Warnaco Expands Global Calvin Klein Businesses

The Warnaco Group, Inc. (NASDAQ: WRNC) today announced it has reached an agreement in principle with Phillips-Van Heusen Corporation to expand the relationship between Warnaco and PVH’s Calvin Klein, Inc. subsidiary by entering into several new or extended long-term licenses, as detailed below. Under the agreement in principle, Warnaco has also agreed to assign to Calvin Klein, Inc. the Calvin Klein Collection license and related business, which Warnaco is currently obligated to operate beginning in 2008. Under the agreement in principle (which is subject to definitive documentation), Warnaco would pay approximately $38.5 million in exchange for a complement of Calvin Klein properties, including the rights to operate Calvin Klein Jeans accessories retail stores in Europe, Asia and Latin America, as well as retail stores for ck Calvin Klein accessories in Europe and Latin America and to offset projected losses of the Calvin Klein Collection business. Additionally, the Company would acquire e-commerce rights in the Americas, Europe and Asia for Calvin Klein Jeans. Warnaco would also secure e-commerce rights in Europe, Asia and Latin America for Calvin Klein Jeans accessories. Each of these arrangements would be long-term, terminating in 2044. Warnaco has also reached an agreement in principle with Calvin Klein, Inc. and Windsong Golf LLC to enter into a sub-license and distribution agreement for Calvin Klein Golf apparel and golf related accessories in department stores, specialty stores and other channels in Asia. As part of the agreement in principle, Warnaco will also assign its rights and obligations to manage the Calvin Klein Collection business to Calvin Klein, Inc., which will operate this business directly. The Company had previously agreed to manage that business beginning in January 2008 in connection with its January 2006 acquisition of the Calvin Klein Jeans apparel and accessories in Europe and Asia and the ck Calvin Klein ‘‘bridge’’ line of sportswear and accessories in Europe. "Given the powerful growth worldwide in accessories, we believe the acquisition of the new rights represents an important opportunity for us to expand our Calvin Klein businesses. It is consistent with our strategic objective of maximizing the potential of our Calvin Klein businesses, expanding globally and growing our direct to consumer business,” said Joe Gromek, Warnaco’s President and Chief Executive Officer. "Additionally, we expect that, over time, e-commerce and digital channels will represent an important avenue for the commercial development of our Calvin Klein portfolio of brands. We are also excited about the prospects for Calvin Klein Golf in the Asian markets. Over the next five years, we believe the businesses associated with these new rights could generate incremental annual revenues of nearly $150 million.” The Company notes that while agreed to in principle, none of these agreements are final and are subject to definitive documentation. ABOUT WARNACO The Warnaco Group, Inc., headquartered in New York, is a leading apparel company engaged in the business of designing, sourcing, marketing and selling intimate apparel, menswear, jeanswear, swimwear, men's and women's sportswear and accessories under such owned and licensed brands as Warner's®, Olga®, Body Nancy Ganz®, and Speedo®, as well as Chaps® sportswear and denim, and Calvin Klein® men's and women's underwear, men’s and women’s bridge apparel and accessories, men's and women's jeans and jeans accessories, junior women's and children's jeans and men’s and women's swimwear. FORWARD-LOOKING STATEMENTS The Warnaco Group, Inc. notes that this press release and certain other written, electronic and oral disclosure made by the Company from time to time, may contain 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 or expectations and investors are cautioned not to place undue reliance on any forward-looking statements. Statements other than statements of historical fact 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," or the negative of those terms, or other similar words and phrases or by discussions of intentions or strategies. The following factors, among others and in addition to those described in the Company's reports filed with the SEC (including, without limitation, those described under the headings "Risk Factors" and "Statement Regarding Forward-Looking Disclosure," 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) announced on September 18, 2007; economic conditions that affect the apparel industry; 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; declining sales resulting from increased competition in the Company’s markets; increases in the prices of raw materials; 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; 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 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; 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; the Company’s history of insufficient disclosure controls and procedures and internal controls and restated financial statements; 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'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; disruptions in the Company's operations caused by difficulties with the new systems infrastructure; 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 strategic objectives, including gross margin, SG&A and operating profit goals, as a result of one or more of the factors described above or otherwise; 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. The Company encourages investors to read the section entitled "Risk Factors" and the discussion of the Company's critical accounting policies under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Discussion of Critical Accounting Policies" included in the Company's Annual Report on Form 10-K, as such discussions may be modified or supplemented by subsequent reports that the Company files with the SEC. The discussion in this press release 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.