuing operations	$ 1.13	$ 0.90	$ 3.11	$ 2.58
Income (Loss) from discontinued operations	$ (0.10)		$ (0.11)	$ (0.01)
Net income	$ 1.03	$ 0.90	$ 3.00	$ 2.57
Weighted average number of shares outstanding used in computing income per common share (see Note 17):
Basic	41,713,958	44,553,898	43,076,120	44,813,952
Diluted	42,581,100	45,465,691	44,023,646	45,806,530

XML

Debt (Details Textual 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended		1 Months Ended	9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Jul. 29, 2011 2011 Term Loan Agreement [Member]	Oct. 01, 2011 2011 Term Loan Agreement [Member]	Oct. 01, 2011 2011 Term Loan [Member]
Debt Instrument [Line Items]
Deferred financing cost	$ 5,385	$ 70		$ 4,779
Senior secured term loan facility				200,000
Credit commitments for incremental term loan facility, maximum				100,000
Term loan outstanding				199,500
Outstanding Term Loan				500
Interest rate on notes payable				LIBOR plus 2.75%
Interest rate on notes payable in addition to LIBOR				2.75%
Weighted Average Interest Rate					3.75%
Term loan amount outstanding under interest rate 3.75%			80,000
Interest rate for partly 2011 Term Loan			3.75%
Term loan amount outstanding under interest rate 5.00%			$ 120,000
Interest rate for rest of 2011 Term Loan			5.00%
Prepayment fees, percentage				1.00%
Maximum equity ownership in first-tier foreign subsidiaries to be considered in first priority lien				66.00%
Interest rate on notes payable				Interest rate floor of 1.00%
Floor rate of LIBOR				1.00%

XML

Comprehensive Income (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010	Jan. 01, 2011
Comprehensive income:
Net income	$ 44,611	$ 41,497	$ 134,145	$ 119,406
Other comprehensive income, net of tax:
Foreign currency translation adjustments (a)	(63,170)	44,967	(21,453)	1,677
Change in fair value of cash flow hedges	440	(2,958)	(1,169)	(427)
Change in actuarial gains (losses), net related to post-retirement medical plans	0	(6)	0	(6)
Other	(3)	(63)	(5)	11
Comprehensive income	(18,122)	83,437	111,518	120,661
Components of accumulated other comprehensive income
Foreign currency translation adjustments (a)	24,529	50,235	24,529	50,235	45,982
Actuarial losses, net related to post retirement medical plans, net of tax of $1,232, $1,232 and $1253 as of October 2, 2011, January 1, 2011 and October 2, 2010, respectively	(1,099)	(1,064)	(1,099)	(1,064)	(1,099)
Loss (gain) on cash flow hedges, net of taxes of $2,175, $871, and $803 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively	(3,016)	(1,454)	(3,016)	(1,454)	(1,847)
Other	7	11	7	11	12
Total accumulated other comprehensive income	20,421	47,728	20,421	47,728	43,048
Comprehensive Income (Textual) [Abstract]
Tax related to actuarial gains (losses) of post retirement medical plans	1,232	1,253	1,232	1,253	1,232
Tax of loss cash flow hedges	$ 2,175	$ 803	$ 2,175	$ 803	$ 871
Company's assets based outside the territory of US			more than 65%

XML

Commitments and Contingencies (Details) (USD $) In Thousands	Oct. 01, 2011
Contractual obligations and commitments
Additional contractual obligations, 2012	$ 30,797
Additional contractual obligations, 2013	25,137
Additional contractual obligations, 2014	19,628
Additional contractual obligations, 2015	14,656
Additional contractual obligations, 2016	10,460
Additional contractual obligations, Thereafter	204,093
Additional contractual obligations	304,771
Operating Leases [Member]
Contractual obligations and commitments
Additional operating leases, 2012	15,599
Additional operating leases, 2013	14,602
Additional operating leases, 2014	10,839
Additional operating leases, 2015	7,711
Additional operating leases, 2016	5,857
Additional operating leases, thereafter	10,938
Additional operating leases, total	65,546
Other Contractual Obligations [Member]
Contractual obligations and commitments
Additional other contractual obligations, 2012	15,198
Additional other contractual obligations, 2013	10,535
Additional other contractual obligations, 2014	8,789
Additional other contractual obligations, 2015	6,945
Additional other contractual obligations, 2016	4,603
Additional other contractual obligations, Thereafter	193,155
Additional other contractual obligations, Total	$ 239,225

XML

Income per Common Share

9 Months Ended

Oct. 01, 2011

Income per Common Share [Abstract]

Income per Common Share

Note 17—Income per Common Share

The following table presents the calculation of both basic and diluted income per common share attributable to Warnaco Group common shareholders, giving effect to participating securities. The Company has determined that based on a review of its share-based awards, only its restricted stock awards are deemed participating securities, which participate equally with common shareholders. The weighted average restricted stock outstanding was 622,969 shares and 587,699 shares for the Three Months Ended October 1, 2011 and the Three Months Ended October 2, 2010, respectively, and 639,980 shares and 582,190 shares for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively. Undistributed income allocated to participating securities is based on the proportion of restricted stock outstanding to the sum of weighted average number of common shares outstanding attributable to Warnaco Group common shareholders and restricted stock outstanding for each period presented below.

	Three Months Ended
	October 1, 2011			October 2, 2010
Numerator for basic and diluted income per common share:
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders and participating securities	$	48,788		$	41,440
Less: allocation to participating securities		(718	)		(540	)
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders	$	48,070		$	40,900
Income (Loss) from discontinued operations, net of tax, attributable to Warnaco Group, Inc. common shareholders and participating securities	$	(4,177	)	$	57
Less: allocation to participating securities		61			—
Income (Loss) from discontinued operations attributable to Warnaco Group, Inc. common shareholders	$	(4,116	)	$	57
Net income attributable to Warnaco Group, Inc. common shareholders and participating securities	$	44,611		$	41,497
Less: allocation to participating securities		(656	)		(540	)
Net income attributable to Warnaco Group, Inc. common shareholders	$	43,955		$	40,957
Basic income per common share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing income per common share		41,713,958			44,553,898
Income per common share from continuing operations	$	1.15		$	0.92
Income (Loss) per common share from discontinued operations		(0.10	)		—
Net income per common share	$	1.05		$	0.92
Diluted income per share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing basic income per common share		41,713,958			44,553,898
Effect of dilutive securities:
Stock options and restricted stock units		867,142			911,793
Weighted average number of shares and share equivalents used in computing income per common share		42,581,100			45,465,691
Income per common share from continuing operations	$	1.13		$	0.90
Income (Loss) per common share from discontinued operations		(0.10	)		—
Net income per common share	$	1.03		$	0.90
Number of anti-dilutive “out-of-the-money” stock options outstanding (a)		355,200			400,067

	Nine Months Ended
	October 1, 2011			October 2, 2010
Numerator for basic and diluted income per common share:
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders and participating securities	$	138,886		$	119,779
Less: allocation to participating securities		(2,033	)		(1,536	)
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders	$	136,853		$	118,243
(Loss) from discontinued operations, net of tax, attributable to Warnaco Group, Inc. common shareholders and participating securities	$	(4,741	)	$	(373	)
Less: allocation to participating securities		69			5
(Loss) from discontinued operations attributable to Warnaco Group, Inc. common shareholders	$	(4,672	)	$	(368	)
Net income attributable to Warnaco Group, Inc. common shareholders and participating securities	$	134,145		$	119,406
Less: allocation to participating securities		(1,964	)		(1,531	)
Net income attributable to Warnaco Group, Inc. common shareholders	$	132,181		$	117,875
Basic income per common share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing income per common share		43,076,120			44,813,952
Income per common share from continuing operations	$	3.18		$	2.64
(Loss) per common share from discontinued operations		(0.11	)		(0.01	)
Net income per common share	$	3.07		$	2.63
Diluted income per share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing basic income per common share		43,076,120			44,813,952
Effect of dilutive securities:
Stock options and restricted stock units		947,526			992,578
Weighted average number of shares and share equivalents used in computing income per common share		44,023,646			45,806,530
Income per common share from continuing operations	$	3.11		$	2.58
(Loss) per common share from discontinued operations		(0.11	)		(0.01	)
Net income per common share	$	3.00		$	2.57
Number of anti-dilutive “out-of-the-money” stock options outstanding (a)		327,950			399,067

(a) options to purchase shares of common stock at an exercise price greater than the average market price of the underlying shares are anti-dilutive and therefore not included in the computation of diluted income per common share from continuing operations.

XML

Stockholders' Equity (Details Textual) (USD $)	0 Months Ended	1 Months Ended	3 Months Ended		9 Months Ended				0 Months Ended	1 Months Ended	9 Months Ended			0 Months Ended	1 Months Ended	0 Months Ended	1 Months Ended	9 Months Ended				1 Months Ended	3 Months Ended
	Jul. 08, 2010	Mar. 01, 2011	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010	Jan. 01, 2011	Oct. 01, 2011 Series A Preferred Stock [Member]	Jul. 08, 2010 Retirement-Eligible Employees [Member] Performance Shares [Member]	Mar. 01, 2011 Retirement-Eligible Employees [Member] Performance Shares [Member]	Oct. 01, 2011 Retirement-Eligible Employees [Member] Performance Shares [Member]	Oct. 01, 2011 Retirement-Eligible Employees [Member] Restricted stock grants [Member]	Oct. 02, 2010 Retirement-Eligible Employees [Member] Restricted stock grants [Member]	Jul. 08, 2010 Monte Carlo Model Year	Mar. 01, 2011 Monte Carlo Model Year	Jul. 08, 2010 Performance Shares [Member]	Mar. 01, 2011 Performance Shares [Member]	Oct. 01, 2011 Performance Shares [Member]	Oct. 01, 2011 Restricted stock grants [Member]	Oct. 01, 2011 Share Repurchase Program 2010 [ Member]	May 12, 2010 Share Repurchase Program 2010 [ Member]	Sep. 30, 2011 Share Repurchase Program 2011 [Member]	Oct. 01, 2011 Share Repurchase Program 2011 [Member]
Class of Stock [Line Items]
Authorized shares of preferred stock			20,000,000		20,000,000			112,500
Share-based Compensation Arrangements by Share-based Payment Award (Textual) [Abstract]
Repurchase of common stock																					5,000,000
Shares repurchase in the open market																				4,060,842			104,300
Remaining value of repurchasing stock																							$ 195,004
Total cost of shares repurchase in the open market																				205,800,000			4,996,000
Average cost per share of shares repurchased in the open market																				$ 50.68			$ 47.90
Company's outstanding common stock																						200,000
Restricted shares/units, Vested									34,300	35,050		37,600	36,750						(130,501)
Grant date fair value of restricted units												$ 55.57	$ 43.28						$ 48.96
Granted to Retirement-Eligible employees, vesting period for restricted units											3 years	3 years
Performance Shares, Granted																75,750	80,050	80,050	227,293
Remaining measurement period (years)														2.83	2.83
Stockholders Equity (Textual) [Abstract]
Authorized shares of preferred stock, par value			$ 0.01		$ 0.01
Preferred stock issued			0	0	0	0	0
Preferred stock outstanding			0	0	0	0	0
Fair value of performance shares on grant date under the market conditions	$ 2,432,000	$ 3,245,000
Stock options granted			12,050	56,096	360,900	434,746
Company's performance to date shares that the company is obligated to issue at the end of performance period					18,613

XML

Document and Entity Information (USD $)	9 Months Ended
	Oct. 01, 2011	Oct. 28, 2011	Jul. 03, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	WARNACO GROUP INC /DE/
Entity Central Index Key	0000801351
Document Type	10-Q
Document Period End Date	Oct. 01, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,284,223,720
Entity Common Stock, Shares Outstanding		40,481,065

XML

Business Segments and Geographic Information (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Net revenues:
Net revenues	$ 645,121	$ 596,761	$ 1,898,669	$ 1,704,259
Percentage of net revenues by geographic region	100.00%	100.00%	100.00%	100.00%
United States [Member]
Net revenues:
Net revenues	241,764	250,039	777,552	782,753
Percentage of net revenues by geographic region	37.50%	41.90%	41.00%	45.90%
Europe [Member]
Net revenues:
Net revenues	182,265	166,749	478,827	423,882
Percentage of net revenues by geographic region	28.30%	27.90%	25.20%	25.00%
Asia [Member]
Net revenues:
Net revenues	129,985	101,090	370,546	281,655
Percentage of net revenues by geographic region	20.10%	17.00%	19.50%	16.50%
Canada [Member]
Net revenues:
Net revenues	28,259	30,667	95,046	86,029
Percentage of net revenues by geographic region	4.40%	5.10%	5.00%	5.00%
Mexico, Central and South America [Member]
Net revenues:
Net revenues	$ 62,848	$ 48,216	$ 176,698	$ 129,940
Percentage of net revenues by geographic region	9.70%	8.10%	9.30%	7.60%

XML

Basis of Consolidation and Presentation (Policies)

9 Months Ended

Oct. 01, 2011

Organization, Basis of Consolidation and Presentation [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-29 “Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”), which amends Topic 805 on business combinations. ASU 2010-29 clarifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for the Company for business combinations for which the acquisition date is on or after January 2, 2011. In the event that the Company enters into a business combination or a series of business combinations that are deemed to be material for financial reporting purposes, the Company will apply the amendments in ASU 2010-29.

During May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 clarifies that the concept that the fair value of an asset is based on its highest and best use is only relevant when measuring the fair value of nonfinancial assets (and therefore would not apply to financial assets or any liabilities) since financial assets have no alternative use. The new guidance specifies that financial assets are measured based on the fair value of an individual security unless an entity manages its market risks and/or counterparty credit risk exposure within a group (portfolio) of financial instruments on a net basis. ASU 2011-4 requires the following new disclosures related to the Company’s assets and liabilities that are measured at and/or disclosed at fair value: (1) the categorization in the fair value hierarchy of all assets and liabilities that are not measured at fair value on the balance sheet but for which the fair value is required to be disclosed (such as the disclosure of the fair value of long-term debt that is recorded at amortized cost on the balance sheet); (2) all, not just significant, transfers between Level 1 and Level 2 fair value measurements; (3) the reason(s), if applicable, why the current use of a nonfinancial asset, that is recorded or disclosed at fair value, differs from its highest and best use; and (4) certain quantitative and qualitative disclosures related to Level 3 fair value measurements. Assets and liabilities of the Company’s defined benefit pension plans (see Note 8 of Notes to Consolidated Condensed Financial Statements) are not subject to any of these new disclosure requirements. The new requirements are effective for the Company for interim and annual periods beginning on or after January 1, 2012 and will be required prospectively upon adoption. The Company does not expect that the adoption of ASU 2011-04 will have a material effect on its financial position, results of operations or cash flows.

During June 2011, the FASB issued ASU 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires the Company to present items of net income and other comprehensive income in a Statement of Comprehensive Income; either in one continuous statement or in two separate, but consecutive, statements of equal prominence. Presentation of components of comprehensive income in the Statement of Stockholders’ Equity will no longer be allowed. The Company will be required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. Earnings-per-share computation will continue to be based on net income. Components of other comprehensive income will be required to be presented either net of the related tax effects or before the related tax effects with one amount reported for the tax effects of all other comprehensive income items. The Company will also be required to present parenthetically on the face of the statement, or to disclose in the footnotes, the tax allocated to each component of other comprehensive income. The new requirements are effective for all interim and annual periods beginning on or after January 1, 2012. Comparative financial statements of prior periods will be presented to conform to the new guidance. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its financial position, results of operations or cash flows.

During September 2011, the FASB issued ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”), which is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to first perform a “qualitative” assessment to determine whether further quantitative impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. An entity can choose to perform the qualitative assessment on none, some or all of its reporting units. Moreover, an entity can bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the impairment test, and then resume performing the qualitative assessment in any subsequent period. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, an entity can choose to early adopt as of the fourth quarter of 2011. The Company is in the process of determining whether to early adopt ASU 2011-08 for Fiscal 2011.

XML

Business Segments and Geographic Information (Details 2) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Reconciliation of operating income
Other loss (income)	$ 1,357	$ (1,899)	$ 498	$ 5,651
Operating income	64,756	67,897	187,009	202,713
Interest expense	4,986	2,953	11,142	12,190
Interest income	(986)	(699)	(2,542)	(2,192)
Income from continuing operations before provision for income taxes and non-controlling interest	59,399	67,542	177,911	187,064
Corporate/Other [Member]
Reconciliation of operating income
Operating income	(4,641)	(19,557)	(26,725)	(44,605)
Group Segment [Member]
Reconciliation of operating income
Operating income	$ 69,397	$ 87,454	$ 213,734	$ 247,318

XML

Stockholders Equity (Details 3) (Restricted stock grants [Member], USD $)	9 Months Ended
	Oct. 01, 2011
Restricted stock grants [Member]
Unvested restricted share/unit awards under the Company's stock incentive plans excluding Performance Awards
Unvested as of January 1, 2011	847,664
Restricted shares/units, Granted	227,293
Restricted shares/units, Vested	(130,501)
Restricted shares/units, Forfeited	(58,083)
Unvested as of October 1, 2011	886,373
Weighted Average Grant Date Fair Value, Unvested as of January 1, 2011	$ 36.93
Weighted Average Grant Date Fair Value, Granted	$ 55.33
Weighted Average Grant Date Fair Value, Vested	$ 48.96
Weighted Average Grant Date Fair Value, Forfeited	$ 26.27
Weighted Average Grant Date Fair Value, Unvested as of October 1, 2011	$ 39.73

XML

Business Segments and Geographic Information

9 Months Ended

Oct. 01, 2011

Business Segments and Geographic Information [Abstract]

Business Segments and Geographic Information

Note 6—Business Segments and Geographic Information

Business Segments: The Company operates in three business segments: (i) Sportswear Group; (ii) Intimate Apparel Group; and (iii) Swimwear Group, which groupings reflect the manner in which the Company’s business is managed and the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker (“CODM”), reviews the Company’s business.

Effective January 2, 2011, in conjunction with an evaluation of the Company’s overall group reporting and to reflect the manner in which the CODM currently evaluates the business, the Company revised its methodology for allocating certain corporate expenses (incurred in the U.S.) to the operating units in each of its business groups. The change in methodology resulted in an increase in the portion of corporate overhead allocated to the business groups for management reporting purposes as well as a change in the manner in which the corporate overhead is allocated between the domestic and international business units. Accordingly, the operating income (loss) for each group and Corporate/Other for the Three and Nine Months Ended October 2, 2010 has been revised to conform to the current period presentation. The revision of the operating income (loss) for each group and Corporate/Other did not have any effect on the Company’s Consolidated Condensed Balance Sheets, Consolidated Condensed Statements of Operations or Consolidated Condensed Statements Cash Flows for any period presented in this Form 10-Q.

The Sportswear Group designs, sources and markets moderate to premium priced men’s and women’s sportswear under the Calvin Klein and Chaps^® brands. As of October 1, 2011, the Sportswear Group operated 565 Calvin Klein retail stores worldwide (consisting of 139 full-price free-standing stores, 56 outlet free-standing stores, 369 shop-in-shop/concession stores and, in the U.S., one on-line store). As of October 1, 2011, there were also 371 retail stores operated by third parties under retail licenses or distributor agreements.

The Intimate Apparel Group designs, sources and markets moderate to premium priced intimate apparel and other products for women and better to premium priced men’s underwear, sleepwear and loungewear under the Calvin Klein, Warner’s^®, Olga^® and Body Nancy Ganz/Bodyslimmers^® brand names. As of October 1, 2011, the Intimate Apparel Group operated 878 Calvin Klein retail stores worldwide (consisting of 99 full-price free-standing stores, 61 outlet free-standing stores and 717 shop-in-shop/concession stores and, in the U.S., one on-line store). As of October 1, 2011, there were also 211 Calvin Klein retail stores operated by third parties under retail licenses or distributor agreements.

The Swimwear Group designs, licenses, sources and markets mass market to premium priced swimwear, fitness apparel, swim accessories and related products under the Speedo^®, Lifeguard^® and Calvin Klein brand names. As of October 1, 2011, the Swimwear Group operated 191 Calvin Klein retail shop-in-shop/concession stores in Europe and one on-line store in the U.S.

Information by business group is set forth below:

				Intimate
	Sportswear			Apparel			Swimwear			Group		Corporate /
	Group			Group			Group			Total		Other			Total
Three Months Ended October 1, 2011
Net revenues	$	357,935		$	247,880		$	39,306		$	645,121	$	—		$	645,121
Operating income (loss)		34,129			38,620			(3,352	)		69,397		(4,641	)		64,756
Depreciation and amortization		8,347			4,413			589			13,349		393			13,742
Restructuring expense		3,545			699			2,988			7,232		315			7,547
Capital expenditures		6,014			7,379			245			13,638		443			14,081
Three Months Ended October 2, 2010
Net revenues	$	337,020		$	223,081		$	36,660		$	596,761	$	—		$	596,761
Operating income (loss) (a)		51,309			39,939			(3,794	)		87,454		(19,557	)		67,897
Depreciation and amortization		8,057			4,294			535			12,886		416			13,302
Restructuring expense		(47	)		9			1,732			1,694		3			1,697
Capital expenditures		12,407			(644	)		86			11,849		680			12,529
Nine Months Ended October 1, 2011
Net revenues	$	983,695		$	695,317		$	219,657		$	1,898,669	$	—		$	1,898,669
Operating income (loss) (c) (d)		88,686			103,627			21,421			213,734		(26,725	)		187,009
Depreciation and amortization		27,010			13,751			1,889			42,650		1,019			43,669
Restructuring expense		7,169			3,619			7,254			18,042		948			18,990
Capital expenditures		17,687			14,863			390			32,940		1,294			34,234
Nine Months Ended October 2, 2010
Net revenues	$	887,410		$	616,139		$	200,710		$	1,704,259	$	—		$	1,704,259
Operating income (loss) (b)		123,834			106,363			17,121			247,318		(44,605	)		202,713
Depreciation and amortization		22,694			11,967			1,705			36,366		1,141			37,507
Restructuring expense		395			122			2,446			2,963		847			3,810
Capital expenditures		26,193			5,747			545			32,485		2,048			34,533
Balance Sheet
Total Assets:
October 1, 2011	$	1,068,298		$	494,482		$	117,949		$	1,680,729	$	132,042		$	1,812,771
January 1, 2011		995,475			381,371			154,831			1,531,677		121,595			1,653,272
October 2, 2010		1,050,685			408,419			112,316			1,571,420		113,048			1,684,468
Property, Plant and Equipment:
October 1, 2011	$	62,317		$	38,486		$	2,472		$	103,275	$	25,930		$	129,205
January 1, 2011		63,555			28,522			3,023			95,100		34,152			129,252
October 2, 2010		46,053			42,527			3,344			91,924		35,233			127,157

(a)	reflects the allocation of $2,467 of corporate expenses to the Sportswear Group ($1,730), the Intimate Apparel Group ($1,052) and the Swimwear Group (($315)), respectively, during the Three Months Ended October 2, 2010 to conform to the presentation for the Three Months Ended October 1, 2011.
(b)	reflects the allocation of $7,422 of corporate expenses to the Sportswear Group ($5,134), the Intimate Apparel Group ($2,809) and the Swimwear Group (($521)), respectively, during the Nine Months Ended October 2, 2010 to conform to the presentation for the Nine Months Ended October 1, 2011.
(c)	includes a gain of $2,000 in the Intimate Apparel Group related to the sale and assignment of the Company’s Nancy Ganz® trademarks in Australia and New Zealand to the Company’s former licensee for cash consideration of $2,000.
(d)	includes a gain of $1,630 related to the recovery of an insurance claim for a fire in a warehouse in Peru, attributable partly to the Sportswear Group and partly to the Intimate Apparel Group.

All inter-company revenues and expenses are eliminated in consolidation. Management does not include inter-company sales when evaluating segment performance. Each segment’s performance is evaluated based upon operating income after restructuring charges and allocations of corporate expenses but before corporate/other expenses.

The table below summarizes Corporate/Other expenses for each period presented:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Unallocated corporate expenses (a)	$	5,273		$	17,242		$	25,338		$	43,660
Foreign exchange losses (gains)		(971	)		1,956			527			(863	)
Pension income		(369	)		(60	)		(1,107	)		(180	)
Restructuring expense		315			3			948			847
Depreciation and amortization of corporate assets		393			416			1,019			1,141
Corporate/other expenses	$	4,641		$	19,557		$	26,725		$	44,605

(a) the decrease in unallocated corporate expenses is related primarily to a reduction in amounts accrued for performance-based employee cash compensation and other employee compensation and benefits.

A reconciliation of operating income from operating groups to income from continuing operations before provision for income taxes and non-controlling interest is as follows:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Operating income by operating groups	$	69,397		$	87,454		$	213,734		$	247,318
Corporate/other expenses		(4,641	)		(19,557	)		(26,725	)		(44,605	)
Operating income		64,756			67,897			187,009			202,713
Other (income) loss		1,357			(1,899	)		498			5,651
Interest expense		4,986			2,953			11,142			12,190
Interest income		(986	)		(699	)		(2,542	)		(2,192	)
Income from continuing operations before provision for income taxes and non-controlling interest	$	59,399		$	67,542		$	177,911		$	187,064

Geographic Information: Net revenues summarized by geographic region are as follows:

	Three Months Ended
	October 1,					October 2,
	2011		%			2010		%
Net revenues:
United States	$	241,764		37.5	%	$	250,039		41.9	%
Europe		182,265		28.3	%		166,749		27.9	%
Asia		129,985		20.1	%		101,090		17.0	%
Mexico, Central and South America		62,848		9.7	%		48,216		8.1	%
Canada		28,259		4.4	%		30,667		5.1	%
	$	645,121		100.0	%	$	596,761		100.0	%

	Nine Months Ended
	October 1,					October 2,
	2011		%			2010		%
Net revenues:
United States	$	777,552		41.0	%	$	782,753		45.9	%
Europe		478,827		25.2	%		423,882		25.0	%
Asia		370,546		19.5	%		281,655		16.5	%
Mexico, Central and South America		176,698		9.3	%		129,940		7.6	%
Canada		95,046		5.0	%		86,029		5.0	%
	$	1,898,669		100.0	%	$	1,704,259		100.0	%

XML

Discontinued Operations (Tables)

9 Months Ended

Oct. 01, 2011

Discontinued Operations [Abstract]

Summarized operating results for discontinued operations

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Net revenues	$	—		$	6		$	—		$	1,355
(Loss) before income tax (benefit) (a)	$	(4,214	)	$	33		$	(5,090	)	$	(683	)
Income tax (benefit)		(37	)		(24	)		(349	)		(310	)
Income (Loss) from discontinued operations	$	(4,177	)	$	57		$	(4,741	)	$	(373	)

(a) Includes a charge of approximately $4,000 in connection with the Lejaby business (see Note 18 of Notes to Consolidated Condensed Financial Statements — Legal Matters).

Summarized assets and liabilities of discontinued operations

	October 1,		January 1,		October 2,
	2011		2011		2010
Accounts receivable, net	$	—	$	18	$	1
Inventories		—		—		2
Prepaid expenses and other current assets		—		107		109
Assets of discontinued operations	$	—	$	125	$	112
Accounts payable	$	5	$	32	$	16
Accrued liabilities		7,043		18,768		8,349
Liabilities of discontinued operations	$	7,048	$	18,800	$	8,365

XML

Restructuring Expenses and Other Exit Costs (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Restructuring charges and other exit costs
Cost of goods sold	$ 365,412	$ 327,736	$ 1,065,552	$ 938,374
Selling, general and administrative expenses	212,000	198,129	637,491	554,962
Restructuring Charges, Total	7,547	1,697	18,990	3,810
Changes in liabilities related to restructuring expenses and other exit costs
Beginning Balance			3,582	3,572
Restructuring charges for the period			18,437	3,810
Cash reductions Settled with cash			(11,720)	(3,810)
Non-cash changes and foreign currency effects			277	(48)
Ending Balance	10,576	3,524	10,576	3,524
Restructuring Charges [Member]
Restructuring charges and other exit costs
Cost of goods sold	376	13	1,842	287
Selling, general and administrative expenses	7,171	1,684	17,148	3,523
Cash portion of restructuring items [Member]
Restructuring charges and other exit costs
Restructuring Charges, Total	7,547	1,697	17,823	3,810
Non-cash portion of restructuring items [Member]
Restructuring charges and other exit costs
Restructuring Charges, Total			$ 1,167

XML

Supplemental Cash Flow Information (Tables)

9 Months Ended

Oct. 01, 2011

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

	Nine Months Ended
	October 1,			October 2,
	2011			2010
Cash paid (received) during the period for:
Interest expense	$	8,606		$	11,834
Interest income		(1,525	)		(714	)
Income taxes, net of refunds received		51,323			27,424
Supplemental non-cash investing and financing activities:
Accounts payable for purchase of fixed assets		4,930			5,851

XML

Commitments and Contingencies

9 Months Ended

Oct. 01, 2011

Legal Matters And Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 19 — Commitments and Contingencies

The contractual obligations and commitments in existence as of October 1, 2011 did not differ materially from those disclosed as of January 1, 2011 in the Company’s Annual Report on Form 10-K for Fiscal 2010, except for the following changes, which occurred during the Nine Months Ended October 1, 2011:

	2012		2013		2014		2015		2016		Thereafter		Total
Operating leases	$	15,599	$	14,602	$	10,839	$	7,711	$	5,857	$	10,938	$	65,546
Other contractual obligations		15,198		10,535		8,789		6,945		4,603		193,155		239,225
Total	$	30,797	$	25,137	$	19,628	$	14,656	$	10,460	$	204,093	$	304,771

At October 1, 2011, in the ordinary course of business, the Company had open purchase orders with suppliers of approximately $325,428, of which $155,340 are payable in 2011 and $170,088 are payable in 2012.

As of October 1, 2011, the Company was also party to outstanding hedging instruments (see Note 11 of Notes to the Consolidated Condensed Financial Statements).

As of October 1, 2011, the Company remains under audit in various taxing jurisdictions. It is, therefore, difficult to predict the final timing and resolution of any particular uncertain tax position. Based upon the Company’s assessment of many factors, including past experience and complex judgments about future events, it is reasonably possible that within the next twelve months the reserve for uncertain tax positions may decrease between $10,000 and $12,000 associated with tax positions expected to be taken during the next twelve months, the reevaluation of current uncertain tax positions arising from developments in examinations, the finalization of tax examinations, or from the closure of tax statutes.

XML

Financial Instruments

9 Months Ended

Oct. 01, 2011

Financial Instruments [Abstract]

Financial Instruments

Note 11— Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments at October 1, 2011, January 1, 2011 and October 2, 2010 are as follows:

		October 1, 2011				January 1, 2011				October 2, 2010
	Balance Sheet	Carrying		Fair		Carrying		Fair		Carrying		Fair
	Location	Amount		Value		Amount		Value		Amount		Value
Assets:
Accounts receivable	Accounts receivable, net of reserves	$	341,406	$	341,406	$	318,123	$	318,123	$	346,464	$	346,464
Open foreign currency exchange contracts	Prepaid expenses and other current assets		4,761		4,761		834		834		231		231
Interest rate cap	Other assets		7,399		7,399		—		—		—		—
Liabilities:
Accounts payable	Accounts payable	$	182,517	$	182,517	$	152,714	$	152,714	$	165,171	$	165,171
Short-term debt	Short-term debt		43,355		43,355		32,172		32,172		69,607		69,607
Open foreign currency exchange contracts	Accrued liabilities		495		495		3,282		3,282		4,044		4,044
2011 Term loan, current portion	Short-term debt		2,000		1,950		—		—		—		—
2011 Term loan	Long-term debt		197,500		194,513		—		—		—		—

See Note 17 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010 for the methods and assumptions used by the Company in estimating its fair value disclosures for financial instruments. In addition, the 2011 Term Loan (see Note 14 of Notes to Consolidated Condensed Financial Statements) matures on June 17, 2018 and bears a variable rate of interest. The fair value of the 2011 Term Loan was estimated by obtaining quotes from brokers. The fair value of the interest rate cap was determined using broker quotes, which use discounted cash flows and the then-applicable forward LIBOR rates.

Derivative Financial Instruments

Foreign Currency Exchange Forward Contracts

During the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, the Company’s Korean, European, Canadian and Mexican subsidiaries continued their hedging programs, which included foreign exchange forward contracts which were designed to satisfy either up to the first 50% of U.S. dollar denominated purchases of inventory over a maximum 18-month period or payment of 100% of certain minimum royalty and advertising expenses. All of the foregoing forward contracts were designated as cash flow hedges, with gains and losses accumulated on the Consolidated Condensed Balance Sheets in Other Comprehensive Income and recognized in Cost of Goods Sold in the Consolidated Condensed Statement of Operations during the periods in which the underlying transactions occur.

During the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, the Company also continued hedging programs, which were accounted for as economic hedges, with gains and losses recorded directly in Other loss (income) or Selling, general and administrative expense in the Consolidated Condensed Statements of Operations in the period in which they are incurred. Those hedging programs included foreign currency exchange forward contracts and zero cost collars that were designed to fix the number of Euros, Korean Won, Canadian Dollars or Mexican Pesos required to satisfy either (i) the first 50% of U.S. dollar denominated purchases of inventory over a maximum 18-month period; (ii) 50% of intercompany sales of inventory by a Euro functional currency subsidiary to a British subsidiary, whose functional currency is the Pound Sterling or (iii) U.S. dollar denominated intercompany loans and payables. During the Three Months Ended October 1, 2011, the Company initiated foreign currency exchange forward contracts, which were accounted for as economic hedges, in connection with the U.S. Dollar-denominated intercompany loan made upon the formation of the Company’s joint venture in India, which is held by a Singapore Dollar functional currency subsidiary (see Note 3 of Notes to Consolidated Condensed Financial Statements).

Interest Rate Cap

On July 1, 2011, the Company entered into an Interest Rate Cap Agreement (as defined below), which will limit the interest rate payable on average over the term of the Interest Rate Cap Agreement to 5.6975% per annum with respect to the portion of the 2011 Term Loan that equals the notional amount of the interest rate cap. The interest rate cap contracts are designated as cash flow hedges of the exposure to variability in expected future cash flows attributable to a three-month LIBOR rate beyond 1.00%. See Note 14 of Notes to Consolidated Condensed Financial Statements — Interest Rate Cap.

The following table summarizes the Company’s derivative instruments as of October 1, 2011, January 1, 2011 and October 2, 2010:

		Asset Derivatives							Liability Derivatives
			Fair Value								Fair Value
		Balance Sheet	October 1,		January 1,		October 2,		Balance Sheet		October 1,		January 1,		October 2,
	Type (a)	Location	2011		2011		2010		Location		2011		2011		2010
Derivatives designated as hedging instruments under FASB ASC 815-20
Foreign exchange contracts	CF	Prepaid expenses and other current assets	$	1,873	$	—	$	—		Accrued liabilities	$	—	$	2,290	$	2,094
Interest rate cap	CF	Other assets		7,399		—		—				—		—		—
			$	9,272	$	—	$	—			$	—	$	2,290	$	2,094
Derivatives not designated as hedging instruments under FASB ASC 815-20
Foreign exchange contracts		Prepaid expenses and other current assets	$	2,888	$	834	$	231		Accrued liabilities	$	495	$	992	$	1,950
Total derivatives			$	12,160	$	834	$	231			$	495	$	3,282	$	4,044

(a) CF = cash flow hedge

The following tables summarize the effect of the Company’s derivative instruments on the Consolidated Condensed Statements of Operations for the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010:

Derivatives in FASB ASC		Amount of Gain (Loss)						Location of Gain (Loss) Reclassified from Accumulated	Amount of Gain (Loss) Reclassified						Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized
815-20 Cash Flow Hedging	Nature of Hedged	Recognized in OCI on						OCI into Income	from Accumulated OCI into						on Derivative		in Income on Derivative
Relationships	Transaction	Derivatives (Effective Portion)						(Effective Portion)	Income (Effective Portion)						(Ineffective Portion) (c)		(Ineffective Portion)
		Three Months			Three Months				Three Months			Three Months				Three Months		Three Months
		Ended			Ended				Ended			Ended				Ended		Ended
		October 1,			October 2,				October 1,			October 2,				October 1,		October 2,
		2011			2010				2011			2010				2011		2010
Foreign exchange contracts	Minimum royalty and advertising costs (a)	$	900		$	(1,128	)	cost of goods sold	$	(47	)	$	289		other loss/income	$	35	$	(49	)
Foreign exchange contracts	Purchases of inventory (b)		4,216			(2,842	)	cost of goods sold		(1,069	)		(93	)	other loss/income		149		(99	)
Interest rate cap	Interest expense on 2011 Term Loan		(6,996	)		—		interest expense		—			—		other loss/income		—		—
Total		$	(1,880	)	$	(3,970	)		$	(1,116	)	$	196			$	184	$	(148	)
		Nine Months			Nine Months				Nine Months			Nine Months				Nine Months		Nine Months
		Ended			Ended				Ended			Ended				Ended		Ended
		October 1,			October 2,				October 1,			October 2,				October 1,		October 2,
			2011			2010				2011			2010				2011		2010
Foreign exchange contracts	Minimum royalty and advertising costs (a)	$	(111	)	$	387		cost of goods sold	$	(708	)	$	689		other loss/income	$	16	$	(23	)
Foreign exchange contracts	Purchases of inventory (b)		732			(1,452	)	cost of goods sold		(2,807	)		(911	)	other loss/income		121		(25	)
Interest rate cap	Interest expense on 2011 Term Loan		(6,996	)		—		interest expense		—			—		other loss/income		—		—
Total		$	(6,375	)	$	(1,065	)		$	(3,515	)	$	(222	)		$	137	$	(48	)

(a)	At October 1, 2011, the amount of minimum royalty costs hedged was $11,366; contracts expire through June 2012. At October 2, 2010, the amount of minimum royalty costs hedged was $11,433; contracts expire through September 2011.
(b)	At October 1, 2011, the amount of inventory purchases hedged was $44,700 ; contracts expire through August 2012. At October 2, 2010, the amount of inventory purchases hedged was $60,100; contracts expire through February 2012.
(c)	No amounts were excluded from effectiveness testing

Location of

Gain (Loss)

Derivatives not designated as

Recognized in

Amount of Gain (Loss)

hedging instruments under

Nature of Hedged

Amount

Maturity

Income on

Recognized in Income on

FASB ASC 815-20

Transaction

Instrument

Hedged

Date

Derivative

Derivative

October 1,

Three Months

Nine Months

2011

Ended

Ended

October 1,

October 1,

2011

2011

Foreign exchange contracts (e)

Intercompany sales of inventory

Forward contracts

6,546

July 2012

other loss/income

(313

)

103

Foreign exchange contracts (f)

Minimum royalty and advertising costs

Forward contracts

10,000

July 2012

other loss/income

723

(260

)

Foreign exchange contracts

Intercompany payables

Forward contracts

28,000

April 2012

other loss/income

556

(1,844

)

Foreign exchange contracts

Intercompany loans

Forward contracts

34,500

November 2011

other loss/income

2,460

859

Foreign exchange contracts

Intercompany loans

Forward contracts

—

other loss/income

819

156

Foreign exchange contracts

Intercompany loans

Forward contracts

6,000

July 2012

other loss/income

(495

)

(495

)

Total

$

3,750

$

(1,481

)

Location of

Gain (Loss)

Derivatives not designated as

Recognized in

Amount of Gain (Loss)

hedging instruments under

Nature of Hedged

Amount

Maturity

Income on

Recognized in Income on

FASB ASC 815-20

Transaction

Instrument

Hedged

Date

Derivative

Derivative

October 2,

Three Months

Nine Months

2010

Ended

Ended

October 2,

October 2,

2010

2010

Foreign exchange contracts (d)

Purchases of inventory

Forward contracts

$

—

other loss/income

$

(32

)

$

(142

)

Foreign exchange contracts (e)

Intercompany sales of inventory

Forward contracts

13,936

January 2012

other loss/income

712

(80

)

Foreign exchange contracts (f)

Minimum royalty and advertising costs

Forward contracts

12,500

October 2011

other loss/income

(976

)

(73

)

Foreign exchange contracts

Intercompany loans

Forward contracts

—

other loss/income

—

(94

)

Foreign exchange contracts

Intercompany payables

Forward contracts

35,000

May 2011

other loss/income

(3,115

)

(256

)

Foreign exchange contracts

Intercompany payables

Zero-cost collars

—

other loss/income

—

1,511

Foreign exchange contracts

Intercompany payables

Forward contracts

—

selling, general and administrative

—

398

Foreign exchange contracts

Intercompany payables

Zero-cost collars

—

selling, general and administrative

—

(232

)

Total

$

(3,411

)

$

1,032

(d)	Forward contracts used to offset 50% of U.S. dollar-denominated purchases of inventory by the Company’s foreign subsidiaries whose functional currencies were the Canadian dollar and Mexican peso, entered into by Warnaco Inc. on behalf of foreign subsidiaries.
(e)	Forward contracts used to offset 50% of British Pounds-denominated intercompany sales by a subsidiary whose functional currency is the Euro.
(f)	Forward contracts used to offset payment of minimum royalty and advertising costs related to sales of inventory by the Company’s foreign subsidiary whose functional currency was the Euro, entered into by Warnaco Inc. on behalf of a foreign subsidiary.

A reconciliation of the balance of Accumulated Other Comprehensive Income during the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010 related to cash flow hedges is as follows:

Balance January 2, 2010	$	(1,414	)
Derivative losses recognized		(1,065	)
Losses amortized to earnings		222
Balance before tax effect		(2,257	)
Tax effect		803
Balance October 2, 2010, net of tax	$	(1,454	)
Balance January 1, 2011	$	(2,331	)
Derivative losses recognized		(6,375	)
Losses amortized to earnings		3,515
Balance before tax effect		(5,191	)
Tax effect		2,175
Balance October 1, 2011, net of tax	$	(3,016	)

During the twelve months following October 1, 2011, the net amount of gains recorded in Other Comprehensive Income at October 1, 2011 that are estimated to be amortized into earnings is $1,415, on a pre-tax basis. During the Nine Months Ended October 1, 2011, the Company expected that all originally forecasted purchases of inventory or payment of minimum royalties, which were covered by cash flow hedges, would occur by the end of the respective originally specified time periods. Therefore, no amount of gains or losses was reclassified into earnings during the Nine Months Ended October 1, 2011 as a result of the discontinuance of those cash flow hedges.

XML

Basis of Consolidation and Presentation

9 Months Ended

Oct. 01, 2011

Organization, Basis of Consolidation and Presentation [Abstract]

Basis of Consolidation and Presentation

Note 2 — Basis of Consolidation and Presentation

The Consolidated Condensed Financial Statements include the accounts of Warnaco Group and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

The accompanying unaudited Consolidated Condensed Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and disclosures necessary for a presentation of the Company’s financial position, results of operations and cash flows in conformity with generally accepted accounting principles in the United States of America (“GAAP”). In the opinion of management, these financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of results for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. These Consolidated Condensed Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for Fiscal 2010 (as defined below). The year-end Consolidated Condensed Balance Sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP.

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Periods Covered: The Company operates on a 52/53 week fiscal year basis ending on the Saturday closest to December 31. As such, the period from January 2, 2011 to December 31, 2011 (“Fiscal 2011”) and the period from January 3, 2010 to January 1, 2011 (“Fiscal 2010”) each contain 52 weeks of operations. Additionally, the period from July 3, 2011 to October 1, 2011 (the “Three Months Ended October 1, 2011”) and the period from July 4, 2010 to October 2, 2010 (the “Three Months Ended October 2, 2010”) each contained thirteen weeks of operations and the period from January 2, 2011 to October 1, 2011 (the “Nine Months Ended October 1, 2011”) and the period from January 3, 2010 to October 2, 2010 (the “Nine Months Ended October 2, 2010”) each contained thirty-nine weeks of operations.

Reclassifications: Amounts related to certain corporate expenses incurred in the U.S. (previously included in Operating income (loss) — Corporate/Other) during the Three Months Ended October 2, 2010 and the Nine Months Ended October 2, 2010 have been reclassified to Operating income (loss) — Sportswear Group, Intimate Apparel Group and Swimwear Group in order to conform to the current period presentation. See Note 6 of Notes to Consolidated Condensed Financial Statements.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-29 “Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”), which amends Topic 805 on business combinations. ASU 2010-29 clarifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for the Company for business combinations for which the acquisition date is on or after January 2, 2011. In the event that the Company enters into a business combination or a series of business combinations that are deemed to be material for financial reporting purposes, the Company will apply the amendments in ASU 2010-29.

During May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”). ASU 2011-04 clarifies that the concept that the fair value of an asset is based on its highest and best use is only relevant when measuring the fair value of nonfinancial assets (and therefore would not apply to financial assets or any liabilities) since financial assets have no alternative use. The new guidance specifies that financial assets are measured based on the fair value of an individual security unless an entity manages its market risks and/or counterparty credit risk exposure within a group (portfolio) of financial instruments on a net basis. ASU 2011-4 requires the following new disclosures related to the Company’s assets and liabilities that are measured at and/or disclosed at fair value: (1) the categorization in the fair value hierarchy of all assets and liabilities that are not measured at fair value on the balance sheet but for which the fair value is required to be disclosed (such as the disclosure of the fair value of long-term debt that is recorded at amortized cost on the balance sheet); (2) all, not just significant, transfers between Level 1 and Level 2 fair value measurements; (3) the reason(s), if applicable, why the current use of a nonfinancial asset, that is recorded or disclosed at fair value, differs from its highest and best use; and (4) certain quantitative and qualitative disclosures related to Level 3 fair value measurements. Assets and liabilities of the Company’s defined benefit pension plans (see Note 8 of Notes to Consolidated Condensed Financial Statements) are not subject to any of these new disclosure requirements. The new requirements are effective for the Company for interim and annual periods beginning on or after January 1, 2012 and will be required prospectively upon adoption. The Company does not expect that the adoption of ASU 2011-04 will have a material effect on its financial position, results of operations or cash flows.

During June 2011, the FASB issued ASU 2011-05 “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 requires the Company to present items of net income and other comprehensive income in a Statement of Comprehensive Income; either in one continuous statement or in two separate, but consecutive, statements of equal prominence. Presentation of components of comprehensive income in the Statement of Stockholders’ Equity will no longer be allowed. The Company will be required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. Earnings-per-share computation will continue to be based on net income. Components of other comprehensive income will be required to be presented either net of the related tax effects or before the related tax effects with one amount reported for the tax effects of all other comprehensive income items. The Company will also be required to present parenthetically on the face of the statement, or to disclose in the footnotes, the tax allocated to each component of other comprehensive income. The new requirements are effective for all interim and annual periods beginning on or after January 1, 2012. Comparative financial statements of prior periods will be presented to conform to the new guidance. The Company does not expect the adoption of ASU 2011-05 to have a material effect on its financial position, results of operations or cash flows.

During September 2011, the FASB issued ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”), which is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to first perform a “qualitative” assessment to determine whether further quantitative impairment testing is necessary. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. An entity can choose to perform the qualitative assessment on none, some or all of its reporting units. Moreover, an entity can bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the impairment test, and then resume performing the qualitative assessment in any subsequent period. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, an entity can choose to early adopt as of the fourth quarter of 2011. The Company is in the process of determining whether to early adopt ASU 2011-08 for Fiscal 2011.

XML

Intangible Assets and Goodwill (Tables)

9 Months Ended

Oct. 01, 2011

Intangible Assets and Goodwill [Abstract]

Activity in intangible asset accounts

	October 1, 2011						January 1, 2011						October 2, 2010
	Gross						Gross						Gross
	Carrying		Accumulated				Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net		Amount		Amortization		Net
Finite-lived intangible assets:
Licenses for a term (Company as licensee)	$	323,422	$	61,773	$	261,649	$	327,394	$	54,907	$	272,487	$	328,388	$	52,774	$	275,614
Other		35,009		13,978		21,031		34,258		11,297		22,961		17,170		10,155		7,015
		358,431		75,751		282,680		361,652		66,204		295,448		345,558		62,929		282,629
Indefinite-lived intangible assets:
Trademarks		54,715		—		54,715		54,715		—		54,715		54,715		—		54,715
Licenses in perpetuity		23,113		—		23,113		23,113		—		23,113		23,113		—		23,113
		77,828		—		77,828		77,828		—		77,828		77,828		—		77,828
Intangible Assets	$	436,259	$	75,751	$	360,508	$	439,480	$	66,204	$	373,276	$	423,386	$	62,929	$	360,457

Increase in the balance of intangible assets

								Other
			Licenses		Licenses			Finite-lived
			in		for a			Intangible
	Trademarks		Perpetuity		Term			Assets			Total
Balance at January 1, 2011	$	54,715	$	23,113	$	272,487		$	22,961		$	373,276
Amortization expense		—		—		(6,866	)		(2,681	)		(9,547	)
Translation adjustments		—		—		(6,472	)		(322	)		(6,794	)
Other (a)		—		—		2,500			1,073			3,573
Balance at October 1, 2011	$	54,715	$	23,113	$	261,649		$	21,031		$	360,508

(a) relates to intangible assets totaling $3,573 for reacquired rights and amendment of a license during the Three Months Ended October 1, 2011, which will be amortized over a weighted average period of 25 years (see Note 3 of Notes to Consolidated Condensed Financial Statements).

Summary of estimated amortization expense

2012	$	11,753
2013		11,662
2014		10,284
2015		10,263
2016		10,005

Summary of changes in the carrying amount of goodwill

				Intimate
	Sportswear			Apparel			Swimwear
	Group			Group			Group		Total
Goodwill balance at January 1, 2011	$	113,016		$	1,620		$	642	$	115,278
Adjustment:
Translation adjustments		(4,672	)		(383	)		—		(5,055	)
Other (a)		29,442			4,023			—		33,465
Goodwill balance at October 1, 2011	$	137,786		$	5,260		$	642	$	143,688

(a) Primarily relates to the acquisition of a controlling interest in the business of the Company’s distributor of Calvin Klein products in India during the Three Months Ended October 1, 2011 ($28,817 in Sportswear Group and $3,930 in Intimate Apparel Group) (see Note 3 of Notes to Consolidated Condensed Financial Statements).

XML

Employee Benefit and Retirement Plans

9 Months Ended

Oct. 01, 2011

Employee Benefit and Retirement Plans [Abstract]

Employee Benefit and Retirement Plans

Note 8—Employee Benefit and Retirement Plans

Defined Benefit Pension Plans

The Company has a defined benefit pension plan covering certain full-time non-union domestic employees and certain domestic employees covered by a collective bargaining agreement who had completed service prior to January 1, 2003 (the “Pension Plan”). Participants in the Pension Plan have not earned any additional pension benefits after December 31, 2002. The Company also sponsors defined benefit plans for certain former employees of its United Kingdom and other European entities (the “Foreign Plans”). The Foreign Plans were not considered to be material for any period presented in this Form 10-Q. These pension plans are noncontributory and benefits are based upon years of service. The Company also has health care and life insurance plans that provide post-retirement benefits to certain retired domestic employees (the “Postretirement Plans”). The Postretirement Plans are, in most cases, contributory with retiree contributions adjusted annually.

Each quarter the Company recognizes interest cost of the Pension Plan’s projected benefit obligation offset by the expected return on Pension Plan assets. The Company records pension expense (income) as the effect of actual gains and losses exceeding the expected return on Pension Plan assets (including changes in actuarial assumptions) less changes in the Pension Plan’s projected benefit obligation (including changes in actuarial assumptions) in the fourth quarter of each year. This accounting results in volatility in pension expense or income; therefore, the Company reports pension expense (income) on a separate line of its Statements of Operations in each period.

The Company made contributions of $1,650 and $7,150 to the Pension Plan during the Three and Nine Months Ended October 1, 2011, respectively. The Company’s contributions to the Pension Plan are expected to be $8,800 in total for Fiscal 2011.

The following table includes only the Pension Plan. The Foreign Plans were not considered to be material for any period presented below. The components of net periodic benefit cost are as follows:

	Pension Plans						Postretirement Plans
	Three Months Ended						Three Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Service cost	$	—		$	—		$	62		$	33
Interest cost		2,334			2,358			70			91
Expected return on plan assets		(2,703	)		(2,418	)		—			—
Amortization of actuarial (gain)		—			—			(25	)		(26	)
Net benefit (income) cost (a)	$	(369	)	$	(60	)	$	107		$	98

	Pension Plans						Postretirement Plans
	Nine Months Ended						Nine Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Service cost	$	—		$	—		$	186		$	99
Interest cost		7,002			7,074			210			273
Expected return on plan assets		(8,109	)		(7,254	)		—			—
Amortization of actuarial (gain)		—			—			(75	)		(78	)
Net benefit (income) cost (a)	$	(1,107	)	$	(180	)	$	321		$	294

(a) net benefit (income) cost does not include costs related to the Foreign Plans of $59 and $176 for the Three and Nine Months Ended October 1, 2011, respectively, and $38 and $115 for the Three and Nine Months Ended October 2, 2010, respectively.

Deferred Compensation Plans

The Company’s liability under the employee deferred compensation plan was $4,185, $4,220 and $3,987 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively. This liability is included in other long-term liabilities. The Company’s liability under the director deferred compensation plan was $1,068, $1,015 and $834 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively. This liability is included in other long-term liabilities.

XML

Intangible Assets and Goodwill

9 Months Ended

Oct. 01, 2011

Intangible Assets and Goodwill [Abstract]

Intangible Assets and Goodwill

Note 13—Intangible Assets and Goodwill

The following tables set forth intangible assets as of October 1, 2011, January 1, 2011 and October 2, 2010 and the activity in the intangible asset accounts for the Nine Months Ended October 1, 2011:

	October 1, 2011						January 1, 2011						October 2, 2010
	Gross						Gross						Gross
	Carrying		Accumulated				Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net		Amount		Amortization		Net
Finite-lived intangible assets:
Licenses for a term (Company as licensee)	$	323,422	$	61,773	$	261,649	$	327,394	$	54,907	$	272,487	$	328,388	$	52,774	$	275,614
Other		35,009		13,978		21,031		34,258		11,297		22,961		17,170		10,155		7,015
		358,431		75,751		282,680		361,652		66,204		295,448		345,558		62,929		282,629
Indefinite-lived intangible assets:
Trademarks		54,715		—		54,715		54,715		—		54,715		54,715		—		54,715
Licenses in perpetuity		23,113		—		23,113		23,113		—		23,113		23,113		—		23,113
		77,828		—		77,828		77,828		—		77,828		77,828		—		77,828
Intangible Assets	$	436,259	$	75,751	$	360,508	$	439,480	$	66,204	$	373,276	$	423,386	$	62,929	$	360,457

								Other
			Licenses		Licenses			Finite-lived
			in		for a			Intangible
	Trademarks		Perpetuity		Term			Assets			Total
Balance at January 1, 2011	$	54,715	$	23,113	$	272,487		$	22,961		$	373,276
Amortization expense		—		—		(6,866	)		(2,681	)		(9,547	)
Translation adjustments		—		—		(6,472	)		(322	)		(6,794	)
Other (a)		—		—		2,500			1,073			3,573
Balance at October 1, 2011	$	54,715	$	23,113	$	261,649		$	21,031		$	360,508

(a) relates to intangible assets totaling $3,573 for reacquired rights and amendment of a license during the Three Months Ended October 1, 2011, which will be amortized over a weighted average period of 25 years (see Note 3 of Notes to Consolidated Condensed Financial Statements).

The following table summarizes the Company’s estimated amortization expense for intangible assets for the next five years:

2012	$	11,753
2013		11,662
2014		10,284
2015		10,263
2016		10,005

The following table summarizes the changes in the carrying amount of goodwill for the Nine Months Ended October 1, 2011:

				Intimate
	Sportswear			Apparel			Swimwear
	Group			Group			Group		Total
Goodwill balance at January 1, 2011	$	113,016		$	1,620		$	642	$	115,278
Adjustment:
Translation adjustments		(4,672	)		(383	)		—		(5,055	)
Other (a)		29,442			4,023			—		33,465
Goodwill balance at October 1, 2011	$	137,786		$	5,260		$	642	$	143,688

(a) Primarily relates to the acquisition of a controlling interest in the business of the Company’s distributor of Calvin Klein products in India during the Three Months Ended October 1, 2011 ($28,817 in Sportswear Group and $3,930 in Intimate Apparel Group) (see Note 3 of Notes to Consolidated Condensed Financial Statements).

See Note 2 of Notes to Consolidated Condensed Financial Statements — Recent Accounting Pronouncements regarding new guidelines for testing goodwill for impairment.

XML

Debt (Details Textual 4) (Interest Rate Cap [Member], USD $) In Thousands	Jul. 02, 2011 Other Assets [Member]	Oct. 01, 2011 Scenario, Forecast [Member]	Jul. 02, 2011
Derivatives, Fair Value [Line Items]
Fair value of cap	$ 14,395	$ 7,399	$ 14,395

XML

Comprehensive Income

9 Months Ended

Oct. 01, 2011

Comprehensive Income [Abstract]

Comprehensive Income

Note 9—Comprehensive Income

The components of comprehensive income attributable to Warnaco Group Inc. are as follows:

	Three Months Ended						Nine Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Net income	$	44,611		$	41,497		$	134,145		$	119,406
Other comprehensive income, net of tax:
Foreign currency translation adjustments (a)		(63,170	)		44,967			(21,453	)		1,677
Change in fair value of cash flow hedges		440			(2,958	)		(1,169	)		(427	)
Change in actuarial gains (losses), net related to post-retirement medical plans		—			(6	)		—			(6	)
Other		(3	)		(63	)		(5	)		11
Total comprehensive income (loss)	$	(18,122	)	$	83,437		$	111,518		$	120,661

The components of accumulated other comprehensive income as of October 1, 2011, January 1, 2011 and October 2, 2010 are summarized below:

	October 1,			January 1,			October 2,
	2011			2011			2010
Foreign currency translation adjustments (a)	$	24,529		$	45,982		$	50,235
Actuarial losses, net related to post retirement medical plans, net of tax of $1,232, $1,232 and $1,253, as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		(1,099	)		(1,099	)		(1,064	)
(Loss) on cash flow hedges, net of taxes of $2,175, $871 and $803 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		(3,016	)		(1,847	)		(1,454	)
Other		7			12			11
Total accumulated other comprehensive income	$	20,421		$	43,048		$	47,728

(a) Foreign currency translation adjustments reflect the change in the U.S. dollar relative to functional currencies where the Company conducts certain of its operations and the fact that more than 65% of the Company’s assets are based outside of the U.S. The change in foreign currency translation adjustments at October 1, 2011 compared to January 1, 2011 and October 2, 2010 as well as for the Three and Nine Months Ended October 1, 2011 compared to the Three and Nine Months Ended October 2, 2010 reflects the fluctuation of certain foreign currencies (principally the Euro, Canadian Dollar, Korean Won, Brazilian Real and Mexican Peso) relative to the U.S. dollar.

XML

Commitments and Contingencies (Details Textual) (USD $) In Thousands	9 Months Ended
	Oct. 01, 2011	Oct. 01, 2012
Commitments (Textual) [Abstract]
Open purchase order	$ 325,428
Open purchase order payable	155,340	170,088
Possible decrease in unrecognized tax benefits within the next twelve months	between $10000 and $12000
Minimum possible decrease in unrecognized tax benefits	10,000
Maximum possible decrease in unrecognized tax benefits	$ 12,000

XML

Fair Value Measurement (Tables)

9 Months Ended

Oct. 01, 2011

Fair Value Measurement [Abstract]

Assets and liabilities measured at fair value on a recurring basis

	October 1, 2011						January 1, 2011						October 2, 2010
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets
Foreign currency exchange contracts	$	—	$	4,761	$	—	$	—	$	834	$	—	$	—	$	231	$	—
Interest rate cap		—		7,399		—		—		—		—		—		—		—
Liabilities
Foreign currency exchange contracts	$	—	$	495	$	—	$	—	$	3,282	$	—	$	—	$	4,044	$	—

XML

Income Taxes

9 Months Ended

Oct. 01, 2011

Income Taxes [Abstract]

Income Taxes

Note 7—Income Taxes

The effective tax rates for the Three Months Ended October 1, 2011 and October 2, 2010 were 18.1% and 38.6% respectively. The lower effective tax rate for the Three Months Ended October 1, 2011 primarily reflects a tax benefit of $7,300 recorded during the Three Months Ended October 1, 2011 related to a reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions, as well as a tax benefit of approximately $1,300 recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for Fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011. In addition, certain discrete charges to the tax provision recorded during the Three Months Ended October 2, 2010 (in total $3,600) did not reoccur in the Three Months Ended October 1, 2011.

The effective tax rates for the Nine Months Ended October 1, 2011 and October 2, 2010 were 22.0% and 36.0% respectively. The lower effective tax rate for the Nine Months Ended October 1, 2011 primarily reflects a tax benefit of approximately $11,000, recorded during the Nine Months Ended October 1, 2011, associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as a result of receiving a favorable ruling from that country’s taxing authority during the Nine Months Ended October 1, 2011, a tax benefit of $7,300 recorded during the Three Months Ended October 1, 2011 related to a reduction in the reserve for uncertain tax positions in certain foreign tax jurisdictions, as well as a tax benefit of approximately $1,300 recorded during the Three Months Ended October 1, 2011 relating to a change in various domestic and foreign tax provision estimates for Fiscal 2010 following the filing of certain of the Company’s tax returns during the Three Months Ended October 1, 2011. In addition, certain discrete charges to the tax provision recorded during the Nine Months Ended October 2, 2010 (in total $3,600) did not reoccur in the Nine Months Ended October 1, 2011.

As of October 1, 2011, the Company remains under audit in various taxing jurisdictions. It is, therefore, difficult to predict the final timing and resolution of any particular uncertain tax position. Based upon the Company’s assessment of many factors, including past experience and complex judgments about future events, it is reasonably possible that within the next twelve months the reserve for uncertain tax positions may decrease between $10,000 and $12,000 associated with tax positions expected to be taken during the next 12 months, the reevaluation of current uncertain tax positions arising from developments in examinations, the finalization of tax examinations, or from the closure of tax statutes.

XML

Employee Benefit and Retirement Plans (Details Textual) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Oct. 01, 2011 Pension Plans [Member]	Oct. 02, 2010 Pension Plans [Member]	Oct. 01, 2011 Pension Plans [Member]	Oct. 02, 2010 Pension Plans [Member]	Dec. 31, 2011 Pension Plans [Member] Scenario, Forecast [Member]	Oct. 01, 2011 Foreign Plans [Member]	Oct. 02, 2010 Foreign Plans [Member]	Oct. 01, 2011 Foreign Plans [Member]	Oct. 02, 2010 Foreign Plans [Member]	Oct. 01, 2011 Postretirement Plans [Member]	Oct. 02, 2010 Postretirement Plans [Member]	Oct. 01, 2011 Postretirement Plans [Member]	Oct. 02, 2010 Postretirement Plans [Member]	Oct. 01, 2011 Employee [Member]	Jan. 01, 2011 Employee [Member]	Oct. 02, 2010 Employee [Member]	Oct. 01, 2011 Director [Member]	Jan. 01, 2011 Director [Member]	Oct. 02, 2010 Director [Member]
Employee Benefit and Retirement Plans (Textual)
Company contributions to the Pension Plan	$ 1,650,000		$ 7,150,000		$ 8,800,000
Costs related to the Foreign Plans	(369,000)	(60,000)	(1,107,000)	(180,000)		59,000	38,000	176,000	115,000	107,000	98,000	321,000	294,000
Deferred Compensation Plans Liability for contributions and investment activity included in other long-term liabilities														$ 4,185,000	$ 4,220,000	$ 3,987,000	$ 1,068,000	$ 1,015,000	$ 834,000

XML

Consolidated Condensed Statements of Cash Flows (Unaudited) (USD $) In Thousands	9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010
Cash flows from operating activities:
Net Income	$ 133,986	$ 119,406
Adjustments to reconcile net income to net cash provided by operating activities:
Foreign exchange (gain) loss	2,185	150
Loss from discontinued operations	4,741	373
Depreciation and amortization	43,669	37,507
Stock compensation	21,215	18,080
Provision for trade and other bad debts	2,259	2,170
Inventory writedown	14,581	10,035
Loss on repurchase of Senior Notes		3,747
Other	(1,697)	(467)
Changes in operating assets and liabilities:
Accounts receivable	(32,383)	(59,319)
Inventories	(101,375)	(74,625)
Prepaid expenses and other assets	(13,125)	(10,495)
Accounts payable, accrued expenses and other liabilities	14,766	61,520
Accrued income taxes	(12,139)	39,861
Net cash provided by operating activities from continuing operations	76,683	147,943
Net cash provided by (used in) operating activities from discontinued operations	(16,501)	377
Net cash provided by operating activities	60,182	148,320
Cash flows from investing activities:
Proceeds on disposal of assets	146	189
Purchases of property, plant & equipment	(36,311)	(29,783)
Business acquisitions, net of cash acquired	(21,454)	(8,404)
Loan to non-controlling shareholder	(6,000)
Disposal of businesses	2,000	1,431
Net cash (used in) investing activities from continuing operations	(61,619)	(36,567)
Net cash (used in) investing activities from discontinued operations	0	0
Net cash (used in) investing activities	(61,619)	(36,567)
Cash flows from financing activities:
Repurchase of Senior Notes due 2013	0	(164,011)
Change in short-term notes payable	24,340	15,344
Change in revolving credit loans		6,985
Proceeds from the exercise of employee stock options	8,231	8,157
Payment of deferred financing cost	(5,385)	(70)
Purchase of treasury stock	(211,206)	(84,145)
Contingent payment related to acquisition of non-controlling interest in Brazilian subsidiary	(11,467)	(3,442)
Net cash (used in) financing activities from continuing operations	(9,357)	(221,182)
Net cash (used in) financing activities from discontinued operations	0	0
Net cash (used in) financing activities	(9,357)	(221,182)
Effect of foreign exchange rate changes on cash and cash equivalents	(1,107)	2,084
Increase (decrease) in cash and cash equivalents	(11,901)	(107,345)
Cash and cash equivalents at beginning of period	191,227	320,754
Cash and cash equivalents at end of period	179,326	213,409
Italian Note [Member]
Repayment of Italian Note	(13,370)
2011 Term Loan [Member]
Proceeds from 2011 Term loan	200,000
Repayment of 2011 Term Loan	$ (500)	$ 0

XML

Legal Matters (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Oct. 01, 2011	Oct. 01, 2011 Palmers Textile Ag [Member]	Aug. 19, 2004 Ocean Pacific Apparel Corp. [Member]
Legal Matters (Textual) [Abstract]
Total receivables included in other assets		$ 13,744
Acquisition of outstanding common stock of Ocean Pacific Apparel Corp.			100.00%
Reserve for Lejaby matters	$ 4,000

XML

Acquisitions

9 Months Ended

Oct. 01, 2011

Acquisitions [Abstract]

Acquisitions

Note 3—Acquisitions

Redeemable Non-Controlling Interest — Joint Venture in India

On July 8, 2011, the Company acquired a controlling interest (51%) in the equity of a joint venture with a distributor of its Calvin Klein products in India for cash consideration of approximately $17,771, net of cash acquired of $2,629. The acquisition was accounted for as a business combination and its results were consolidated into the Company’s operations and financial statements from the acquisition date, with the operating results of the non-controlling interest (i.e., the interest in the joint venture not owned by the Company) reported separately (see below). In addition, on July 8, 2011, the Company loaned one of the non-controlling shareholders in the joint venture $6,000 with an interest rate of 5.0% per annum (which loan is collateralized by the non-controlling shareholder’s equity interest in the joint venture). Principal is due on July 8, 2016, the maturity date of the loan, or sooner if the Company purchases the shares of the non-controlling shareholder. Interest on the loan is payable in arrears on the last day of each calendar year.

The Company is in the process of finalizing the allocation of the purchase price attributable to the acquisition of its controlling interest in the joint venture and is also in the process of finalizing the determination of the fair values of the assets acquired and liabilities assumed.

The Shareholders’ Agreement entered into by the parties to the joint venture (the “Shareholders’ Agreement”) contains a put option under which the non-controlling shareholders can require the Company to purchase all or a portion of their shares in the joint venture (i) at any date after July 8, 2011, if the Company commits a material breach, as defined in the Shareholders’ Agreement, that is not cured or becomes insolvent; or (ii) at any date after July 8, 2013, with respect to one of the non-controlling shareholders or after July 8, 2015, with respect to the other non-controlling shareholder. The put price is the fair market value of the shares on the redemption date based upon a multiple of the joint venture’s EBITDA for the prior 12 months less its net debt as of the closing balance sheet of the 12 month period. EBITDA will be derived from the joint venture’s financial statements. The multiple of EBITDA will be based on multiples of comparable companies and specific facts and circumstances of the joint venture. Thus, the redemption value at any date after the acquisition date is the fair value of the redeemable non-controlling interest on that date.

The Shareholders’ Agreement also contains a call option under which the Company can require any of the non-controlling shareholders to sell their shares to the Company (i) at any date after July 8, 2011 in the event that any non-controlling shareholder commits a material breach, as defined in the Shareholders’ Agreement, under any of the agreements related to the joint venture, that is not cured; or (ii) at any date after July 8, 2015. The call price is determined by the same method as the put price (as described above).

Due to the inclusion of a put option in the Shareholders’ Agreement, the Company is accounting for the joint venture as a redeemable non-controlling interest in accordance with ASC 480-10-S99-3A, Distinguishing Liabilities from Equity. The redeemable non-controlling interest is classified as temporary equity and is presented in the mezzanine section of the Company’s Consolidated Condensed Balance Sheets between liabilities and equity at its redemption value. The preliminary estimate of the initial carrying value of the non-controlling interest on July 8, 2011 of $15,200 was its fair value as determined using a discounted cash flow model with a discount rate of 27% and additional discounts for lack of marketability and lack of control by the non-controlling shareholders.

Since it is probable that the non-controlling interest will become redeemable in the future, based on the passage of time, subsequent changes in the redemption value (fair value) of the redeemable non-controlling interest will be recognized immediately as they occur and the carrying amount of the redeemable non-controlling interest will be adjusted to equal the fair value at the end of each reporting period. Thus, the end of each reporting period is viewed as the redemption date. The adjustment to the carrying amount will be determined after attribution of net income or net loss of the non-controlling interest. The offset to the adjustment to the carrying amount of the redeemable non-controlling interest will be retained earnings of the Company. The adjustment to the carrying amount will not impact net income or comprehensive income in the Company’s Consolidated Condensed Financial Statements and will not impact earnings per share since the shares of the redeemable non-controlling interest are redeemable at fair value. At October 1, 2011, the preliminary estimate of the fair value of the redeemable non-controlling interest was $15,200.

As of October 1, 2011, the Company has recorded a preliminary amount of $32,747 for Goodwill in connection with the acquisition of its controlling interest in the joint venture. Goodwill represents synergies and economies of scale resulting from the business combination as well as the value of the business established by the Indian partners before formation of the joint venture, including business relationships, opening stores and hiring of an assembled workforce (see Note 13 of Notes to Consolidated Condensed Financial Statements).

On July 8, 2011, subsequent to the formation of the joint venture, Calvin Klein Inc. (“CKI”) agreed to amend certain licenses with the Company related to territories in Asia to include the territory of India. The amendments allow the Company to develop, manufacture, distribute and market Calvin Klein Jeans products (including Jeans apparel, Jeans accessories and Bridge merchandise) in India through 2046 (see Trademarks and Licensing Agreements in the Company’s Annual Report on Form 10-K for Fiscal 2010). The Company accounted for rights received to the territory of India as an intangible asset, which was recorded at estimated cost (see Note 13 of Notes to Consolidated Condensed Financial Statements). Changes in the estimate of the cost will be reflected as a change in the carrying amount of the intangible asset.

Acquisition of Business in Taiwan

On January 3, 2011, the Company acquired certain assets, including inventory and leasehold improvements, and leases of the retail stores of its Calvin Klein distributor in Taiwan for cash consideration of approximately $1,450. The acquisition was accounted for as a business combination and its results were consolidated into the Company’s operations and financial statements from the acquisition date.

Acquisition of Remaining Non-Controlling Interest in Brazil

During the fourth quarter of the fiscal year ended January 2, 2010 (“Fiscal 2009”), the Company acquired the remaining non-controlling interest in a Brazilian subsidiary (“WBR”) and eight retail stores in Brazil, collectively, the “Brazilian Acquisition.” As part of the consideration for the Brazilian Acquisition, the Company is required to make three payments through March 31, 2012, which are contingent on the level of operating income achieved (as specified in the acquisition agreement) by WBR during that period. The Company made the second contingent payment of 18,500 Brazilian Real (approximately $11,470 as of March 31, 2011), based on the operating results of WBR for Fiscal 2010, on March 31, 2011. As of October 1, 2011, the Company expects that the third contingent payment will be 18,500 Brazilian Real (approximately $10,100 as of October 1, 2011) based on the anticipated operating results of WBR for Fiscal 2011, which will be paid by March 31, 2012.

XML

Commitments and Contingencies (Tables)

9 Months Ended

Oct. 01, 2011

Legal Matters And Commitments and Contingencies [Abstract]

Contractual obligations and commitments

	2012		2013		2014		2015		2016		Thereafter		Total
Operating leases	$	15,599	$	14,602	$	10,839	$	7,711	$	5,857	$	10,938	$	65,546
Other contractual obligations		15,198		10,535		8,789		6,945		4,603		193,155		239,225
Total	$	30,797	$	25,137	$	19,628	$	14,656	$	10,460	$	204,093	$	304,771

XML

Comprehensive Income (Tables)

9 Months Ended

Oct. 01, 2011

Comprehensive Income [Abstract]

Components of comprehensive income

	Three Months Ended						Nine Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Net income	$	44,611		$	41,497		$	134,145		$	119,406
Other comprehensive income, net of tax:
Foreign currency translation adjustments (a)		(63,170	)		44,967			(21,453	)		1,677
Change in fair value of cash flow hedges		440			(2,958	)		(1,169	)		(427	)
Change in actuarial gains (losses), net related to post-retirement medical plans		—			(6	)		—			(6	)
Other		(3	)		(63	)		(5	)		11
Total comprehensive income (loss)	$	(18,122	)	$	83,437		$	111,518		$	120,661

Components of accumulated other comprehensive income

	October 1,			January 1,			October 2,
	2011			2011			2010
Foreign currency translation adjustments (a)	$	24,529		$	45,982		$	50,235
Actuarial losses, net related to post retirement medical plans, net of tax of $1,232, $1,232 and $1,253, as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		(1,099	)		(1,099	)		(1,064	)
(Loss) on cash flow hedges, net of taxes of $2,175, $871 and $803 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively		(3,016	)		(1,847	)		(1,454	)
Other		7			12			11
Total accumulated other comprehensive income	$	20,421		$	43,048		$	47,728

(a) Foreign currency translation adjustments reflect the change in the U.S. dollar relative to functional currencies where the Company conducts certain of its operations and the fact that more than 65% of the Company’s assets are based outside of the U.S. The change in foreign currency translation adjustments at October 1, 2011 compared to January 1, 2011 and October 2, 2010 as well as for the Three and Nine Months Ended October 1, 2011 compared to the Three and Nine Months Ended October 2, 2010 reflects the fluctuation of certain foreign currencies (principally the Euro, Canadian Dollar, Korean Won, Brazilian Real and Mexican Peso) relative to the U.S. dollar.

XML

Financial Instruments (Details 2) (Cash Flow Hedge [Member], USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)	$ (1,880)	$ (3,970)	$ (6,375)	$ (1,065)
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	(1,116)	196	(3,515)	(222)
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)	184	(148)	137	(48)
Foreign currency exchange contracts [Member] | Minimum Royalty and Advertising Costs [Member] | Cost of goods sold [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	(47)	289	(708)	689
Foreign currency exchange contracts [Member] | Minimum Royalty and Advertising Costs [Member] | Other loss/income [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)	35	(49)	16	(23)
Foreign currency exchange contracts [Member] | Minimum Royalty and Advertising Costs [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)	900	(1,128)	(111)	387
Foreign currency exchange contracts [Member] | Purchases of Inventory [Member] | Cost of goods sold [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	(1,069)	(93)	(2,807)	(911)
Foreign currency exchange contracts [Member] | Purchases of Inventory [Member] | Other loss/income [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)	149	(99)	121	(25)
Foreign currency exchange contracts [Member] | Purchases of Inventory [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)	4,216	(2,842)	732	(1,452)
Interest Rate Cap [Member] | Term Loan [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)	(6,996)	0	(6,996)	0
Interest Rate Cap [Member] | Other loss/income [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion)	0	0	0	0
Interest Rate Cap [Member] | Interest Expense [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	$ 0	$ 0	$ 0	$ 0
Minimum Royalty and Advertising Costs [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Derivative, Maturity Date			Jun. 01, 2010	Sep. 01, 2011
Purchases of Inventory [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Derivative, Maturity Date			Aug. 01, 2012	Feb. 01, 2012

XML

Financial Instruments (Details 4) (USD $) In Thousands	9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Jan. 01, 2011
Reconciliation of the balance of Accumulated Other Comprehensive Income related to cash flow hedges of foreign exchange forward contracts
Beginning Balance, before tax effect	$ (2,331)	$ (1,414)
Derivative losses recognized	(6,375)	(1,065)
Losses amortized to earnings	3,515	222
Ending Balance, before tax effect	(5,191)	(2,257)
Tax effect	2,175	803
Balance, net of tax	$ (3,016)	$ (1,454)	$ (1,847)

XML

Employee Benefit and Retirement Plans (Details) (USD $)	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Pension Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Interest cost	$ 2,334,000	$ 2,358,000	$ 7,002,000	$ 7,074,000
Expected return on plan assets	(2,703,000)	(2,418,000)	(8,109,000)	(7,254,000)
Net benefit (income) cost (a)	(369,000)	(60,000)	(1,107,000)	(180,000)
Postretirement Plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	62,000	33,000	186,000	99,000
Interest cost	70,000	91,000	210,000	273,000
Amortization of actuarial loss (gain)	(25,000)	(26,000)	(75,000)	(78,000)
Net benefit (income) cost (a)	$ 107,000	$ 98,000	$ 321,000	$ 294,000

XML

Intangible Assets and Goodwill (Details 1) (USD $) In Thousands	9 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011 Licenses for a term [Member]	Oct. 01, 2011 Others Finite Lived Intangible Asset [Member]	Oct. 01, 2011 Trademarks [Member]	Jan. 01, 2011 Trademarks [Member]	Oct. 01, 2011 Licenses in Perpetuity [Member]	Jan. 01, 2011 Licenses in Perpetuity [Member]
Increase in the balance of intangible assets
Balance beginning	$ 373,276	$ 360,457	$ 272,487	$ 22,961	$ 54,715	$ 54,715	$ 23,113	$ 23,113
Amortization expense	(9,547)		(6,866)	(2,681)
Translation adjustments	(6,794)		(6,472)	(322)
Other	3,573		2,500	1,073
Ending beginning	$ 360,508	$ 360,457	$ 261,649	$ 21,031	$ 54,715	$ 54,715	$ 23,113	$ 23,113

XML

Discontinued Operations

9 Months Ended

Oct. 01, 2011

Discontinued Operations [Abstract]

Discontinued Operations

Note 4—Discontinued Operations

As disclosed in its Annual Report on Form 10-K for Fiscal 2010, the Company discontinued certain operations in prior periods. Summarized operating results for the discontinued operations of those prior periods are as follows:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Net revenues	$	—		$	6		$	—		$	1,355
(Loss) before income tax (benefit) (a)	$	(4,214	)	$	33		$	(5,090	)	$	(683	)
Income tax (benefit)		(37	)		(24	)		(349	)		(310	)
Income (Loss) from discontinued operations	$	(4,177	)	$	57		$	(4,741	)	$	(373	)

(a) Includes a charge of approximately $4,000 in connection with the Lejaby business (see Note 18 of Notes to Consolidated Condensed Financial Statements — Legal Matters).

Summarized assets and liabilities of the discontinued operations are presented in the Consolidated Condensed Balance Sheets as follows:

	October 1,		January 1,		October 2,
	2011		2011		2010
Accounts receivable, net	$	—	$	18	$	1
Inventories		—		—		2
Prepaid expenses and other current assets		—		107		109
Assets of discontinued operations	$	—	$	125	$	112
Accounts payable	$	5	$	32	$	16
Accrued liabilities		7,043		18,768		8,349
Liabilities of discontinued operations	$	7,048	$	18,800	$	8,365

During February 2011, the Company and Doyle & Bossiere Fund I LLC reached a settlement agreement and mutual release related to the OP Action (see Note 18 of Notes to Consolidated Condensed Financial Statements — Legal Matters). On February 16, 2011, the Company paid $15,000 in full and final settlement of the OP Action in accordance with the terms of the settlement agreement and mutual release.

XML

Stockholders' Equity (Details 2) (USD $)	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Stock option award activity under the Company's stock incentive plans
Options, Outstanding as of January 1, 2011			1,926,257
Options, Granted	12,050	56,096	360,900	434,746
Options, Exercised			(286,340)
Options, Forfeited/Expired			(62,726)
Options, Outstanding as of October 1, 2011	1,938,091		1,938,091
Options Exercisable as of October 1, 2011	1,154,007		1,154,007
Weighted Average Exercise Price, Outstanding as of January 1, 2011			$ 33.73
Weighted Average Exercise Price, Granted			$ 55.33
Weighted Average Exercise Price, Exercised			$ 28.74
Weighted Average Exercise Price, Forfeited/Expired			$ 41.81
Weighted Average Exercise Price, Outstanding as of October 1, 2011	$ 38.23		$ 38.23
Weighted Average Exercise Price, Options Exercisable as of October 1, 2011	$ 33.52		$ 33.52

XML

Discontinued Operations (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010	Feb. 16, 2011	Jan. 01, 2011
Summarized operating results for discontinued operations
Net revenues	$ 0	$ 6	$ 0	$ 1,355
(Loss) before income tax (benefit)	(4,214)	33	(5,090)	(683)
Income tax (benefit)	(37)	(24)	(349)	(310)
Income (Loss) from discontinued operations	(4,177)	57	(4,741)	(373)
Summarized assets and liabilities of discontinued operations
Accounts receivable, net	0	1	0	1		18
Inventories	0	2	0	2		0
Prepaid expenses and other current assets	0	109	0	109		107
Assets of discontinued operations	0	112	0	112		125
Accounts payable	5	16	5	16		32
Accrued liabilities	7,043	8,349	7,043	8,349		18,768
Liabilities of discontinued operations	7,048	8,365	7,048	8,365		18,800
Discontinued Operations (Textual) [Abstract]
Legal matter charges in connection with Lejaby business	4,000
Cash paid for full and final settlement of the OP Action in accordance with the terms of the settlement agreement and mutual release					$ 15,000

XML

Restructuring Expenses and Other Exit Costs (Tables)

9 Months Ended

Oct. 01, 2011

Restructuring Expenses and Other Exit Costs [Abstract]

Restructuring charges and other exit costs

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Cost of goods sold	$	376	$	13	$	1,842	$	287
Selling, general and administrative expenses		7,171		1,684		17,148		3,523
	$	7,547	$	1,697	$	18,990	$	3,810
Cash portion of restructuring items	$	7,547	$	1,697	$	17,823	$	3,810
Non-cash portion of restructuring items		—		—		1,167		—

Changes in liabilities related to restructuring expenses and other exit costs

Balance at January 2, 2010	$	3,572
Charges for the Nine Months Ended October 2, 2010		3,810
Cash reductions for the Nine Months Ended October 2, 2010		(3,810	)
Non-cash changes and foreign currency effects		(48	)
Balance at October 2, 2010	$	3,524
Balance at January 1, 2011	$	3,582
Charges for the Nine Months Ended October 1, 2011		18,437
Cash reductions for the Nine Months Ended October 1, 2011		(11,720	)
Non-cash changes and foreign currency effects		277
Balance at October 1, 2011 (a)	$	10,576

(a) The balance at October 1, 2011 includes approximately $7,698 recorded in accrued liabilities (part of current liabilities) which amounts are expected to be settled over the next 12 months and approximately $2,878 recorded in other long term liabilities which amounts are expected to be settled over the next two years.

XML

Intangible Assets and Goodwill (Details 3) (USD $) In Thousands	9 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011 Sportswear Group [Member]	Oct. 01, 2011 Intimate Apparel Group [Member]	Oct. 01, 2011 Swimwear Group [Member]	Jan. 01, 2011 Swimwear Group [Member]
Summary of changes in the carrying amount of goodwill
Goodwill balance, Beginning	$ 115,278	$ 110,150	$ 113,016	$ 1,620	$ 642	$ 642
Adjustment
Translation adjustments	(5,055)		(4,672)	(383)
Other	33,465		29,442	4,023
Goodwill balance, Ending	$ 143,688	$ 110,150	$ 137,786	$ 5,260	$ 642	$ 642

XML

Stockholders' Equity (Details 4)	0 Months Ended	1 Months Ended
	Jul. 08, 2010	Mar. 01, 2011
Peer Companies [Member] | Maximum [Member]
Calculation of simulated TSR's under the Monte Carlo model for the Remaining Measurement Period
Expected volatility	114.10%	113.40%
Peer Companies [Member] | Minimum [Member]
Calculation of simulated TSR's under the Monte Carlo model for the Remaining Measurement Period
Expected volatility	39.80%	38.20%
Monte Carlo Model
Calculation of simulated TSR's under the Monte Carlo model for the Remaining Measurement Period
Weighted average risk free rate of return	1.25%	1.07%
Dividend yield
Remaining measurement period (years)	2.83	2.83
Monte Carlo Model | Parent Company [Member]
Calculation of simulated TSR's under the Monte Carlo model for the Remaining Measurement Period
Expected volatility	65.00%	61.50%

XML

Inventories (Details) (USD $) In Thousands	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Inventories
Finished goods	$ 390,205	$ 310,504	$ 324,430
Raw materials	1,868	0	9
Total	392,073	310,504	324,439
Inventories (Textual) [Abstract]
Amount of Deposits	$ 4,234	$ 8,841	$ 4,792

XML

Financial Instruments (Tables)

9 Months Ended

Oct. 01, 2011

Financial Instruments [Abstract]

Carrying amounts and fair values of the Company's financial instruments

		October 1, 2011				January 1, 2011				October 2, 2010
	Balance Sheet	Carrying		Fair		Carrying		Fair		Carrying		Fair
	Location	Amount		Value		Amount		Value		Amount		Value
Assets:
Accounts receivable	Accounts receivable, net of reserves	$	341,406	$	341,406	$	318,123	$	318,123	$	346,464	$	346,464
Open foreign currency exchange contracts	Prepaid expenses and other current assets		4,761		4,761		834		834		231		231
Interest rate cap	Other assets		7,399		7,399		—		—		—		—
Liabilities:
Accounts payable	Accounts payable	$	182,517	$	182,517	$	152,714	$	152,714	$	165,171	$	165,171
Short-term debt	Short-term debt		43,355		43,355		32,172		32,172		69,607		69,607
Open foreign currency exchange contracts	Accrued liabilities		495		495		3,282		3,282		4,044		4,044
2011 Term loan, current portion	Short-term debt		2,000		1,950		—		—		—		—
2011 Term loan	Long-term debt		197,500		194,513		—		—		—		—

Summary of Company's derivative instruments

		Asset Derivatives							Liability Derivatives
			Fair Value								Fair Value
		Balance Sheet	October 1,		January 1,		October 2,		Balance Sheet		October 1,		January 1,		October 2,
	Type (a)	Location	2011		2011		2010		Location		2011		2011		2010
Derivatives designated as hedging instruments under FASB ASC 815-20
Foreign exchange contracts	CF	Prepaid expenses and other current assets	$	1,873	$	—	$	—		Accrued liabilities	$	—	$	2,290	$	2,094
Interest rate cap	CF	Other assets		7,399		—		—				—		—		—
			$	9,272	$	—	$	—			$	—	$	2,290	$	2,094
Derivatives not designated as hedging instruments under FASB ASC 815-20
Foreign exchange contracts		Prepaid expenses and other current assets	$	2,888	$	834	$	231		Accrued liabilities	$	495	$	992	$	1,950
Total derivatives			$	12,160	$	834	$	231			$	495	$	3,282	$	4,044

(a) CF = cash flow hedge

Effect of derivative instruments on Consolidated Condensed Statements of Operations

Derivatives in FASB ASC		Amount of Gain (Loss)						Location of Gain (Loss) Reclassified from Accumulated	Amount of Gain (Loss) Reclassified						Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized
815-20 Cash Flow Hedging	Nature of Hedged	Recognized in OCI on						OCI into Income	from Accumulated OCI into						on Derivative		in Income on Derivative
Relationships	Transaction	Derivatives (Effective Portion)						(Effective Portion)	Income (Effective Portion)						(Ineffective Portion) (c)		(Ineffective Portion)
		Three Months			Three Months				Three Months			Three Months				Three Months		Three Months
		Ended			Ended				Ended			Ended				Ended		Ended
		October 1,			October 2,				October 1,			October 2,				October 1,		October 2,
		2011			2010				2011			2010				2011		2010
Foreign exchange contracts	Minimum royalty and advertising costs (a)	$	900		$	(1,128	)	cost of goods sold	$	(47	)	$	289		other loss/income	$	35	$	(49	)
Foreign exchange contracts	Purchases of inventory (b)		4,216			(2,842	)	cost of goods sold		(1,069	)		(93	)	other loss/income		149		(99	)
Interest rate cap	Interest expense on 2011 Term Loan		(6,996	)		—		interest expense		—			—		other loss/income		—		—
Total		$	(1,880	)	$	(3,970	)		$	(1,116	)	$	196			$	184	$	(148	)
		Nine Months			Nine Months				Nine Months			Nine Months				Nine Months		Nine Months
		Ended			Ended				Ended			Ended				Ended		Ended
		October 1,			October 2,				October 1,			October 2,				October 1,		October 2,
			2011			2010				2011			2010				2011		2010
Foreign exchange contracts	Minimum royalty and advertising costs (a)	$	(111	)	$	387		cost of goods sold	$	(708	)	$	689		other loss/income	$	16	$	(23	)
Foreign exchange contracts	Purchases of inventory (b)		732			(1,452	)	cost of goods sold		(2,807	)		(911	)	other loss/income		121		(25	)
Interest rate cap	Interest expense on 2011 Term Loan		(6,996	)		—		interest expense		—			—		other loss/income		—		—
Total		$	(6,375	)	$	(1,065	)		$	(3,515	)	$	(222	)		$	137	$	(48	)

(a)	At October 1, 2011, the amount of minimum royalty costs hedged was $11,366; contracts expire through June 2012. At October 2, 2010, the amount of minimum royalty costs hedged was $11,433; contracts expire through September 2011.
(b)	At October 1, 2011, the amount of inventory purchases hedged was $44,700 ; contracts expire through August 2012. At October 2, 2010, the amount of inventory purchases hedged was $60,100; contracts expire through February 2012.
(c)	No amounts were excluded from effectiveness testing

Location of

Gain (Loss)

Derivatives not designated as

Recognized in

Amount of Gain (Loss)

hedging instruments under

Nature of Hedged

Amount

Maturity

Income on

Recognized in Income on

FASB ASC 815-20

Transaction

Instrument

Hedged

Date

Derivative

Derivative

October 1,

Three Months

Nine Months

2011

Ended

Ended

October 1,

October 1,

2011

2011

Foreign exchange contracts (e)

Intercompany sales of inventory

Forward contracts

6,546

July 2012

other loss/income

(313

)

103

Foreign exchange contracts (f)

Minimum royalty and advertising costs

Forward contracts

10,000

July 2012

other loss/income

723

(260

)

Foreign exchange contracts

Intercompany payables

Forward contracts

28,000

April 2012

other loss/income

556

(1,844

)

Foreign exchange contracts

Intercompany loans

Forward contracts

34,500

November 2011

other loss/income

2,460

859

Foreign exchange contracts

Intercompany loans

Forward contracts

—

other loss/income

819

156

Foreign exchange contracts

Intercompany loans

Forward contracts

6,000

July 2012

other loss/income

(495

)

(495

)

Total

$

3,750

$

(1,481

)

Location of

Gain (Loss)

Derivatives not designated as

Recognized in

Amount of Gain (Loss)

hedging instruments under

Nature of Hedged

Amount

Maturity

Income on

Recognized in Income on

FASB ASC 815-20

Transaction

Instrument

Hedged

Date

Derivative

Derivative

October 2,

Three Months

Nine Months

2010

Ended

Ended

October 2,

October 2,

2010

2010

Foreign exchange contracts (d)

Purchases of inventory

Forward contracts

$

—

other loss/income

$

(32

)

$

(142

)

Foreign exchange contracts (e)

Intercompany sales of inventory

Forward contracts

13,936

January 2012

other loss/income

712

(80

)

Foreign exchange contracts (f)

Minimum royalty and advertising costs

Forward contracts

12,500

October 2011

other loss/income

(976

)

(73

)

Foreign exchange contracts

Intercompany loans

Forward contracts

—

other loss/income

—

(94

)

Foreign exchange contracts

Intercompany payables

Forward contracts

35,000

May 2011

other loss/income

(3,115

)

(256

)

Foreign exchange contracts

Intercompany payables

Zero-cost collars

—

other loss/income

—

1,511

Foreign exchange contracts

Intercompany payables

Forward contracts

—

selling, general and administrative

—

398

Foreign exchange contracts

Intercompany payables

Zero-cost collars

—

selling, general and administrative

—

(232

)

Total

$

(3,411

)

$

1,032

(d)	Forward contracts used to offset 50% of U.S. dollar-denominated purchases of inventory by the Company’s foreign subsidiaries whose functional currencies were the Canadian dollar and Mexican peso, entered into by Warnaco Inc. on behalf of foreign subsidiaries.
(e)	Forward contracts used to offset 50% of British Pounds-denominated intercompany sales by a subsidiary whose functional currency is the Euro.
(f)	Forward contracts used to offset payment of minimum royalty and advertising costs related to sales of inventory by the Company’s foreign subsidiary whose functional currency was the Euro, entered into by Warnaco Inc. on behalf of a foreign subsidiary.

Reconciliation of the balance of Accumulated Other Comprehensive Income related to cash flow hedges of foreign exchange forward contracts

Balance January 2, 2010	$	(1,414	)
Derivative losses recognized		(1,065	)
Losses amortized to earnings		222
Balance before tax effect		(2,257	)
Tax effect		803
Balance October 2, 2010, net of tax	$	(1,454	)
Balance January 1, 2011	$	(2,331	)
Derivative losses recognized		(6,375	)
Losses amortized to earnings		3,515
Balance before tax effect		(5,191	)
Tax effect		2,175
Balance October 1, 2011, net of tax	$	(3,016	)

XML

Acquisitions (Details) In Thousands, unless otherwise specified				3 Months Ended
	Oct. 01, 2011 USD ($)	Jan. 01, 2011 USD ($)	Oct. 02, 2010 USD ($)	Jan. 02, 2010 Brazilian Acquisition [Member] Stores Payments	Oct. 01, 2011 Brazilian Acquisition [Member] USD ($)	Oct. 01, 2011 Brazilian Acquisition [Member] BRL	Mar. 31, 2011 Brazilian Acquisition [Member] USD ($)	Mar. 31, 2011 Brazilian Acquisition [Member] BRL	Jan. 03, 2011 Calvin Klein distributor in Taiwan [Member] USD ($)	Jul. 08, 2011 Calvin Klein Distributor In India [Member] USD ($)
Acquisition (Textual) [Abstract]
Joint venture controlling interest										51.00%
Loaned to non controlling party										$ 6,000
Amount of Cash among the assets acquired										2,629
Interest rate to non-controlling party										5.00%
Initial carrying value of the non-controlling interest										15,200
Discount rate used for determining fair value										27.00%
Redemption value of the redeemable non-controlling interest	15,200
Preliminary amount for goodwill in connection with the acquisition of its controlling interest in the joint venture	143,688	115,278	110,150							32,747
Cash consideration paid					$ 10,100	18,500	$ 11,470	18,500	$ 1,450	$ 17,771
Number of retail stores acquired in Brazil				8
Number of Future annual payments				3

XML

Employee Benefit and Retirement Plans (Tables)

9 Months Ended

Oct. 01, 2011

Employee Benefit and Retirement Plans [Abstract]

Components of net periodic benefit cost

	Pension Plans						Postretirement Plans
	Three Months Ended						Three Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Service cost	$	—		$	—		$	62		$	33
Interest cost		2,334			2,358			70			91
Expected return on plan assets		(2,703	)		(2,418	)		—			—
Amortization of actuarial (gain)		—			—			(25	)		(26	)
Net benefit (income) cost (a)	$	(369	)	$	(60	)	$	107		$	98

	Pension Plans						Postretirement Plans
	Nine Months Ended						Nine Months Ended
	October 1, 2011			October 2, 2010			October 1, 2011			October 2, 2010
Service cost	$	—		$	—		$	186		$	99
Interest cost		7,002			7,074			210			273
Expected return on plan assets		(8,109	)		(7,254	)		—			—
Amortization of actuarial (gain)		—			—			(75	)		(78	)
Net benefit (income) cost (a)	$	(1,107	)	$	(180	)	$	321		$	294

(a) net benefit (income) cost does not include costs related to the Foreign Plans of $59 and $176 for the Three and Nine Months Ended October 1, 2011, respectively, and $38 and $115 for the Three and Nine Months Ended October 2, 2010, respectively.

XML

Inventories

9 Months Ended

Oct. 01, 2011

Inventories [Abstract]

Inventories

Note 12—Inventories

Inventories are valued at the lower of cost to the Company (using the first-in-first-out method) or market and are summarized as follows:

	October 1,		January 1,		October 2,
	2011		2011		2010
Finished goods	$	390,205	$	310,504	$	324,430
Raw materials		1,868		—		9
	$	392,073	$	310,504	$	324,439

In addition to the amounts of inventory noted above, the Company records deposits related to advance payments to certain third-party suppliers for the future purchase of finished goods. Such deposits are recorded in Prepaid and other current assets on the Company’s Consolidated Condensed Balance Sheets. At October 1, 2011, January 1, 2011 and October 2, 2010, the amount of such deposits was $4,234, $8,841 and $4,792, respectively.

See Note 11 of Notes to Consolidated Condensed Financial Statements for details on the Company’s hedging programs related to purchases of inventory.

XML

Financial Instruments (Details) (USD $) In Thousands	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets
Accounts receivable, Fair Value	$ 341,406	$ 318,123	$ 346,464
Open foreign currency exchange contracts, Fair Value	4,761	834	231
Interest rate cap	7,399	0	0
Liabilities
Accounts payable, Fair Value	182,517	152,714	165,171
Short-term debt, Fair Value	43,355	32,172	69,607
Open foreign currency exchange contracts, Fair Value	495	3,282	4,044
2011 Term loan, Current Portion	2,000	0	0
2011 term loan	197,500	0	0
Estimate of Fair Value, Fair Value Disclosure [Member]
Assets
Accounts receivable, Fair Value	341,406	318,123	346,464
Open foreign currency exchange contracts, Fair Value	4,761	834	231
Interest rate cap	7,399	0	0
Liabilities
Accounts payable, Fair Value	182,517	152,714	165,171
Short-term debt, Fair Value	43,355	32,172	69,607
Open foreign currency exchange contracts, Fair Value	495	3,282	4,044
2011 Term loan, Current Portion	1,950	0	0
2011 term loan	$ 194,513	$ 0	$ 0

XML

Supplemental Cash Flow Information (Details) (USD $) In Thousands	9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010
Cash paid (received) during the period for:
Interest expense	$ 8,606	$ 11,834
Interest income	(1,525)	(714)
Income taxes, net of refunds received	51,323	27,424
Supplemental non-cash investing and financing activities:
Accounts payable for purchase of fixed assets	$ 4,930	$ 5,851

XML

Stockholders' Equity (Details) (Black-Scholes-Merton)	3 Months Ended		9 Months Ended
	Oct. 01, 2011 Year	Oct. 02, 2010 Year	Oct. 01, 2011 Year	Oct. 02, 2010 Year
Black-Scholes-Merton
Fair value of stock option granted
Weighted average risk free rate of return	0.71%	1.15%	1.62%	1.74%
Dividend yield
Expected volatility of the market price of the Company's common stock	57.70%	56.80%	57.70%	56.80%
Expected option life (years)	4.1	4.2	4.1	4.2

XML

Financial Instruments (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended		9 Months Ended
	Oct. 01, 2011	Jul. 02, 2011	Oct. 01, 2011 Korean European And Canadian Subsidiaries [Member]	Oct. 02, 2010 Korean European And Canadian Subsidiaries [Member]	Oct. 01, 2011 Minimum Royalty and Advertising Costs [Member] Cash Flow Hedge [Member]	Oct. 02, 2010 Minimum Royalty and Advertising Costs [Member] Cash Flow Hedge [Member]	Oct. 01, 2011 Purchases of Inventory [Member] Cash Flow Hedge [Member]	Oct. 02, 2010 Purchases of Inventory [Member] Cash Flow Hedge [Member]	Oct. 01, 2011 Inter Company [Member]
Financial Instruments (Textual) [Abstract]
Maximum percentage of U.S. Dollars Denominated Purchases of inventory included in foreign exchange forward contracts			50.00%	50.00%					50.00%
Percentage of Minimum Royalty and Advertising Expenses Included in Foreign Exchange Forward Contracts	100.00%
Maximum period of U.S. Dollars Denominated Purchases of inventory included in foreign exchange forward contracts			18 months	18 months
Minimum royalty costs hedged					$ 11,366	$ 11,433	$ 44,700	$ 60,100
Royalty costs contracts maturity period					Jun. 01, 2010	Sep. 01, 2011	Aug. 01, 2012	Feb. 01, 2012
Additional Financial Instruments (Textual) [Abstract]
Net amount of gain amortized to earnings during the following 12 months	1,415
Gains or losses reclassified into earnings as a result of the discontinuance of cash flow hedges	$ 0
Percentage equal the notional amount of the Interest rate cap that limit the cash flows related to portion of the 2011 term Loan		5.6975%
Interest rate to be considered for the exposure to variability in expected future cash flows		three-month LIBOR rate beyond 1.00%

XML

Restructuring Expenses and Other Exit Costs

9 Months Ended

Oct. 01, 2011

Restructuring Expenses and Other Exit Costs [Abstract]

Restructuring Expenses and Other Exit Costs

Note 5—Restructuring Expenses and Other Exit Costs

During the Three and Nine Months Ended October 1, 2011, the Company incurred restructuring charges and other exit costs of $7,547 and $18,990, respectively, primarily related to (i) the rationalization and consolidation of the Company’s international operations ($2,191 and $7,054, respectively); (ii) job eliminations in the U.S. ($840 and $2,871, respectively); (iii) impairment charges and lease contract termination costs in connection with retail store, office and warehouse closures ($4,396 and $8,748, respectively) and (iv) other exit costs ($120 and $317, respectively).

During the Three and Nine Months Ended October 2, 2010, the Company incurred restructuring charges and other exit costs of $1,697 and $3,810, respectively, primarily related to (i) costs associated with workforce reductions to align its cost structure to match current economic conditions ($0 and $1,121, respectively); (ii) the rationalization and consolidation of the Company’s European operations ($323 and $919, respectively) and (iii) other exit activities, including contract termination costs, legal and other costs ($1,374 and $1,770, respectively).

Restructuring charges and other exit costs have been recorded in the Consolidated Condensed Statements of Operations for the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010, as follows:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Cost of goods sold	$	376	$	13	$	1,842	$	287
Selling, general and administrative expenses		7,171		1,684		17,148		3,523
	$	7,547	$	1,697	$	18,990	$	3,810
Cash portion of restructuring items	$	7,547	$	1,697	$	17,823	$	3,810
Non-cash portion of restructuring items		—		—		1,167		—

Changes in liabilities related to restructuring expenses and other exit costs for the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010 are summarized below:

Balance at January 2, 2010	$	3,572
Charges for the Nine Months Ended October 2, 2010		3,810
Cash reductions for the Nine Months Ended October 2, 2010		(3,810	)
Non-cash changes and foreign currency effects		(48	)
Balance at October 2, 2010	$	3,524
Balance at January 1, 2011	$	3,582
Charges for the Nine Months Ended October 1, 2011		18,437
Cash reductions for the Nine Months Ended October 1, 2011		(11,720	)
Non-cash changes and foreign currency effects		277
Balance at October 1, 2011 (a)	$	10,576

(a) The balance at October 1, 2011 includes approximately $7,698 recorded in accrued liabilities (part of current liabilities) which amounts are expected to be settled over the next 12 months and approximately $2,878 recorded in other long term liabilities which amounts are expected to be settled over the next two years.

XML

Stockholders Equity

9 Months Ended

Oct. 01, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 15—Stockholders’ Equity

Preferred Stock

The Company has authorized an aggregate of 20,000,000 shares of preferred stock, par value $0.01 per share, of which 112,500 shares are designated as Series A preferred stock, par value $0.01 per share. There were no shares of preferred stock issued and outstanding at October 1, 2011, January 1, 2011 and October 2, 2010.

Share Repurchase Programs

On May 12, 2010, the Company’s Board of Directors authorized a share repurchase program (the ‘‘2010 Share Repurchase Program’’) for the repurchase of up to 5,000,000 shares of the Company’s common stock. During the Nine Months Ended October 1, 2011, the Company repurchased the remaining 4,060,842 shares of its common stock under the 2010 Share Repurchase Program for an aggregate amount of $205,800 (based on an average of $50.68 per share).

During September 2011, the Company’s Board of Directors approved a new multi-year share repurchase program (the “2011 Share Repurchase Program”) for up to $200,000 of the Company’s outstanding common stock. All repurchases under the 2011 Share Repurchase Program will be made consistent with the terms of the Company’s applicable debt instruments. During the Three Months Ended October 1, 2011, the Company repurchased 104,300 shares under the 2011 Share Repurchase Program for $4,996 (based on an average of $47.90 per share), leaving $195,004 of common stock to be repurchased.

Stock Incentive Plans

The Company granted 12,050 and 360,900 stock options during the Three and Nine Months Ended October 1, 2011, respectively, and 56,096 and 434,746 stock options during the Three and Nine Months Ended October 2, 2010, respectively. The fair values of stock options granted during the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010 were estimated at the dates of grant using the Black-Scholes-Merton option pricing model with the following assumptions:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Weighted average risk free rate of return (a)		0.71	%		1.15	%		1.62	%		1.74	%
Dividend yield		—			—			—			—
Expected volatility of the market price of the Company’s common stock		57.7	%		56.8	%		57.7	%		56.8	%
Expected option life (years)		4.1			4.2			4.1			4.2

(a) based on the quoted yield for U.S. five-year treasury bonds as of the date of grant.

A summary of stock-based compensation expense is as follows:

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Stock-based compensation expense before income taxes:
Stock options	$	1,566	$	1,625	$	6,938	$	6,485
Restricted stock grants		3,165		2,681		14,277		11,595
Total		4,731		4,306		21,215		18,080
Income tax benefit:
Stock options		532		570		2,407		2,307
Restricted stock grants		1,121		953		4,776		3,633
Total		1,653		1,523		7,183		5,940
Stock-based compensation expense after income taxes:
Stock options		1,034		1,055		4,531		4,178
Restricted stock grants		2,044		1,728		9,501		7,962
Total	$	3,078	$	2,783	$	14,032	$	12,140

A summary of stock option award activity under the Company’s stock incentive plans as of and for the Nine Months Ended October 1, 2011 is presented below:

				Weighted
				Average
				Exercise
	Options			Price
Outstanding as of January 1, 2011		1,926,257		$	33.73
Granted		360,900			55.33
Exercised		(286,340	)		28.74
Forfeited / Expired		(62,726	)		41.81
Outstanding as of October 1, 2011		1,938,091		$	38.23
Options Exercisable as of October 1, 2011		1,154,007		$	33.52

A summary of the activity for unvested restricted share/unit awards under the Company’s stock incentive plans (excluding Performance Awards, defined below) as of and for the Nine Months Ended October 1, 2011 is presented below:

				Weighted Average
	Restricted			Grant Date Fair
	shares/units			Value
Unvested as of January 1, 2011		847,664		$	36.93
Granted		227,293			55.33
Vested (a)		(130,501	)		48.96
Forfeited		(58,083	)		26.27
Unvested as of October 1, 2011		886,373		$	39.73

(a) does not include an additional 37,600 restricted units with a grant date fair value per share of $55.57 and 36,750 restricted units with a grant date fair value per share of $43.28, granted to Retirement-Eligible employees (see Note 13 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010) during the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively, for which the requisite service period has been completed on the respective grant dates but the restrictions will not lapse until the end of the three-year vesting period.

During March 2011 and March 2010, share-based compensation awards granted to certain of the Company’s executive officers under Warnaco Group’s 2005 Stock Incentive Plan included 80,050 and 75,750 performance-based restricted stock/restricted unit awards, respectively, (“Performance Awards”) in addition to the service-based stock options and restricted stock awards, included in the preceding tables. The Performance Awards include both a performance condition and a market condition (see Note 13 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010 for further details on the Performance Awards).

Under the performance condition, the estimated compensation expense is based on the grant date fair value (the closing price of the Company’s common stock on the date of grant) and the Company’s current expectations of the probable number of Performance Awards that will ultimately be earned. The fair value of the Performance Awards under the market condition on the respective grant dates ($3,245 at March 1, 2011 and $2,432 at March 3, 2010) is based upon a Monte Carlo simulation model, which encompasses the Company’s relative total shareholder return (“TSR”) (change in closing price of the Company’s common stock on the New York Stock Exchange compared to that of a peer group of companies (“Peer Companies”)) during the Measurement Period. The Measurement Period includes both:

(i) the period from the beginning of Fiscal 2011 to March 1, 2011 (the grant date) for Performance Awards granted on March 1, 2011, and the period from the beginning of Fiscal 2010 to March 3, 2010 (the grant date) for Performance Awards granted on March 3, 2010, for which actual TSR’s are calculated; and

(ii) the periods from the respective grant dates to the end of the fiscal years ending 2012 or 2013, respectively, a total of 2.83 years, (the “Remaining Measurement Period”), for which simulated TSR’s are calculated.

The calculation of simulated TSR’s under the Monte Carlo model for the Remaining Measurement Period for Performance Awards granted on March 1, 2011 and on March 3, 2010 included the following assumptions:

	March 1, 2011	March 3, 2010
Weighted average risk free rate of return	1.07%	1.25%
Dividend yield	—	—
Expected volatility — Company (a)	61.50%	65.0%
Expected volatility — Peer Companies	38.2% - 113.4%	39.8% - 114.1%
Remaining measurement period (years)	2.83	2.83

(a) Expected volatility — Company for Performance Awards granted on March 1, 2011 and on March 3, 2010 is based on a remaining measurement period of 2.83 years.

The Company recorded compensation expense for the Performance Awards during the Three and Nine Months Ended October 1, 2011 and the Three and Nine Months Ended October 2, 2010 based on the performance condition.

Performance Award activity for the Nine Months Ended October 1, 2011 was as follows:

				Weighted Average Grant
	Performance Shares			Date Fair Value
Unvested as of January 1, 2011		75,750		$	43.28
Granted		80,050			55.57
Vested (a)		—			—
Forfeited		(1,300	)		43.28
Unvested as of October 1, 2011 (b)		154,500		$	49.65

(a)	does not include 35,050 and 34,300 Performance Awards granted to Retirement Eligible Employees on March 1, 2011 and March 3, 2010, respectively, for which the requisite service period has been completed on the grant date; the restrictions on such awards will not lapse until the end of the three-year vesting period.
(b)	includes 18,613 shares that the Company is obligated to issue at the end of the three-year performance period based upon the Company’s performance to date.

XML

Intangible Assets and Goodwill (Details 2) (USD $) In Thousands	9 Months Ended
	Oct. 01, 2011
Summary of estimated amortization expense
2012	$ 11,753
2013	11,662
2014	10,284
2015	10,263
2016	$ 10,005

XML

Intangible Assets and Goodwill (Details) (USD $) In Thousands	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Finite-lived intangible assets:
Finite Lived Intangible Assets, Gross Carrying Amount	$ 358,431	$ 361,652	$ 345,558
Finite Lived Intangible Assets, Accumulated Amortization	75,751	66,204	62,929
Finite Lived Intangible Assets, Net	282,680	295,448	282,629
Indefinite-lived intangible assets:
Indefinite Lived Intangible Assets, Net	77,828	77,828	77,828
Intangible Assets, Gross	436,259	439,480	423,386
Intangible Assets, Total	360,508	373,276	360,457
Licenses for a term [Member]
Finite-lived intangible assets:
Finite Lived Intangible Assets, Gross Carrying Amount	323,422	327,394	328,388
Finite Lived Intangible Assets, Accumulated Amortization	61,773	54,907	52,774
Finite Lived Intangible Assets, Net	267,649	272,487	275,614
Indefinite-lived intangible assets:
Intangible Assets, Total	261,649	272,487
Other [Member]
Finite-lived intangible assets:
Finite Lived Intangible Assets, Gross Carrying Amount	35,009	34,258	17,170
Finite Lived Intangible Assets, Accumulated Amortization	13,978	11,297	10,155
Finite Lived Intangible Assets, Net	21,031	22,961	7,015
Indefinite-lived intangible assets:
Intangible Assets, Total	21,031	22,961
Trademarks [Member]
Indefinite-lived intangible assets:
Indefinite Lived Intangible Assets, Net	54,715	54,715	54,715
Intangible Assets, Total	54,715	54,715
Licenses in Perpetuity [Member]
Indefinite-lived intangible assets:
Indefinite Lived Intangible Assets, Net	23,113	23,113	23,113
Intangible Assets, Total	$ 23,113	$ 23,113

XML

Income Per Common Share (Tables)

9 Months Ended

Oct. 01, 2011

Income per Common Share [Abstract]

Calculation of basic and diluted Income per Common Share

	Three Months Ended
	October 1, 2011			October 2, 2010
Numerator for basic and diluted income per common share:
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders and participating securities	$	48,788		$	41,440
Less: allocation to participating securities		(718	)		(540	)
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders	$	48,070		$	40,900
Income (Loss) from discontinued operations, net of tax, attributable to Warnaco Group, Inc. common shareholders and participating securities	$	(4,177	)	$	57
Less: allocation to participating securities		61			—
Income (Loss) from discontinued operations attributable to Warnaco Group, Inc. common shareholders	$	(4,116	)	$	57
Net income attributable to Warnaco Group, Inc. common shareholders and participating securities	$	44,611		$	41,497
Less: allocation to participating securities		(656	)		(540	)
Net income attributable to Warnaco Group, Inc. common shareholders	$	43,955		$	40,957
Basic income per common share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing income per common share		41,713,958			44,553,898
Income per common share from continuing operations	$	1.15		$	0.92
Income (Loss) per common share from discontinued operations		(0.10	)		—
Net income per common share	$	1.05		$	0.92
Diluted income per share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing basic income per common share		41,713,958			44,553,898
Effect of dilutive securities:
Stock options and restricted stock units		867,142			911,793
Weighted average number of shares and share equivalents used in computing income per common share		42,581,100			45,465,691
Income per common share from continuing operations	$	1.13		$	0.90
Income (Loss) per common share from discontinued operations		(0.10	)		—
Net income per common share	$	1.03		$	0.90
Number of anti-dilutive “out-of-the-money” stock options outstanding (a)		355,200			400,067

	Nine Months Ended
	October 1, 2011			October 2, 2010
Numerator for basic and diluted income per common share:
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders and participating securities	$	138,886		$	119,779
Less: allocation to participating securities		(2,033	)		(1,536	)
Income from continuing operations attributable to Warnaco Group, Inc. common shareholders	$	136,853		$	118,243
(Loss) from discontinued operations, net of tax, attributable to Warnaco Group, Inc. common shareholders and participating securities	$	(4,741	)	$	(373	)
Less: allocation to participating securities		69			5
(Loss) from discontinued operations attributable to Warnaco Group, Inc. common shareholders	$	(4,672	)	$	(368	)
Net income attributable to Warnaco Group, Inc. common shareholders and participating securities	$	134,145		$	119,406
Less: allocation to participating securities		(1,964	)		(1,531	)
Net income attributable to Warnaco Group, Inc. common shareholders	$	132,181		$	117,875
Basic income per common share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing income per common share		43,076,120			44,813,952
Income per common share from continuing operations	$	3.18		$	2.64
(Loss) per common share from discontinued operations		(0.11	)		(0.01	)
Net income per common share	$	3.07		$	2.63
Diluted income per share attributable to Warnaco Group, Inc. common shareholders:
Weighted average number of common shares outstanding used in computing basic income per common share		43,076,120			44,813,952
Effect of dilutive securities:
Stock options and restricted stock units		947,526			992,578
Weighted average number of shares and share equivalents used in computing income per common share		44,023,646			45,806,530
Income per common share from continuing operations	$	3.11		$	2.58
(Loss) per common share from discontinued operations		(0.11	)		(0.01	)
Net income per common share	$	3.00		$	2.57
Number of anti-dilutive “out-of-the-money” stock options outstanding (a)		327,950			399,067

(a) options to purchase shares of common stock at an exercise price greater than the average market price of the underlying shares are anti-dilutive and therefore not included in the computation of diluted income per common share from continuing operations.

XML

Debt (Details Textual 1) In Thousands, unless otherwise specified	9 Months Ended			1 Months Ended	3 Months Ended	9 Months Ended						9 Months Ended
	Oct. 01, 2011 USD ($)	Jan. 01, 2011 USD ($)	Oct. 02, 2010 USD ($)	Sep. 30, 2011 Asian subsidiaries [Member] USD ($)	Oct. 01, 2011 Asian subsidiaries [Member] USD ($)	Oct. 01, 2011 CKJEA Notes and other [Member] USD ($)	Jan. 01, 2011 CKJEA Notes and other [Member] USD ($)	Oct. 02, 2010 CKJEA Notes and other [Member] USD ($)	Oct. 01, 2011 CKJEA Notes Payable [Member] USD ($)	Jan. 01, 2011 CKJEA Notes Payable [Member] USD ($)	Oct. 02, 2010 CKJEA Notes Payable [Member] USD ($)	Oct. 01, 2011 Italian Note [Member] USD ($)	Oct. 01, 2011 Italian Note [Member] EUR (€)	Jan. 01, 2011 Italian Note [Member] USD ($)	Jan. 01, 2011 Italian Note [Member] EUR (€)	Oct. 02, 2010 Italian Note [Member] USD ($)	Sep. 30, 2010 Italian Note [Member] EUR (€)
Debt (Textual) [Abstract]
2011 Term Loan	$ 47,773	$ 32,172	$ 69,607			$ 43,355	$ 18,802	$ 48,653	$ 39,027	$ 18,445	$ 48,653	$ 0		$ 13,370		$ 13,780
Weighted average effective interest rate						3.14%	4.29%	2.45%
Short term notes renewed for additional term						no more than 12 months
Short term notes renewed for additional term	12 months
Principal balance of loan														13,370	10,000		10,000
Repayments of notes												8,600	6,040
Interest rate on senior notes														3.64%	3.64%
Short-term revolving credit facility with one lender				25,000
Borrowings during the period					$ 0
Credit facility bears interest				1.75% over 1-month LIBOR
Interest rate percentage of Credit facility				1.75%

XML

Business Segments and Geographic Information (Tables)

9 Months Ended

Oct. 01, 2011

Business Segments and Geographic Information [Abstract]

Information by business group

				Intimate
	Sportswear			Apparel			Swimwear			Group		Corporate /
	Group			Group			Group			Total		Other			Total
Three Months Ended October 1, 2011
Net revenues	$	357,935		$	247,880		$	39,306		$	645,121	$	—		$	645,121
Operating income (loss)		34,129			38,620			(3,352	)		69,397		(4,641	)		64,756
Depreciation and amortization		8,347			4,413			589			13,349		393			13,742
Restructuring expense		3,545			699			2,988			7,232		315			7,547
Capital expenditures		6,014			7,379			245			13,638		443			14,081
Three Months Ended October 2, 2010
Net revenues	$	337,020		$	223,081		$	36,660		$	596,761	$	—		$	596,761
Operating income (loss) (a)		51,309			39,939			(3,794	)		87,454		(19,557	)		67,897
Depreciation and amortization		8,057			4,294			535			12,886		416			13,302
Restructuring expense		(47	)		9			1,732			1,694		3			1,697
Capital expenditures		12,407			(644	)		86			11,849		680			12,529
Nine Months Ended October 1, 2011
Net revenues	$	983,695		$	695,317		$	219,657		$	1,898,669	$	—		$	1,898,669
Operating income (loss) (c) (d)		88,686			103,627			21,421			213,734		(26,725	)		187,009
Depreciation and amortization		27,010			13,751			1,889			42,650		1,019			43,669
Restructuring expense		7,169			3,619			7,254			18,042		948			18,990
Capital expenditures		17,687			14,863			390			32,940		1,294			34,234
Nine Months Ended October 2, 2010
Net revenues	$	887,410		$	616,139		$	200,710		$	1,704,259	$	—		$	1,704,259
Operating income (loss) (b)		123,834			106,363			17,121			247,318		(44,605	)		202,713
Depreciation and amortization		22,694			11,967			1,705			36,366		1,141			37,507
Restructuring expense		395			122			2,446			2,963		847			3,810
Capital expenditures		26,193			5,747			545			32,485		2,048			34,533
Balance Sheet
Total Assets:
October 1, 2011	$	1,068,298		$	494,482		$	117,949		$	1,680,729	$	132,042		$	1,812,771
January 1, 2011		995,475			381,371			154,831			1,531,677		121,595			1,653,272
October 2, 2010		1,050,685			408,419			112,316			1,571,420		113,048			1,684,468
Property, Plant and Equipment:
October 1, 2011	$	62,317		$	38,486		$	2,472		$	103,275	$	25,930		$	129,205
January 1, 2011		63,555			28,522			3,023			95,100		34,152			129,252
October 2, 2010		46,053			42,527			3,344			91,924		35,233			127,157

(a)	reflects the allocation of $2,467 of corporate expenses to the Sportswear Group ($1,730), the Intimate Apparel Group ($1,052) and the Swimwear Group (($315)), respectively, during the Three Months Ended October 2, 2010 to conform to the presentation for the Three Months Ended October 1, 2011.
(b)	reflects the allocation of $7,422 of corporate expenses to the Sportswear Group ($5,134), the Intimate Apparel Group ($2,809) and the Swimwear Group (($521)), respectively, during the Nine Months Ended October 2, 2010 to conform to the presentation for the Nine Months Ended October 1, 2011.
(c)	includes a gain of $2,000 in the Intimate Apparel Group related to the sale and assignment of the Company’s Nancy Ganz® trademarks in Australia and New Zealand to the Company’s former licensee for cash consideration of $2,000.
(d)	includes a gain of $1,630 related to the recovery of an insurance claim for a fire in a warehouse in Peru, attributable partly to the Sportswear Group and partly to the Intimate Apparel Group.

Summarization of corporate or other expenses

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Unallocated corporate expenses (a)	$	5,273		$	17,242		$	25,338		$	43,660
Foreign exchange losses (gains)		(971	)		1,956			527			(863	)
Pension income		(369	)		(60	)		(1,107	)		(180	)
Restructuring expense		315			3			948			847
Depreciation and amortization of corporate assets		393			416			1,019			1,141
Corporate/other expenses	$	4,641		$	19,557		$	26,725		$	44,605

(a) the decrease in unallocated corporate expenses is related primarily to a reduction in amounts accrued for performance-based employee cash compensation and other employee compensation and benefits.

Reconciliation of operating income

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Operating income by operating groups	$	69,397		$	87,454		$	213,734		$	247,318
Corporate/other expenses		(4,641	)		(19,557	)		(26,725	)		(44,605	)
Operating income		64,756			67,897			187,009			202,713
Other (income) loss		1,357			(1,899	)		498			5,651
Interest expense		4,986			2,953			11,142			12,190
Interest income		(986	)		(699	)		(2,542	)		(2,192	)
Income from continuing operations before provision for income taxes and non-controlling interest	$	59,399		$	67,542		$	177,911		$	187,064

Summarization of net revenues by geographic region

	Three Months Ended
	October 1,					October 2,
	2011		%			2010		%
Net revenues:
United States	$	241,764		37.5	%	$	250,039		41.9	%
Europe		182,265		28.3	%		166,749		27.9	%
Asia		129,985		20.1	%		101,090		17.0	%
Mexico, Central and South America		62,848		9.7	%		48,216		8.1	%
Canada		28,259		4.4	%		30,667		5.1	%
	$	645,121		100.0	%	$	596,761		100.0	%

	Nine Months Ended
	October 1,					October 2,
	2011		%			2010		%
Net revenues:
United States	$	777,552		41.0	%	$	782,753		45.9	%
Europe		478,827		25.2	%		423,882		25.0	%
Asia		370,546		19.5	%		281,655		16.5	%
Mexico, Central and South America		176,698		9.3	%		129,940		7.6	%
Canada		95,046		5.0	%		86,029		5.0	%
	$	1,898,669		100.0	%	$	1,704,259		100.0	%

XML

Consolidated Statements of Stockholders' Equity, Comprehensive Income and Redeemable Non-controlling Interest (Unaudited) (USD $) In Thousands	Total	Redeemable non-controlling interest [Member]	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Retained Earnings	Treasury Stock	Comprehensive Income
Beginning Balance at Jan. 02, 2010	$ 916,110	$ 0	$ 506	$ 633,378	$ 46,473	$ 362,813	$ (127,060)	$ 0
Comprehensive income:
Net income	119,406					119,406		119,406
Other comprehensive income, net of tax:
Foreign currency translation adjustments	1,677				1,677			1,677
Change in post-retirement plans	(6)				(6)			(6)
Change in cash flow hedges	(427)				(427)			(427)
Other	11				11			11
Other comprehensive income	1,255							1,255
Comprehensive income	120,661							120,661
Stock issued in connection with stock compensation plans	8,911		7	8,904
Compensation expense in connection with employee stock compensation plans	18,080			18,080
Purchase of treasury stock related to stock compensation plans	(3,362)						(3,362)
Repurchases of common stock	(80,783)						(80,783)
Ending Balance at Oct. 02, 2010	979,617	0	513	660,362	47,728	482,219	(211,205)
Beginning Balance at Jan. 01, 2011	972,606	0	517	674,508	43,048	501,394	(246,861)	0
Comprehensive income:
Net income	134,145					134,145		134,145
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(21,453)				(21,453)			(21,453)
Change in cash flow hedges	(1,169)				(1,169)			(1,169)
Other	(5)				(5)			(5)
Other comprehensive income	(22,627)							(22,627)
Comprehensive income	111,518							111,518
Stock issued in connection with stock compensation plans	9,022		4	9,018
Compensation expense in connection with employee stock compensation plans	21,215			21,215
Purchase of treasury stock related to stock compensation plans	(2,406)						(2,406)
Repurchases of common stock	(210,788)						(210,788)
Acquisition date fair value of redeemable noncontrolling interest in joint venture in India		15,200
Net loss attributable to redeemable non-controlling interest	(159)	(159)
Foreign currency translations adjustments attributable to redeemable non-controlling interest		(1,604)
Adjustment to redemption value	(1,763)	1,763				(1,763)
Ending Balance at Oct. 01, 2011	$ 899,404	$ 15,200	$ 521	$ 704,741	$ 20,421	$ 633,776	$ (460,055)

XML

Supplemental Cash Flow Information

9 Months Ended

Oct. 01, 2011

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Note 16—Supplemental Cash Flow Information

	Nine Months Ended
	October 1,			October 2,
	2011			2010
Cash paid (received) during the period for:
Interest expense	$	8,606		$	11,834
Interest income		(1,525	)		(714	)
Income taxes, net of refunds received		51,323			27,424
Supplemental non-cash investing and financing activities:
Accounts payable for purchase of fixed assets		4,930			5,851

XML

Restructuring Expenses and Other Exit Costs (Details Textual) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010	Jan. 01, 2011
Restructuring Charges and Other Exit Costs (Textual) [Abstract]
Restructuring charges and other exit costs	$ 7,547	$ 1,697	$ 18,990	$ 3,810
Approximate amounts recorded in accrued liabilities, which are expected to be settled over the next 12 months	209,842	223,397	209,842	223,397	227,561
Approximate amounts recorded in other long term liabilities, which are expected to be settled over the next two years	206,529	194,880	206,529	194,880	211,200
Employee Severance [Member]
Restructuring Charges and Other Exit Costs (Textual) [Abstract]
Restructuring charges and other exit costs	840	0	2,871	1,121
Rationalization and Consolidation [Member]
Restructuring Charges and Other Exit Costs (Textual) [Abstract]
Restructuring charges and other exit costs	2,191	323	7,054	919
Impairment Charges And Contract Termination [Member]
Restructuring Charges and Other Exit Costs (Textual) [Abstract]
Restructuring charges and other exit costs	4,396		8,748
Exit Activities [Member]
Restructuring Charges and Other Exit Costs (Textual) [Abstract]
Restructuring charges and other exit costs	120	1,374	317	1,770
Restructuring Charges [Member]
Restructuring Charges and Other Exit Costs (Textual) [Abstract]
Approximate amounts recorded in accrued liabilities, which are expected to be settled over the next 12 months	7,698		7,698
Approximate amounts recorded in other long term liabilities, which are expected to be settled over the next two years	$ 2,878		$ 2,878

XML

Legal Matters

9 Months Ended

Oct. 01, 2011

Legal Matters And Commitments and Contingencies [Abstract]

Legal Matters

Note 18—Legal Matters

Lejaby Claims: On August 18, 2009, Palmers Textil AG (“Palmers”) filed an action against the Company in Le Tribunal de Commerce de Paris (The Paris Commercial Court), alleging that the Company made certain misrepresentations in the sale agreement, and seeking to declare the sale null and void, monetary damages in an unspecified amount and other relief (the “Palmers Suit”). The Company believes that the Palmers Suit is without merit. The Company is defending itself vigorously in this matter. In addition, the Company and Palmers have been unable to agree on certain post-closing adjustments to the purchase price, including adjustments for working capital. The dispute regarding the amount of post-closing adjustments is not a subject of the Palmers Suit. During the Three Months Ended October 1, 2011, the Company recorded a reserve of approximately $4,000 in connection with these matters. In addition, as of October 1, 2011, the Company had a loan receivable recorded in Other assets on the Company’s Consolidated Condensed Balance Sheets of $13,744 from Palmers related to the Company’s sale of its Lejaby business to Palmers on March 10, 2008. The Company believes that its loan receivable from Palmers is valid and collectible.

OP Litigation: On August 19, 2004, the Company acquired 100% of the outstanding common stock of Ocean Pacific Apparel Corp. (“OP”) from Doyle & Bossiere Fund I, LLC (“Doyle”) and certain minority shareholders of OP. The terms of the acquisition agreement required the Company to make certain contingent payments to the sellers of OP under certain circumstances. On November 6, 2006, the Company sold the OP business to a third party. On May 23, 2007, Doyle filed a demand against the Company for arbitration before Judicial Arbitration and Mediation Services (“JAMS”) in Orange County, California, alleging that certain contingent purchase price payments are due to them as a result of the Company’s sale of the OP business in November 2006 (the “OP Action”). On February 7, 2011, the Company and Doyle entered into a settlement agreement and mutual release to the entire action described above. As a result, the entire action was dismissed by JAMS, with prejudice.

Other: In addition, from time to time, the Company is involved in arbitrations or legal proceedings that arise in the ordinary course of its business. The Company cannot predict the timing or outcome of these claims and proceedings. Currently, the Company is not involved in any such arbitration and/or legal proceeding that it expects to have a material effect on its financial condition, results of operations or business.

XML

Debt (Details Textual 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended					3 Months Ended
	Oct. 01, 2011	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010	Oct. 01, 2011 Interest Rate Cap Agreement [Member]	Jul. 02, 2011 Interest Rate Cap Agreement [Member]	Oct. 01, 2011 Interest Rate Cap [Member]	Jul. 02, 2011 Interest Rate Cap [Member]
Derivative [Line Items]
Notional Amount					$ 120,000
Percentage of Libor above strike price		1.00%
Percentage of Libor beyond strike price		1.00%
Premium payment obligation						16,015
Premium payment, Annual rate					1.9475%
Percentage equal to interest rate payable on average over the term of the cap agreement on the portion of the 2011 Term Loan that equals the notional amount of the cap					5.6975%
Fair Value of Deferred Premium Payments on Interest Rate Cap						14,395
Decrease in Fair Value	6,996
Short-term Debt	47,773	47,773	32,172	69,607	2,418	(1,764)
Long-term debt	209,552	209,552	0	0			12,052	(12,631)
Deferred premium on interest rate cap					14,470
Accretion of deferred premium							$ 75

XML

Debt (Details) (USD $) In Thousands	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Short-term debt:
Short-term debt	$ 47,773	$ 32,172	$ 69,607
Long-term debt:
Long-term debt	209,552	0	0
Total Debt	257,325	32,172	69,607
Current portion of 2011 Term Loan [Member]
Short-term debt:
Short-term debt	2,000	0	0
CKJEA Notes and other [Member]
Short-term debt:
Short-term debt	43,355	18,802	48,653
Italian Note [Member]
Short-term debt:
Short-term debt	0	13,370	13,780
2008 Credit Agreements [Member]
Short-term debt:
Short-term debt	0	0	7,174
Premium on interest rate cap [Member]
Short-term debt:
Short-term debt	2,418	0	0
Long-term debt:
Long-term debt	12,052	0	0
2011 Term B Loan [Member]
Long-term debt:
Long-term debt	$ 197,500	$ 0	$ 0

XML

Organization

9 Months Ended

Oct. 01, 2011

Organization, Basis of Consolidation and Presentation [Abstract]

Organization

Note 1—Organization

The Warnaco Group, Inc. (“Warnaco Group” and, collectively with its subsidiaries, the “Company”) was incorporated in Delaware on March 14, 1986 and, on May 10, 1986, acquired substantially all of the outstanding shares of Warnaco Inc. (“Warnaco”). Warnaco is the principal operating subsidiary of Warnaco Group.

XML

Fair Value Measurement

9 Months Ended

Oct. 01, 2011

Fair Value Measurement [Abstract]

Fair Value Measurement

Note 10—Fair Value Measurement

The Company utilizes the market approach to measure fair value for financial assets and liabilities, which primarily relates to derivative contracts. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company classifies its financial instruments in a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy consists of the following three levels:

Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 — Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

Valuation Techniques

The fair value of foreign currency exchange contracts, including forward contracts and zero cost collars, was determined as the net unrealized gains or losses on those contracts, which is the net difference between (i) the U.S. dollars to be received or paid at the contracts’ settlement dates and (ii) the U.S. dollar value of the foreign currency to be sold or purchased at the current forward or spot exchange rate, as applicable. The fair value of these foreign currency exchange contracts is based on quoted prices that include the effects of U.S. and foreign interest rate yield curves and, therefore, meets the definition of Level 2 fair value, as defined above.

The fair value of interest rate caps (see Note 14 of Notes to Consolidated Condensed Financial Statements) was determined using broker quotes, which use discounted cash flows and the then-applicable forward LIBOR rates and, therefore, meets the definition of Level 2 fair value, as defined above.

The fair value of long-lived assets was based on the Company’s best estimates of future cash flows and, therefore, meets the definition of Level 3 fair value, as defined above (see Note 1 of Notes to Consolidated Financial Statements — Nature of Operations and Summary of Significant Accounting Policies — Long-Lived Assets in the Company’s Annual Report on Form 10-K for Fiscal 2010).

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis, as of October 1, 2011, January 1, 2011 and October 2, 2010:

	October 1, 2011						January 1, 2011						October 2, 2010
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets
Foreign currency exchange contracts	$	—	$	4,761	$	—	$	—	$	834	$	—	$	—	$	231	$	—
Interest rate cap		—		7,399		—		—		—		—		—		—		—
Liabilities
Foreign currency exchange contracts	$	—	$	495	$	—	$	—	$	3,282	$	—	$	—	$	4,044	$	—

Cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value. The Company’s CKJEA Notes (as defined below) and other short-term notes, amounts outstanding under the 2008 Credit Agreements (as defined below) and amounts outstanding under the 2011 Term Loan (as defined below) are also reported at carrying value.

During the Nine Months Ended October 1, 2011, the Company recorded impairment charges for the long-lived assets, consisting of leasehold improvements and furniture and fixtures, of certain retail stores in the Sportswear Group and the Intimate Apparel Group, which were scheduled to close as part of a restructuring plan. For the Nine Months Ended October 1, 2011, those assets, measured on a non-recurring basis, had a fair value of $0, based upon projected future cash flows of those retail stores through the dates of closure. The Company recorded a loss of $1,140 related to those assets. For assets measured on a non-recurring basis for Fiscal 2010 see Note 16 of Notes to Consolidated Financial Statements — Financial Instruments in the Company’s Annual Report on Form 10-K for Fiscal 2010. There were no assets or liabilities measured on a non-recurring basis for the Three Months or Nine Months Ended October 2, 2010. See Note 1 of Notes to Consolidated Financial Statements — Nature of Operations and Summary of Significant Accounting Policies — Long-Lived Assets in the Company’s Annual Report on Form 10-K for Fiscal 2010 for a description of the testing of retail stores for impairment.

XML

Fair Value Measurement (Details Textual) (USD $) In Thousands	Oct. 01, 2011	Oct. 02, 2010
Additional Fair value Measurement (Textual) [Abstract]
Loss on assets scheduled to close as part of a restructuring plan	$ 1,140
Fair Value, Measurements, Nonrecurring [Member]
Fair Value Measurement (Textual) [Abstract]
Fair value of assets scheduled to close as part of a restructuring plan	0
Fair Value Assets Measured On Nonrecurring basis	0	0
Fair Value Liabilities Measured On Nonrecurring basis	$ 0	$ 0

XML

Financial Instruments (Details 3) (USD $) In Thousands	9 Months Ended	3 Months Ended	9 Months Ended				3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended				3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended			9 Months Ended				9 Months Ended		3 Months Ended		9 Months Ended	3 Months Ended	9 Months Ended				9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended				9 Months Ended
	Oct. 01, 2011 Foreign currency exchange contracts [Member] Minimum Royalty and Advertising Costs [Member] July 2012	Oct. 02, 2010 Foreign currency exchange contracts [Member] Purchases of Inventory [Member] Other loss/income [Member]	Oct. 02, 2010 Foreign currency exchange contracts [Member] Purchases of Inventory [Member] Other loss/income [Member]	Oct. 02, 2010 Foreign currency exchange contracts [Member] Intercompany Loans [Member] Other loss/income [Member]	Oct. 01, 2011 Foreign currency exchange contracts [Member] Intercompany Loans [Member] Other loss/income [Member] November 2011 [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign currency exchange contracts [Member] Intercompany Loans [Member] November 2011 [Member]	Oct. 02, 2010 Foreign currency exchange contracts [Member] Intercompany sales of inventory [Member] Other loss/income [Member]	Oct. 02, 2010 Foreign currency exchange contracts [Member] Intercompany sales of inventory [Member] Other loss/income [Member]	Oct. 01, 2011 Foreign currency exchange contracts [Member] Intercompany sales of inventory [Member] Other loss/income [Member] July 2012 Nondesignated [Member]	Oct. 01, 2011 Foreign currency exchange contracts [Member] Intercompany sales of inventory [Member] Other loss/income [Member] July 2012 Nondesignated [Member]	Oct. 01, 2011 Foreign currency exchange contracts [Member] Intercompany sales of inventory [Member] July 2012	Oct. 01, 2011 Foreign currency exchange contracts [Member] Intercompany Payables [Member] Other loss/income [Member] April 2012 [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign currency exchange contracts [Member] Intercompany Payables [Member] April 2012 [Member]	Oct. 02, 2010 Foreign Exchange Forward [Member] Minimum Royalty and Advertising Costs [Member] Other loss/income [Member]	Oct. 02, 2010 Foreign Exchange Forward [Member] Minimum Royalty and Advertising Costs [Member] Other loss/income [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Minimum Royalty and Advertising Costs [Member] Other loss/income [Member] July 2012 Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Minimum Royalty and Advertising Costs [Member] Other loss/income [Member] July 2012 Nondesignated [Member]	Jul. 03, 2010 Foreign Exchange Forward [Member] Minimum Royalty and Advertising Costs [Member] April 2011 [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Minimum Royalty and Advertising Costs [Member] October 2011 [Member] Nondesignated [Member]	Jul. 02, 2011 Foreign Exchange Forward [Member] Minimum Royalty and Advertising Costs [Member] July 2012 Nondesignated [Member]	Jul. 03, 2010 Foreign Exchange Forward [Member] Purchases of Inventory [Member] August 2010 [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] Other loss/income [Member] July 2012 Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] Other loss/income [Member] July 2012 Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] Other loss/income [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] Other loss/income [Member] Nondesignated [Member]	Jul. 02, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] November 2011 [Member] Nondesignated [Member]	Jul. 02, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] September 2011 [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] July 2012	Jul. 02, 2011 Foreign Exchange Forward [Member] Intercompany Loans [Member] July 2012 Nondesignated [Member]	Jul. 03, 2010 Foreign Exchange Forward [Member] Intercompany Loans [Member] Nondesignated [Member]	Jul. 03, 2010 Foreign Exchange Forward [Member] Intercompany sales of inventory [Member] December 2011 [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany sales of inventory [Member] January 2012 [Member] Nondesignated [Member]	Jul. 02, 2011 Foreign Exchange Forward [Member] Intercompany sales of inventory [Member] July 2012 Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany Payables [Member] Other loss/income [Member] April 2012 [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Forward [Member] Intercompany Payables [Member] Other loss/income [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Forward [Member] Intercompany Payables [Member] Other loss/income [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Forward [Member] Intercompany Payables [Member] Selling, general and administrative [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Forward [Member] Intercompany Payables [Member] Selling, general and administrative [Member] Nondesignated [Member]	Jul. 03, 2010 Foreign Exchange Forward [Member] Intercompany Payables [Member] March 2011 [Member] Nondesignated [Member]	Jul. 03, 2010 Foreign Exchange Forward [Member] Intercompany Payables [Member] July 2010 [Member] Nondesignated [Member]	Jul. 02, 2011 Foreign Exchange Forward [Member] Intercompany Payables [Member] April 2012 [Member] Nondesignated [Member]	Oct. 01, 2011 Foreign Exchange Forward [Member] Intercompany Payables [Member] May 2011 [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Contracts Zero Cost Collars [Member] Intercompany Payables [Member] Other loss/income [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Contracts Zero Cost Collars [Member] Intercompany Payables [Member] Other loss/income [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Contracts Zero Cost Collars [Member] Intercompany Payables [Member] Selling, general and administrative [Member] Nondesignated [Member]	Oct. 02, 2010 Foreign Exchange Contracts Zero Cost Collars [Member] Intercompany Payables [Member] Selling, general and administrative [Member] Nondesignated [Member]	Jul. 03, 2010 Foreign Exchange Contracts Zero Cost Collars [Member] Intercompany Payables [Member] Nondesignated [Member]	Oct. 02, 2010 Intercompany Loans [Member] Other loss/income [Member]	Oct. 01, 2011 Intercompany Loans [Member] Other loss/income [Member] November 2011 [Member] Nondesignated [Member]	Oct. 01, 2011 Nondesignated [Member]	Oct. 02, 2010 Nondesignated [Member]	Oct. 01, 2011 Nondesignated [Member]	Oct. 02, 2010 Nondesignated [Member]
Effect of derivative instruments designated as hedging instruments on Consolidated Condensed Statements of Operations
Derivative, Amount Hedged																		$ 12,500		$ 10,000	$ 0					$ 34,500	$ 0		$ 6,000	$ 0	$ 13,936		$ 6,546						$ 35,000	$ 0	$ 28,000						$ 0
Amount of Gain (Loss) Recognized in Income on Derivative		$ (32)	$ (142)	$ (94)	$ 859		$ 712	$ (80)	$ (313)	$ 103		$ (1,844)		$ (976)	$ (73)	$ 723	$ (260)					$ (495)	$ (495)	$ 819	$ 156									$ 556	$ (3,115)	$ (256)	$ 0	$ 398					$ 0	$ 1,511	$ 0	$ (232)		$ 0	$ 2,460	$ 3,750	$ (3,411)	$ (1,481)	$ 1,032
Derivative, Maturity Date	Jul. 01, 2012					Nov. 01, 2011					Jul. 01, 2012		Apr. 01, 2012						Oct. 01, 2011									Jul. 01, 2012				Jan. 01, 2012										May 01, 2011

XML

Debt (Details Textual) (USD $) In Thousands, unless otherwise specified				9 Months Ended
	Oct. 01, 2011 Brazilian subsidiaries [Member]	Jan. 01, 2011 Brazilian subsidiaries [Member]	Oct. 02, 2010 Brazilian subsidiaries [Member]	Oct. 01, 2011 CKJEA Notes and other [Member]	Oct. 01, 2011 2008 Credit Agreements [Member]	Oct. 01, 2011 2008 Canadian Credit Agreement [Member]
Line of Credit Facility [Line Items]
2008 Credit Agreement Interest rate option				Euro LIBOR plus 1.0%	(i) 3.75%, based on a Base Rate plus 0.50% (ii) 1.87%, based on LIBOR plus 1.50%	(i) 3.50%, based on the prime rate announced by Bank of America (acting through its Canada branch) plus 0.50% (ii) 2.67%, based on the BA Rate, in each case, on a per annum basis
Interest rate based on base rate					3.75%
Interest Rate in Excess of Base Rate					0.50%
Interest Rate Based on Libor Rate					1.87%
Interest rate in excess of LIBOR rate					1.50%
Interest rate based on prime rate						3.50%
Interest rate in excess of prime rate						0.50%
Interest rate based on BA rate						2.67%
Interest rate on revolving notes payable in addition to Euro LIBOR				1.00%
Revolving credit loans					$ 0	$ 0
Letters of credit, amount outstanding	4,328	357	0		29,074	1,970
Available line of credit					$ 189,662	$ 20,269

XML

Inventories (Tables)

9 Months Ended

Oct. 01, 2011

Inventories [Abstract]

Inventories are valued at the lower of cost to the Company

	October 1,		January 1,		October 2,
	2011		2011		2010
Finished goods	$	390,205	$	310,504	$	324,430
Raw materials		1,868		—		9
	$	392,073	$	310,504	$	324,439

XML

Debt

9 Months Ended

Oct. 01, 2011

Debt [Abstract]

Debt

Note 14—Debt

Debt was as follows:

	October 1,		January 1,		October 2,
	2011		2011		2010
Short-term debt:
Current portion of 2011 Term Loan	$	2,000	$	—	$	—
CKJEA notes payable and Other		43,355		18,802		48,653
2008 Credit Agreements		—		—		7,174
Premium on interest rate cap - current		2,418		—		—
Italian Note		—		13,370		13,780
		47,773		32,172		69,607
Long-term debt:
2011 Term Loan		197,500		—		—
Premium on interest rate cap		12,052		—		—
		209,552		—		—
Total Debt	$	257,325	$	32,172	$	69,607

2011 Term Loan Agreement

On June 17, 2011, Warnaco Group, Warnaco, Calvin Klein Jeanswear Company (“CK Jeans”), an indirect wholly-owned subsidiary of Warnaco Group, and Warnaco Swimwear Products Inc. (“Warnaco Swimwear”), an indirect wholly-owned subsidiary of Warnaco Group, entered into a term loan agreement (the “2011 Term Loan Agreement”) with the financial institutions which are the lenders thereunder (the “Lenders”). Warnaco, CK Jeans and Warnaco Swimwear are co-borrowers on a joint and several basis under the 2011 Term Loan Agreement (the “Borrowers”).

The 2011 Term Loan Agreement provides for a $200,000 senior secured term loan facility, maturing on June 17, 2018 (the “2011 Term Loan”). In addition, during the term of the 2011 Term Loan Agreement, the Borrowers may request additional credit commitments for incremental term loan facilities in an aggregate amount not to exceed $100,000 plus the aggregate principal amount of the term loans that the Borrowers have voluntarily prepaid prior to the date of such request. The Borrowers may request a greater amount to the extent that Warnaco Group meets certain financial tests set forth in the 2011 Term Loan Agreement. At October 1, 2011, there was $199,500 in term loans outstanding under the 2011 Term Loan Agreement. During June 2011, the Company repaid the outstanding balances of the 2008 Credit Agreements and the Italian Note (as defined below) from the proceeds of the 2011 Term Loan (see below). The Company paid $4,779 in deferred financing costs in connection with the 2011 Term Loan, which are being amortized to interest expense over the term of the loan using the effective interest method. The deferred financing costs were recorded in Other assets on the Consolidated Condensed Balance Sheets.

On the last day of each of the Company’s fiscal quarters, beginning on October 1, 2011, $500 of the outstanding principal amount of the 2011 Term Loans must be repaid. Such amount will be reduced if a portion of the principal amount is prepaid. The remaining principal amount is due on June 17, 2018.

The 2011 Term Loan Agreement provides interest rate options, at the Borrowers’ election, including a base rate, as defined in the 2011 Term Loan Agreement or at LIBOR (with a floor of 1.00%) plus a margin of 2.75%, in each case, on a per annum basis. Accrued interest will be paid in arrears on the last day of each interest period through the maturity date. Payment dates are the last calendar day (or business day if the last calendar day is not a business day) of each of January, April, July and October, beginning on October 31, 2011. Reset dates are two business days prior to a payment date, beginning on October 29, 2011 (determines the three-month LIBOR variable leg for the following three month period). From inception of the loan through July 29, 2011, the Company elected to use a combination of a base rate and a LIBOR rate of interest, each on a portion of the outstanding balance ($80,000 at 3.75% and $120,000 at a base rate of 5.0%). From July 29, 2011 through October 31, 2011, the interest rate on the entire balance of the 2011 Term Loan is 3.75% (based on three-month LIBOR (with a floor of 1.00%) plus a margin of 2.75%. At October 1, 2011, the loans under the 2011 Term Loan Agreement had a weighted average annual interest rate of 3.75%. In order to match the interest rate on the hedged portion of the 2011 Term Loan with that on the interest rate cap (see below), the Company intends to use successive interest periods of three months and adjusted three-month LIBOR rates (with a LIBOR floor of 1.00% per annum) plus 2.75% on a per annum basis from July 29, 2011 through the maturity date of the 2011 Term Loan.

In addition, the 2011 Term Loan Agreement is subject to a 1.00% prepayment fee in the event it is refinanced on or before June 17, 2012, subject to certain conditions. The Borrowers must make mandatory prepayments of the term loans with the proceeds of asset dispositions and insurance proceeds from casualty events (subject to certain limitations), with a portion of any excess cash flow (as defined in the 2011 Term Loan Agreement) generated by Warnaco Group and with the proceeds of certain issuances of debt (subject to certain exceptions).

The 2011 Term Loan Agreement does not require the Borrowers to comply with any financial maintenance covenants. The 2011 Term Loan Agreement contains customary representations, warranties and affirmative covenants. The 2011 Term Loan Agreement also contains customary negative covenants providing limitations, subject to negotiated carve-outs, with respect to (i) incurrence of indebtedness and liens, (ii) significant corporate changes including mergers and acquisitions with third parties, (iii) investments, (iv) loans, (v) advances and guarantees to or for the benefit of third parties, (vi) hedge agreements, (vii) certain restricted payments and (viii) transactions with affiliates and certain other restrictive agreements, among others.

The 2011 Term Loan Agreement contains customary events of default, such as payment defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency, the occurrence of a “Change of Control” (as defined in the 2011 Term Loan Agreement), or the failure to observe the certain covenants therein. Upon an event of default, the Lenders may, among other things, declare any then outstanding loans due and payable immediately.

The obligations of the Borrowers under the 2011 Term Loan Agreement are guaranteed by Warnaco Group and its indirect domestic subsidiaries (collectively, the “U.S. Guarantors”) pursuant to a Guaranty dated as of June 17, 2011 (the “Guaranty”).

The obligations under the 2011 Term Loan Agreement and the guarantees thereof, are secured by Warnaco Group, the Borrowers and each of the U.S. Guarantors, for the benefit of the Lenders, with a first priority lien on all fixed asset collateral (including, without limitation, pledges of their equity ownership in domestic subsidiaries and up to 66% of their equity ownership in first-tier foreign subsidiaries), intellectual property, and substantially all other personal property of the Borrowers and the U.S. Guarantors not constituting 2008 Credit Agreement Priority Collateral (as defined below), and, in each case, proceeds thereof. In addition, Warnaco Group, the Borrowers and each of the U.S. Guarantors have granted to the Lenders a second priority security interest in accounts receivable, inventory, deposit accounts and cash, checks and certain related assets (the “2008 Credit Agreement Priority Collateral”).

In connection with entering into the 2011 Term Loan Agreement, on June 17, 2011, (i) Warnaco Group, Warnaco and the U.S. Guarantors entered into an amendment to the 2008 Credit Agreement (the “2008 Credit Agreement Amendment”) and (ii) Warnaco Canada, Warnaco Group, Warnaco and the U.S. Guarantors entered into an amendment to the 2008 Canadian Credit Agreement (the “2008 Canadian Credit Agreement Amendment”), in each case, permitting the Borrowers to incur the indebtedness and grant the liens under the 2011 Term Loan Agreement, and providing, among other things, for modifications to the definitions of “Change of Control”, the eligibility criteria for receivables and certain covenants relating to asset sales, prepayments of debt, permitted liens and permitted indebtedness.

In addition, on June 17, 2011, Warnaco Group, the Borrowers and the U.S. Guarantors executed an Intercreditor Agreement (the “Intercreditor Agreement”), establishing certain priorities with respect to the collateral that secures the Borrowers’ obligations under the 2008 Credit Agreements and the 2011 Term Loan Agreement. Pursuant to the Intercreditor Agreement, the secured parties under the existing 2008 Credit Agreements retain a first priority security interest in all 2008 Credit Agreement Priority Collateral and a second priority security interest in all fixed asset collateral (including, without limitation, pledges of their equity ownership in domestic subsidiaries and up to 66% of their equity ownership in first-tier foreign subsidiaries), intellectual property and substantially all other personal property of Warnaco Group, the Borrowers and the U.S. Guarantors not constituting 2008 Credit Agreement Priority Collateral.

Interest Rate Cap Agreement

On July 1, 2011, the Company entered into a deferred premium interest rate cap agreement with HSBC Bank USA (the “Counterparty”), effective July 29, 2011, (notional amount $120,000) (the “Cap Agreement”). The Cap Agreement is a series of 27 individual caplets (in total, the “Cap”) that reset and settle quarterly over the period from October 31, 2011 to April 30, 2018. Under the terms of the Cap Agreement, if three-month LIBOR resets above a strike price of 1.00%, the Company will receive the net difference between the reset rate and the strike price. In addition, on the quarterly settlement dates, the Company will remit the deferred premium payment to the Counterparty. If LIBOR resets below the strike price no payment is made by the Counterparty. However, the Company would still be responsible for payment of the deferred premium. At July 1, 2011, the Company was obligated to make premium payments totaling approximately $16,015, based on an annual rate of 1.9475% on the notional amount of the Cap, over the term of the Cap Agreement. The effect of the Cap Agreement is to limit the interest rate payable on average over the term of the Cap Agreement to 5.6975% per annum with respect to the portion of the 2011 Term Loan that equals the notional amount of the Cap.

The interest rate cap contracts are designated as cash flow hedges of the exposure to variability in expected future cash flows attributable to a three-month LIBOR rate beyond 1.00%. At the inception of the hedging relationship, the fair value of the Cap of $14,395 was allocated to the respective caplets within the Cap on a fair value basis. To the extent that the interest rate cap contracts are effective in offsetting that variability, changes in the Cap’s fair value will be recorded in Accumulated other comprehensive income (AOCI”) in the Company’s Consolidated Condensed Balance Sheets and subsequently recognized in interest expense in the Consolidated Statements of Operations as the underlying interest expense is recognized on the 2011 Term Loan.

On July 1, 2011, the Company recorded the fair value of the Cap of $14,395 in Other assets and the fair value of the deferred premium payments of $14,395 as Deferred premium on interest rate cap in Short-term debt ($1,764) and Long-term debt ($12,631), on the Company’s Consolidated Condensed Balance Sheet. On October 1, 2011, the fair value of the Cap was $7,399, which was recorded in Other assets and the decrease in fair value of $6,996 from July 1, 2011 was recorded in AOCI. On October 1, 2011, Deferred premium on the interest rate cap was $14,470, of which $2,418 was recorded in Short-term debt and $12,052 was recorded in Long-term debt. The accretion of Deferred premium on the interest rate cap of $75 during the Three Months Ended October 1, 2011 was recorded as an increase in interest expense.

2008 Credit Agreements

On August 26, 2008, Warnaco, as borrower, and Warnaco Group, as guarantor, entered into a revolving credit agreement (the “2008 Credit Agreement”) and Warnaco of Canada Company, an indirect wholly-owned subsidiary of Warnaco Group, as borrower, and Warnaco Group, as guarantor, entered into a second revolving credit agreement (the “2008 Canadian Credit Agreement” and, together with the 2008 Credit Agreement, the “2008 Credit Agreements”), in each case with the financial institutions which, from time to time, will act as lenders and issuers of letters of credit. As noted above, on June 17, 2011, the 2008 Credit Agreements were amended in connection with the 2011 Term Loan Agreement.

At October 1, 2011, the 2008 Credit Agreement had interest rate options (dependent on the amount borrowed and the repayment period) of (i) 3.75%, based on a base rate plus 0.50%, or (ii) 1.87%, based on LIBOR plus 1.50%. The 2008 Canadian Credit Agreement had interest rate options of (i) 3.50%, based on the prime rate announced by Bank of America (acting through its Canada branch) plus 0.50%, or (ii) 2.67%, based on the BA Rate (as defined below), in each case, on a per annum basis. The BA Rate is defined as the annual rate of interest quoted by Bank of America (acting through its Canada branch) as its rate of interest rate for bankers’ acceptances in Canadian Dollars for a face amount similar to the amount of the loan and for a term similar to the applicable interest period.

During June 2011, the Company used a portion of the proceeds from the 2011 Term Loan to repay the outstanding balances of the 2008 Credit Agreements. As of October 1, 2011, the Company had no loans and approximately $29,074 in letters of credit outstanding under the 2008 Credit Agreement, leaving approximately $189,662 of availability. As of October 1, 2011, there were no loans and $1,970 in letters of credit outstanding under the 2008 Canadian Credit Agreement and the available line of credit was approximately $20,269. As of October 1, 2011, the Company was in compliance with all financial covenants contained in the 2008 Credit Agreements.

CKJEA Notes and Other Short-Term Debt

Certain of the Company’s European businesses hold short-term notes payable (the “CKJEA Notes”). The total amounts of CKJEA Notes payable of $39,027 at October 1, 2011, $18,445 at January 1, 2011 and $48,653 at October 2, 2010 each consist of short-term revolving notes with a number of banks at various interest rates (primarily Euro LIBOR plus 1.0%). The weighted average effective interest rate for the outstanding CKJEA notes payable was 3.14% as of October 1, 2011, 4.29% as of January 1, 2011 and 2.45% as of October 2, 2010. All of the CKJEA notes payable are short-term and were renewed during the Nine Months Ended October 1, 2011 for additional terms of no more than 12 months.

In addition, at October 1, 2011, January 1, 2011 and October 2, 2010, the Company’s Brazilian subsidiary, WBR, had lines of credit with several banks, with total outstanding balances of $4,328, $357 and $0, respectively, recorded in Short-term debt in the Company’s Consolidated Condensed Balance Sheets or Consolidated Balance Sheets, which were secured by approximately equal amounts of WBR’s trade accounts receivable.

During September 2011, one of the Company’s Asian subsidiaries entered into a short-term $25,000 revolving credit facility with one lender (the “Asian Credit Facility”) to be used for temporary working capital and general corporate purposes. The Asian Credit Facility bears interest of 1.75% over 1-month LIBOR, which is due monthly. At the end of each month, amounts outstanding under the Asian Credit Facility may be carried forward for further 1-month periods for up to one year. The Asian Credit Facility may be renewed annually. The Asian Credit Facility is subject to certain terms and conditions customary for a credit facility of this type and may be terminated at any time at the discretion of the lender. There were no borrowings during the Three Months Ended October 1, 2011.

Italian Notes

On September 30, 2010, one of the Company’s Italian subsidiaries entered into a €10,000 loan (the “Italian Note”). At January 1, 2011, the principal balance of the Italian Note was €10,000 ($13,370) with an annual interest rate of 3.64%. On June 30, 2011, the Company repaid the full outstanding balance of €6,040 ($8,600) on the Italian Note with a portion of the proceeds of the 2011 Term Loan (see above).

XML

Consolidated Condensed Balance Sheets (Unaudited) (USD $) In Thousands	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Current assets:
Cash and cash equivalents	$ 179,326	$ 191,227	$ 213,409
Accounts receivable, net of reserves of $89,798, $95,639 and $82,594 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively	341,406	318,123	346,464
Inventories	392,073	310,504	324,439
Assets of discontinued operations	0	125	112
Prepaid expenses and other current assets (including deferred income taxes of $59,781, $58,270 and $53,402 as of October 1, 2011, January 1, 2011, and October 2, 2010, respectively)	174,355	158,659	147,421
Total current assets	1,087,160	978,638	1,031,845
Property, plant and equipment, net	129,205	129,252	127,157
Other assets:
Licenses, trademarks and other intangible assets, net	360,508	373,276	360,457
Goodwill	143,688	115,278	110,150
Other assets (including deferred income taxes of $24,695, $11,769 and $15,459 as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively)	92,210	56,828	54,859
Total assets	1,812,771	1,653,272	1,684,468
Current liabilities:
Short-term debt	47,773	32,172	69,607
Accounts payable	182,517	152,714	165,171
Accrued liabilities	209,842	227,561	223,397
Liabilities of discontinued operations	7,048	18,800	8,365
Accrued income taxes payable (including deferred income taxes of $1,320,$262 and $1,094 as of October 1, 2011, January 1, 2011 and October 2, 2010 respectively)	34,906	38,219	43,431
Total current liabilities	482,086	469,466	509,971
Long-term debt	209,552	0	0
Other long-term liabilities (including deferred income taxes of $76,410, $74,233 and $69,478 as of October 1, 2011, January 1, 2011 and October 2, 2010 respectively)	206,529	211,200	194,880
Total liabilities	898,167	680,666	704,851
Commitments and contingencies
Redeemable non- controlling interest	15,200	0	0
Stockholders' equity:
Preferred stock	0	0	0
Common stock: $0.01 par value 112,500,000 shares authorized 52,134,522,51,712,674 and 51,255,219 issued as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively	521	517	513
Additional paid-in capital	704,741	674,508	660,362
Accumulated other comprehensive income	20,421	43,048	47,728
Retained earnings	633,776	501,394	482,219
Treasury stock, at cost 11,653,871, 7,445,166 and 6,751,793 shares as of October 1, 2011, January 1, 2011 and October 2, 2010, respectively	(460,055)	(246,861)	(211,205)
Total stockholders' equity	899,404	972,606	979,617
Total liabilities, redeemable non-controlling interest and stockholders' equity	$ 1,812,771	$ 1,653,272	$ 1,684,468

XML

Debt (Tables)

9 Months Ended

Oct. 01, 2011

Debt [Abstract]

Debt

	October 1,		January 1,		October 2,
	2011		2011		2010
Short-term debt:
Current portion of 2011 Term Loan	$	2,000	$	—	$	—
CKJEA notes payable and Other		43,355		18,802		48,653
2008 Credit Agreements		—		—		7,174
Premium on interest rate cap - current		2,418		—		—
Italian Note		—		13,370		13,780
		47,773		32,172		69,607
Long-term debt:
2011 Term Loan		197,500		—		—
Premium on interest rate cap		12,052		—		—
		209,552		—		—
Total Debt	$	257,325	$	32,172	$	69,607

XML

Stockholders' Equity (Details 5) (Performance Shares [Member], USD $)	0 Months Ended	1 Months Ended	9 Months Ended
	Jul. 08, 2010	Mar. 01, 2011	Oct. 01, 2011
Performance Shares [Member]
Performance share activity
Unvested as of January 1, 2011		75,750	75,750
Performance Shares, Granted	75,750	80,050	80,050
Performance Shares, Vested
Performance Shares, Forfeited			(1,300)
Unvested as of October 1, 2011			154,500
Weighted Average Grant Date Fair Value, Unvested as of January 1, 2011		$ 43.28	$ 43.28
Weighted Average Grant Date Fair Value, Granted			$ 55.57
Weighted Average Grant Date Fair Value, Vested
Weighted Average Grant Date Fair Value, Forfeited			$ 43.28
Weighted Average Grant Date Fair Value, Unvested as of October 1, 2011			$ 49.65

XML

Stockholders' Equity (Details 1) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Stock-based compensation expense
Stock-based compensation expense before income taxes	$ 4,731	$ 4,306	$ 21,215	$ 18,080
Income tax benefit	1,653	1,523	7,183	5,940
Stock-based compensation expense after income taxes	3,078	2,783	14,032	12,140
Stock options [Member]
Stock-based compensation expense
Stock-based compensation expense before income taxes	1,566	1,625	6,938	6,485
Income tax benefit	532	570	2,407	2,307
Stock-based compensation expense after income taxes	1,034	1,055	4,531	4,178
Restricted stock grants [Member]
Stock-based compensation expense
Stock-based compensation expense before income taxes	3,165	2,681	14,277	11,595
Income tax benefit	1,121	953	4,776	3,633
Stock-based compensation expense after income taxes	$ 2,044	$ 1,728	$ 9,501	$ 7,962

XML

Business Segments and Geographic Information (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Oct. 01, 2011	Oct. 01, 2011 Segment
Business Segments and Geographic Information (Textual) [Abstract]
Expenses Reclassified	$ 2,467	$ 7,422
Business Segments and Geographic Information (Additional Textual) [Abstract]
Number of business segments		3
Sportswear Group [Member] | Calvin Klein Full Price Free Standing [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	139	139
Intimate Apparel Group [Member] | Calvin Klein Full Price Free Standing [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	99	99
Sportswear Group [Member] | Calvin Klein Shop In Shop Concession Stores [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	369	369
Intimate Apparel Group [Member] | Calvin Klein Shop In Shop Concession Stores [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	717	717
Swimwear Group [Member] | Calvin Klein Shop In Shop Concession Stores [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	191	191
Sportswear Group [Member] | Calvin Klein Retail Stores [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	565	565
Intimate Apparel Group [Member] | Calvin Klein Retail Stores [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	878	878
Sportswear Group [Member] | Calvin Klein Outlet Free Standing Stores [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	56	56
Intimate Apparel Group [Member] | Calvin Klein Outlet Free Standing Stores [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	61	61
Sportswear Group [Member] | Third Party Under Retail Licenses Or Distributer Agreements [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	371	371
Intimate Apparel Group [Member] | Third Party Under Retail Licenses Or Distributer Agreements [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Number of Stores	211	211
Sportswear Group [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Description of company's business segments		The Sportswear Group designs, sources and markets moderate to premium priced men's and women's sportswear under the Calvin Klein and Chaps® brands. As of October 1, 2011, the Sportswear Group operated 565 Calvin Klein retail stores worldwide (consisting of 139 full price free-standing stores, 56 outlet free standing stores,369 shop-in-shop/concession stores and, in the U.S., one on-line store). As of October 1, 2011, there were also 371 retail stores operated by third parties under retail licenses or distributor agreements.
Expenses Reclassified	(1,730)	(5,134)
Gain on Insurance Claim		1,630
Intimate Apparel Group [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Description of company's business segments		The Intimate Apparel Group designs, sources and markets moderate to premium priced intimate apparel and other products for women and better to premium priced men's underwear, sleepwear and loungewear under the Calvin Klein , Warner's®, Olga® and Body Nancy Ganz/Bodyslimmers® brand names. As of October 1, 2011, the Intimate Apparel Group operated 878 Calvin Klein retail stores worldwide (consisting of 99 full-price free-standing stores, 61 outlet free-standing stores and 717 shop-in-shop/concession stores and, in the U.S., one on-line store). As of October 1, 2011, there were also 211 Calvin Klein retail stores operated by third parties under retail licenses or distributor agreements.
Expenses Reclassified	(1,052)	(2,809)
Gain on sale and assignment of trademark to Company's former licensee		2,000
Proceeds from sale and assignment of trademark to Company's former licensee		2,000
Swimwear Group [Member]
Business Segments and Geographic Information (Textual) [Abstract]
Description of company's business segments		The Swimwear Group designs, licenses, sources and markets mass market to premium priced swimwear, fitness apparel, swim accessories and related products under the Speedo®, Lifeguard® and Calvin Klein brand names. As of October 1, 2011, the Swimwear Group operated 191 Calvin Klein retail shop-in-shop/concession stores in Europe and one on-line store in the U.S.
Expenses Reclassified	$ (315)	$ (521)

XML

Financial Instruments (Details 1) (USD $) In Thousands	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Derivatives designated as hedging instruments under FASB ASC 815-20 [Member]
Summary of company's derivative instruments
Asset Derivatives at Fair Value	$ 9,272	$ 0	$ 0
Liability Derivatives at Fair Value	0	2,290	2,094
Interest rate cap	7,399	0	0
Derivatives designated as hedging instruments under FASB ASC 815-20 [Member] | Prepaid Expenses and Other Current Assets [Member] | Foreign currency exchange contracts [Member]
Summary of company's derivative instruments
Asset Derivatives at Fair Value	1,873	0	0
Derivatives designated as hedging instruments under FASB ASC 815-20 [Member] | Accrued Liabilities [Member] | Foreign currency exchange contracts [Member]
Summary of company's derivative instruments
Liability Derivatives at Fair Value	0	2,290	2,094
Derivatives not designated as hedging instruments under FASB ASC 815-20 [Member]
Summary of company's derivative instruments
Asset Derivatives at Fair Value	12,160	834	231
Liability Derivatives at Fair Value	495	3,282	4,044
Derivatives not designated as hedging instruments under FASB ASC 815-20 [Member] | Prepaid Expenses and Other Current Assets [Member] | Foreign currency exchange contracts [Member]
Summary of company's derivative instruments
Asset Derivatives at Fair Value	2,888	834	231
Derivatives not designated as hedging instruments under FASB ASC 815-20 [Member] | Accrued Liabilities [Member] | Foreign currency exchange contracts [Member]
Summary of company's derivative instruments
Liability Derivatives at Fair Value	$ 495	$ 992	$ 1,950

XML

Intangible Assets and Goodwill (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Oct. 01, 2011 Year
Schedule of Increase Decrease in Intangible Assets [Line Items]
Weighted average amortization period of intangible asset	25
Amendment of license and reacquired rights [Member]
Schedule of Increase Decrease in Intangible Assets [Line Items]
Amendment of license and reacquired rights	3573
Sportswear Group [Member]
Schedule of Increase Decrease in Intangible Assets [Line Items]
Goodwill India	$ 28,817
Intimate Apparel Group [Member]
Schedule of Increase Decrease in Intangible Assets [Line Items]
Goodwill India	$ 3,930

XML

Business Segments and Geographic Information (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010	Jan. 01, 2011
Profit (Loss)
Net revenues	$ 645,121	$ 596,761	$ 1,898,669	$ 1,704,259
Operating income (loss)	64,756	67,897	187,009	202,713
Depreciation and amortization	13,742	13,302	43,669	37,507
Restructuring expense	7,547	1,697	18,990	3,810
Capital expenditures	14,081	12,529	34,234	34,533
Assets [Abstract]
Total Assets:	1,812,771	1,684,468	1,812,771	1,684,468	1,653,272
Property, Plant and Equipment:	129,205	127,157	129,205	127,157	129,252
Sportswear Group [Member]
Profit (Loss)
Net revenues	357,935	337,020	983,695	887,410
Operating income (loss)	34,129	51,309	88,686	123,834
Depreciation and amortization	8,347	8,057	27,010	22,694
Restructuring expense	3,545	(47)	7,169	395
Capital expenditures	6,014	12,407	17,687	26,193
Assets [Abstract]
Total Assets:	1,068,298	1,050,685	1,068,298	1,050,685	995,475
Property, Plant and Equipment:	62,317	46,053	62,317	46,053	63,555
Intimate Apparel Group [Member]
Profit (Loss)
Net revenues	247,880	223,081	695,317	616,139
Operating income (loss)	38,620	39,939	103,627	106,363
Depreciation and amortization	4,413	4,294	13,751	11,967
Restructuring expense	699	9	3,619	122
Capital expenditures	7,379	(644)	14,863	5,747
Assets [Abstract]
Total Assets:	494,482	408,419	494,482	408,419	381,371
Property, Plant and Equipment:	38,486	42,527	38,486	42,527	28,522
Swimwear Group [Member]
Profit (Loss)
Net revenues	39,306	36,660	219,657	200,710
Operating income (loss)	(3,352)	(3,794)	21,421	17,121
Depreciation and amortization	589	535	1,889	1,705
Restructuring expense	2,988	1,732	7,254	2,446
Capital expenditures	245	86	390	545
Assets [Abstract]
Total Assets:	117,949	112,316	117,949	112,316	154,831
Property, Plant and Equipment:	2,472	3,344	2,472	3,344	3,023
Group Segment [Member]
Profit (Loss)
Net revenues	645,121	596,761	1,898,669	1,704,259
Operating income (loss)	69,397	87,454	213,734	247,318
Depreciation and amortization	13,349	12,886	42,650	36,366
Restructuring expense	7,232	1,694	18,042	2,963
Capital expenditures	13,638	11,849	32,940	32,485
Assets [Abstract]
Total Assets:	1,680,729	1,571,420	1,680,729	1,571,420	1,531,677
Property, Plant and Equipment:	103,275	91,924	103,275	91,924	95,100
Corporate/Other [Member]
Profit (Loss)
Operating income (loss)	(4,641)	(19,557)	(26,725)	(44,605)
Depreciation and amortization	393	416	1,019	1,141
Restructuring expense	315	3	948	847
Capital expenditures	443	680	1,294	2,048
Assets [Abstract]
Total Assets:	132,042	113,048	132,042	113,048	121,595
Property, Plant and Equipment:	$ 25,930	$ 35,233	$ 25,930	$ 35,233	$ 34,152

XML

Business Segments and Geographic Information (Details 1) (USD $)	3 Months Ended		9 Months Ended
	Oct. 01, 2011	Oct. 02, 2010	Oct. 01, 2011	Oct. 02, 2010
Summarization of corporate or other expenses
Foreign exchange (losses) gains			$ (2,185,000)	$ (150,000)
Restructuring expense	7,547,000	1,697,000	18,990,000	3,810,000
Depreciation and amortization of corporate assets	13,742,000	13,302,000	43,669,000	37,507,000
Corporate/other expenses	(64,756,000)	(67,897,000)	(187,009,000)	(202,713,000)
Corporate/Other [Member]
Summarization of corporate or other expenses
Unallocated corporate expenses	5,273,000	17,242,000	25,338,000	43,660,000
Foreign exchange (losses) gains	(971,000)	1,956,000	527,000	(863,000)
Restructuring expense	315,000	3,000	948,000	847,000
Depreciation and amortization of corporate assets	393,000	416,000	1,019,000	1,141,000
Corporate/other expenses	4,641,000	19,557,000	26,725,000	44,605,000
Corporate/Other [Member] | Pension Plans [Member]
Summarization of corporate or other expenses
Pension income	(369,000)	(60,000)	(1,107,000)	(180,000)
Pension Plans [Member]
Summarization of corporate or other expenses
Pension income	$ 369,000	$ 60,000	$ 1,107,000	$ 180,000

XML

Fair Value Measurement (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands	Oct. 01, 2011	Jan. 01, 2011	Oct. 02, 2010
Level 1 [Member]
Assets and liabilities measured at fair value on a recurring basis
Foreign Currency Contract, Asset, Fair Value Disclosure	$ 0	$ 0	$ 0
Foreign Currency Contracts, Liability, Fair Value Disclosure	0	0	0
Interest rate cap	0	0	0
Level 2 [Member]
Assets and liabilities measured at fair value on a recurring basis
Foreign Currency Contract, Asset, Fair Value Disclosure	4,761	834	231
Foreign Currency Contracts, Liability, Fair Value Disclosure	495	3,282	4,044
Interest rate cap	7,399	0	0
Level 3 [Member]
Assets and liabilities measured at fair value on a recurring basis
Foreign Currency Contract, Asset, Fair Value Disclosure	0	0	0
Foreign Currency Contracts, Liability, Fair Value Disclosure	0	0	0
Interest rate cap	$ 0	$ 0	$ 0

XML

Stockholders' Equity (Tables)

9 Months Ended

Oct. 01, 2011

Stockholders' Equity [Abstract]

Fair value of stock option granted

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
Weighted average risk free rate of return (a)		0.71	%		1.15	%		1.62	%		1.74	%
Dividend yield		—			—			—			—
Expected volatility of the market price of the Company’s common stock		57.7	%		56.8	%		57.7	%		56.8	%
Expected option life (years)		4.1			4.2			4.1			4.2

(a) based on the quoted yield for U.S. five-year treasury bonds as of the date of grant.

Stock-based compensation expense

	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2011		2010		2011		2010
Stock-based compensation expense before income taxes:
Stock options	$	1,566	$	1,625	$	6,938	$	6,485
Restricted stock grants		3,165		2,681		14,277		11,595
Total		4,731		4,306		21,215		18,080
Income tax benefit:
Stock options		532		570		2,407		2,307
Restricted stock grants		1,121		953		4,776		3,633
Total		1,653		1,523		7,183		5,940
Stock-based compensation expense after income taxes:
Stock options		1,034		1,055		4,531		4,178
Restricted stock grants		2,044		1,728		9,501		7,962
Total	$	3,078	$	2,783	$	14,032	$	12,140

Stock option award activity under the Company's stock incentive plans

				Weighted
				Average
				Exercise
	Options			Price
Outstanding as of January 1, 2011		1,926,257		$	33.73
Granted		360,900			55.33
Exercised		(286,340	)		28.74
Forfeited / Expired		(62,726	)		41.81
Outstanding as of October 1, 2011		1,938,091		$	38.23
Options Exercisable as of October 1, 2011		1,154,007		$	33.52

Unvested restricted share/unit awards under the Company's stock incentive plans excluding Performance Awards

				Weighted Average
	Restricted			Grant Date Fair
	shares/units			Value
Unvested as of January 1, 2011		847,664		$	36.93
Granted		227,293			55.33
Vested (a)		(130,501	)		48.96
Forfeited		(58,083	)		26.27
Unvested as of October 1, 2011		886,373		$	39.73

(a) does not include an additional 37,600 restricted units with a grant date fair value per share of $55.57 and 36,750 restricted units with a grant date fair value per share of $43.28, granted to Retirement-Eligible employees (see Note 13 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for Fiscal 2010) during the Nine Months Ended October 1, 2011 and the Nine Months Ended October 2, 2010, respectively, for which the requisite service period has been completed on the respective grant dates but the restrictions will not lapse until the end of the three-year vesting period.

Calculation of simulated TSR's under the Monte Carlo model for the Remaining Measurement Period

	March 1, 2011	March 3, 2010
Weighted average risk free rate of return	1.07%	1.25%
Dividend yield	—	—
Expected volatility — Company (a)	61.50%	65.0%
Expected volatility — Peer Companies	38.2% - 113.4%	39.8% - 114.1%
Remaining measurement period (years)	2.83	2.83

(a) Expected volatility — Company for Performance Awards granted on March 1, 2011 and on March 3, 2010 is based on a remaining measurement period of 2.83 years.

Performance share activity

				Weighted Average Grant
	Performance Shares			Date Fair Value
Unvested as of January 1, 2011		75,750		$	43.28
Granted		80,050			55.57
Vested (a)		—			—
Forfeited		(1,300	)		43.28
Unvested as of October 1, 2011 (b)		154,500		$	49.65

(a)	does not include 35,050 and 34,300 Performance Awards granted to Retirement Eligible Employees on March 1, 2011 and March 3, 2010, respectively, for which the requisite service period has been completed on the grant date; the restrictions on such awards will not lapse until the end of the three-year vesting period.
(b)	includes 18,613 shares that the Company is obligated to issue at the end of the three-year performance period based upon the Company’s performance to date.