<Page>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------


                         ANNUAL REPORT ON FORM 10-K/A-3


(MARK ONE)

<Table>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934

              FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                  OR

   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</Table>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                         COMMISSION FILE NUMBER 1-11805

                            ------------------------

                         DONNA KARAN INTERNATIONAL INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                              <C>
                   DELAWARE                                        13-3882426
        (State or other jurisdiction of                           (IRS Employer
        incorporation or organization)                         Identification No.)

              550 SEVENTH AVENUE
              NEW YORK, NEW YORK                                      10018
    (Address of principal executive office)                        (zip code)
</Table>

      REGISTRANT'S TELEPHONE NUMBER, (INCLUDING AREA CODE): (212) 789-1500

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

<Table>
<Caption>
                                                  NAME OF EACH EXCHANGE
TITLE OF EACH CLASS                                ON WHICH REGISTERED
-------------------                               ---------------------
<S>                                      <C>
Common Stock                                     New York Stock Exchange
</Table>

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
                            ------------------------

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

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

    The aggregate market value of Registrant's Common Stock held by
nonaffiliates as of March 28, 2001 was $101,872,962 based on 11,194,831 such
shares outstanding on such date and the closing sales price for the Common Stock
on such date of $9.10 as reported on the New York Stock Exchange. As of
March 28, 2001, the Registrant had 22,253,254 shares of Common Stock
outstanding.*

------------------------

*   Does not include 18 shares of Class A Common Stock, par value $.01 per
    share, and two shares of Class B Common Stock, par value $.01 per share,
    outstanding as of such date.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<Page>

    The following Item of the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 is hereby amended and, as so amended, is restated below
in its entirety: Item 14. Exhibits, Financial Statements, Schedules, and Reports
on Form 8-K.


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K

    (a) The following documents are filed as part of this report:

       1.  Financial Statements--See "Index to Financial Statements"

       2.  Financial Statement Schedule--Schedule II Valuation and Qualifying
           Accounts and Reserves

        All other schedules for which provision is made in the applicable
    accounting regulations of the Securities and Exchange Commission are not
    required under the related instructions or are inapplicable and therefore
    have been omitted.

       3.  Exhibits--see "Exhibit Index"

    (b) The Company filed no reports on Form 8-K during the last quarter of the
       period covered by this report.

                                       2
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                         INDEX TO FINANCIAL STATEMENTS

       YEARS ENDED DECEMBER 31, 2000, JANUARY 2, 2000 AND JANUARY 3, 1999

<Table>
<Caption>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Report of Independent Auditors..............................    F-2

Statements of Income for the years ended December 31, 2000,
  January 2, 2000 and January 3, 1999.......................    F-3

Balance Sheets as of December 31, 2000 and January 2,
  2000......................................................    F-4

Statements of Stockholders' Equity for the years ended
  December 31, 2000, January 2, 2000 and January 3, 1999....    F-5

Statements of Cash Flows for the years ended December 31,
  2000, January 2, 2000 and January 3, 1999.................    F-6

Notes to Financial Statements...............................    F-7
</Table>

                                      F-1
<Page>
                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors of
Donna Karan International Inc.

    We have audited the consolidated balance sheets of Donna Karan
International Inc. and subsidiaries (the "Company") as of December 31, 2000 and
January 2, 2000, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.


    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Donna Karan
International Inc. and subsidiaries at December 31, 2000 and January 2, 2000,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.


                                                               ERNST & YOUNG LLP


New York, New York
March 13, 2001, except for Note 18 as to
which the date is April 2, 2001, and
Note 19 as to which the
date is October 23, 2001


                                      F-2
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                              STATEMENTS OF INCOME

<Table>
<Caption>
                                                                             YEAR ENDED
                                                           -----------------------------------------------
                                                            DECEMBER 31,      JANUARY 2,      JANUARY 3,
                                                                2000             2000            1999
                                                           ---------------   -------------   -------------
                                                            (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                        <C>               <C>             <C>
NET REVENUES.............................................    $  662,695       $  661,837      $  622,646
Cost of sales............................................       444,780          450,686         468,559
                                                             ----------       ----------      ----------
GROSS PROFIT.............................................       217,915          211,151         154,087
Selling, general, and administrative expenses............       193,170          193,827         152,089
Restructuring charges (credits), net.....................          (200)           2,645            (267)
                                                             ----------       ----------      ----------
OPERATING INCOME.........................................        24,945           14,679           2,265
Other income (expense):
  Equity in loss of affiliate............................            --               --             (65)
  Interest income........................................           498               97             599
  Interest expense.......................................        (3,093)          (4,187)         (2,649)
  Gain on sale of interests in affiliates................            --               --              88
                                                             ----------       ----------      ----------
INCOME BEFORE INCOME TAXES...............................        22,350           10,589             238
Provision for income taxes...............................         3,163              553             110
                                                             ----------       ----------      ----------
NET INCOME...............................................    $   19,187       $   10,036      $      128
                                                             ==========       ==========      ==========
Net income per common share:
  Basic..................................................    $     0.89       $     0.46      $     0.01
  Diluted................................................    $     0.87       $     0.46      $     0.01

Weighted average common shares outstanding:
  Basic..................................................    21,604,767       21,599,500      21,598,264
  Diluted................................................    22,055,974       21,702,700      21,631,664
</Table>

                       See notes to financial statements

                                      F-3
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                                 BALANCE SHEETS

<Table>
<Caption>
                                                              DECEMBER 31,   JANUARY 2,
                                                                  2000          2000
                                                              ------------   ----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>            <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents.................................    $ 15,535      $ 15,038
  Accounts receivable, net of allowances of $36,178 and
    $27,193 respectively....................................      85,007        86,314
  Inventories...............................................      88,691        82,792
  Deferred income taxes.....................................      28,297        26,408
  Prepaid expenses and other current assets.................      27,920        17,567
                                                                --------      --------
      Total current assets..................................     245,450       228,119
Property and equipment, at cost--net........................      38,987        41,512
Deferred income taxes.......................................      19,650        19,543
Deposits and other noncurrent assets........................      20,127        15,117
                                                                --------      --------
                                                                $324,214      $304,291
                                                                ========      ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable..........................................    $ 76,956      $ 57,923
  Accrued expenses and other current liabilities............      57,501        71,339
                                                                --------      --------
      Total current liabilities.............................     134,457       129,262
                                                                --------      --------
Subordinated notes payable..................................       8,209         8,209
Deferred income.............................................      28,688        34,051
Commitments and contingencies (Note 13)

STOCKHOLDERS' EQUITY
  Common stock, $0.01 par value, 35,000,000 shares
    authorized, 22,127,805 shares at December 31, 2000, and
    21,600,264 shares at January 2, 2000 issued and
    outstanding.............................................         221           216
  Common stock class A, $0.01 par value, 18 shares
    authorized, issued and outstanding......................          --            --
  Common stock, class B, $0.01 par value, 2 shares
    authorized, issued and outstanding......................          --            --
  Preferred stock, $0.01 par value, 1,000,000 shares
    authorized, no shares issued and outstanding............          --            --
  Additional paid-in capital................................     192,348       188,471
  Retained deficit..........................................     (34,524)      (53,711)
  Accumulated other comprehensive loss......................      (1,415)         (991)
                                                                --------      --------
                                                                 156,630       133,985
  Less:
    Treasury stock, at cost (16,270 shares and 17,770
      shares, respectively).................................        (384)         (419)
    Unearned compensation...................................      (3,386)         (797)
                                                                --------      --------
      Total stockholders' equity............................     152,860       132,769
                                                                --------      --------
                                                                $324,214      $304,291
                                                                ========      ========
</Table>

                       See notes to financial statements

                                      F-4
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<Table>
<Caption>
                                                                            YEAR ENDED
                                                              --------------------------------------
                                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                                  2000          2000         1999
                                                              ------------   ----------   ----------
                                                                          (IN THOUSANDS)
<S>                                                           <C>            <C>          <C>
Common stock, beginning of year.............................    $    216      $    216     $    216
Restricted stock award......................................           5            --           --
                                                                --------      --------     --------
Common stock, end of year...................................         221           216          216
                                                                --------      --------     --------

Additional paid-in capital, beginning of year...............     188,471       188,479      188,491
Restricted stock award......................................       3,869            (8)         (12)
Stock options exercised.....................................          33            --           --
Vesting of restricted stock award...........................         (25)           --           --
                                                                --------      --------     --------
Additional paid-in capital, end of year.....................     192,348       188,471      188,479
                                                                --------      --------     --------
Retained deficit, beginning of year.........................     (53,711)      (63,747)     (63,875)
Net income..................................................      19,187        10,036          128
                                                                --------      --------     --------

Retained deficit, end of year...............................     (34,524)      (53,711)     (63,747)
                                                                --------      --------     --------
Treasury stock, beginning of year...........................        (419)         (443)        (479)
Vesting of restricted stock award...........................          35            24           36
                                                                --------      --------     --------

Treasury stock, end of year.................................        (384)         (419)        (443)
                                                                --------      --------     --------

Unearned compensation, beginning of year....................        (797)       (1,195)      (1,434)
Restricted stock award......................................      (3,874)           --           --
Amortization................................................       1,285           398          239
                                                                --------      --------     --------
Unearned compensation, end of year..........................      (3,386)         (797)      (1,195)
                                                                --------      --------     --------

Accumulated other comprehensive loss, beginning of year.....        (991)       (1,206)        (455)
Foreign currency translation, adjustments...................        (424)          215         (751)
                                                                --------      --------     --------
Accumulated other comprehensive loss, end of year...........      (1,415)         (991)      (1,206)

Total stockholders' equity..................................    $152,860      $132,769     $122,104
                                                                ========      ========     ========

Comprehensive income (loss).................................    $ 18,763      $ 10,251     $   (623)
                                                                ========      ========     ========
</Table>

                       See notes to financial statements

                                      F-5
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                            YEAR ENDED
                                                              --------------------------------------
                                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                                  2000          2000         1999
                                                              ------------   ----------   ----------
                                                                          (IN THOUSANDS)
<S>                                                           <C>            <C>          <C>
OPERATING ACTIVITIES
  Net income................................................    $ 19,187      $ 10,036     $    128
  Adjustments to reconcile net income to net cash provided
    by operating activities:
    Depreciation and amortization...........................      16,281        19,406       11,169
    Amortization of deferred income.........................     (12,847)      (14,494)      (7,956)
    Provision for bad debts.................................      (1,215)        2,717        1,544
    Deferred income taxes...................................      (1,996)       (4,211)        (989)
    Provision for restricted stock compensation.............       1,285           398          239
    Other, net..............................................          10            16         (266)
  Changes in operating assets and liabilities:
    Decrease (increase) in accounts receivable..............       3,222       (18,054)      (4,383)
    (Increase) decrease in inventories......................      (5,899)       10,819       22,541
    (Increase) decrease in prepaid expenses and other
      current assets........................................     (11,053)        1,294       (6,790)
    Increase in deposits and other noncurrent assets........     (12,351)       (6,464)      (3,508)
    Increase (decrease) in accounts payable, accrued
      expenses, and other current liabilities...............      17,618        28,785       (8,616)
    (Decrease) increase in deferred income..................      (5,363)       (2,444)      36,360
                                                                --------      --------     --------
      NET CASH PROVIDED BY OPERATING ACTIVITIES.............       6,879        27,804       39,473
                                                                --------      --------     --------

INVESTING ACTIVITIES
  Purchase of free-standing retail stores...................          --        (9,200)          --
  Proceeds from sale of affiliate...........................          --            --          646
  Purchase of property and equipment........................      (6,415)      (11,014)      (8,158)
                                                                --------      --------     --------
      NET CASH USED IN INVESTING ACTIVITIES.................      (6,415)      (20,214)      (7,512)
                                                                --------      --------     --------

FINANCING ACTIVITIES
  Net repayment of revolving credit facility................          --            --      (22,314)
  Repayment of note payable to principal....................          --            --       (6,700)
  Other.....................................................          33            --          (36)
                                                                --------      --------     --------
      NET CASH PROVIDED BY (USED FOR) FINANCING
        ACTIVITIES..........................................          33            --      (29,050)
                                                                --------      --------     --------

NET INCREASE IN CASH AND CASH EQUIVALENTS...................         497         7,590        2,911
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR..............      15,038         7,448        4,537
                                                                --------      --------     --------
CASH AND CASH EQUIVALENTS AT END OF YEAR....................    $ 15,535      $ 15,038     $  7,448
                                                                ========      ========     ========
</Table>

                       See notes to financial statements

                                      F-6
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                         NOTES TO FINANCIAL STATEMENTS

NOTE 1.--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION

    The accompanying financial statements include the accounts of Donna Karan
International Inc. and subsidiaries ("DKI" or the "Company"). The accompanying
financial statements include the results of operations of DKI for the fiscal
years ended December 31, 2000, January 2, 2000, and January 3, 1999. All
significant intercompany balances and transactions have been eliminated. The
equity method of accounting was used for Donna Karan Japan K.K. ("DKJ") since
the date the Company sold 70% of its interest to a nonaffiliated party and until
March 1998, when the Company and such nonaffiliated party sold all of their
remaining outstanding shares to a Japanese public company (see Note 6).

    The Company's fiscal year consists of the 52- or 53-week period ending on
the Sunday nearest December 31, with fiscal 2000 and fiscal 1999 consisting of a
52-week year and fiscal 1998 consisting of a 53-week year.

    Certain amounts in the financial statements of prior years have been
reclassified to conform to the current year presentation.

    NET INCOME PER COMMON SHARE

    In accordance with the requirements of Financial Accounting Standards
("SFAS") No. 128, net income per common share amounts ("basic EPS") were
computed by dividing net income by the weighted average number of common shares
outstanding and contingently issuable shares (which satisfy certain conditions)
and excluding any potential dilution. Net income per common share amounts
assuming dilution ("diluted EPS") were computed by reflecting potential dilution
from the exercise of stock options. SFAS No. 128 requires the presentation of
both basic EPS and diluted EPS on the face of the statements of income.

    Reconciliation between the numerators and denominators of the basic and
diluted EPS computations is as follows:

<Table>
<Caption>
                                                         DECEMBER 31,     JANUARY 2,      JANUARY 3,
                                                             2000            2000            1999
                                                        --------------   -------------   -------------
                                                        (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                     <C>              <C>             <C>
NUMERATOR:
Net income attributable to common stock...............    $    19,187     $    10,036     $       128
                                                          ===========     ===========     ===========
DENOMINATOR:
Weighted average common shares outstanding--Basic.....     21,604,767      21,599,500      21,598,264
Effect of dilutive securities:
  Stock options.......................................         17,533         103,200          33,400
  Restricted common stock.............................        433,674              --              --
                                                          -----------     -----------     -----------
Weighted average common shares outstanding--Diluted...     22,055,974      21,702,700      21,631,664
                                                          ===========     ===========     ===========
Basic EPS.............................................    $      0.89     $      0.46     $      0.01
                                                          ===========     ===========     ===========
Diluted EPS...........................................    $      0.87     $      0.46     $      0.01
                                                          ===========     ===========     ===========
</Table>

                                      F-7
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    INVENTORIES

    Inventory is stated at the lower of cost or market, with cost being
determined on the first-in, first-out method.

<Table>
<Caption>
                                                        DECEMBER 31,   JANUARY 2,
                                                            2000          2000
                                                        ------------   ----------
                                                             (IN THOUSANDS)
<S>                                                     <C>            <C>
Raw materials.........................................     $ 3,522       $ 2,947
Work in process.......................................       3,920         2,730
Finished goods........................................      81,249        77,115
                                                           -------       -------
                                                           $88,691       $82,792
                                                           =======       =======
</Table>

    PROPERTY AND EQUIPMENT

    Property and equipment are carried at cost less accumulated depreciation.
Depreciation of machinery, equipment and fixtures, including amounts accounted
for under capital leases, is computed using straight-line and accelerated
methods based on their estimated useful lives, which range from 5 to 7 years.
Leasehold improvements are amortized on a straight-line basis over the lease
term, which in certain instances include the anticipated renewal period. The
Company's share of the cost of constructing in-store shop displays is
capitalized and amortized using the straight-line method over their estimated
useful lives of 4 years. At December 31, 2000 and January 2, 2000, the
unamortized balance of these costs of $17.5 million and $11.8 million,
respectively, was included in "Deposits and other noncurrent assets" in the
accompanying balance sheets. Amortization expense of these costs for the years
ended December 31, 2000, January 2, 2000 and January 3, 1999 amounted to
approximately $6.5 million, $5.1 million and $4.4 million, respectively.

    Major classes of property and equipment consist of the following:

<Table>
<Caption>
                                                        DECEMBER 31,   JANUARY 2,
                                                            2000          2000
                                                        ------------   ----------
                                                             (IN THOUSANDS)
<S>                                                     <C>            <C>
Machinery, equipment and fixtures.....................    $ 29,688      $ 28,281
Leasehold improvements................................      63,359        61,776
                                                          --------      --------
                                                            93,047        90,057
Less accumulated depreciation and amortization........     (54,060)      (48,545)
                                                          --------      --------
                                                          $ 38,987      $ 41,512
                                                          ========      ========
</Table>

    Depreciation and amortization of property and equipment amounted to
$9.0 million, $9.6 million, and $5.5 million for the years ended December 31,
2000, January 2, 2000 and January 3, 1999, respectively.

    LONG-LIVED ASSETS

    The Company accounts for long-lived assets, including intangibles, at the
lower of amortized cost or fair value, less disposition costs. Whenever events
or changes in circumstances have indicated that the carrying amount of assets
might not be recoverable, the Company, using its best estimates, reviews for
impairment the carrying value of those long-lived assets. In fiscal 1999, the
Company identified

                                      F-8
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

certain underperforming stores as a result of this review, and recorded a charge
of approximately $3.7 million, related to this impairment loss (see Note 9).

    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

    Accrued expenses and other current liabilities are comprised of the
following:

<Table>
<Caption>
                                                        DECEMBER 31,   JANUARY 2,
                                                            2000          2000
                                                        ------------   ----------
                                                             (IN THOUSANDS)
<S>                                                     <C>            <C>
Accrued expenses......................................     $13,169       $17,326
Unearned revenues.....................................       7,367        14,852
Accrued compensation..................................      12,712        14,061
Accrued royalties.....................................      12,920        10,559
Accrued income taxes..................................       6,868         6,469
Accrued restructuring and other charges...............         892         5,370
Accrued taxes other than income taxes.................       2,671         1,722
Other.................................................         902           980
                                                           -------       -------
                                                           $57,501       $71,339
                                                           =======       =======
</Table>

    REVENUE RECOGNITION

    Revenues from merchandise sales are recognized upon shipment of products to
the customer or, in the case of sales by Company-owned stores, when payment is
received. The Company reports its sales on a net basis, which is computed by
deducting from gross sales the amount of anticipated discounts, returns and
allowances. Income from licensing agreements is recognized when earned and is
included in net revenues. Shipping and handling costs related to merchandise
sales are classified as selling, general and administrative expenses.

    ADVERTISING AND PROMOTION

    Costs associated with the production of advertising are expensed upon the
first showing of the related advertisement, which is generally less than six
months after the production costs are incurred. At December 31, 2000 and
January 2, 2000, advertising costs totaling $4.3 million and $1.9 million,
respectively, were included in "Prepaid expenses and other current assets" in
the accompanying balance sheets. Advertising and marketing expenses, including
costs related to the Company's Creative Services Department, for the years ended
December 31, 2000, January 2, 2000, and January 3, 1999 were $35.8 million,
$34.1 million and $31.0 million, respectively.

    STORE PRE-OPENING COSTS

    In accordance with Accounting Standards Executive Committee ("AcSec")
Statement of Position ("SOP") No. 98-5 "Reporting on the Costs of Start-up
Activities," costs associated with the opening or remodeling of stores, such as
pre-opening rent and payroll, are expensed as incurred. In fiscal 1999, the
Company expensed $1.9 million of costs associated with the opening of its DKNY
Flagship store on Madison Avenue in New York City, New York.

                                      F-9
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    CASH AND CASH EQUIVALENTS

    The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Cash includes approximately
$5.7 million and $9.4 million of short-term deposits at December 31, 2000 and
January 2, 2000, respectively.

    STATEMENT OF CASH FLOWS

    Supplemental disclosures of cash flow information:

<Table>
<Caption>
                                                            YEAR ENDED
                                              --------------------------------------
                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                  2000          2000         1999
                                              ------------   ----------   ----------
                                                          (IN THOUSANDS)
<S>                                           <C>            <C>          <C>
Cash paid during the year for:
  Interest..................................     $2,353        $2,825       $1,507
                                                 ======        ======       ======
  Taxes.....................................     $6,220        $  673       $6,174
                                                 ======        ======       ======
</Table>

    FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

    For foreign operations, local currencies are considered the functional
currency. All assets and liabilities of foreign subsidiaries and affiliates are
translated at year-end rates of exchange, while results of operations are
translated at weighted average rates of exchange for the year. Unrealized
translation gains or losses are generally reported in stockholders' equity as
accumulated other comprehensive income. Such adjustments amounted to
approximately $0.4 million of unrealized translation losses and $0.2 million of
unrealized translation gains in fiscal 2000 and fiscal 1999, respectively. Gains
and losses from foreign currency transactions are included in operations.

    The Company enters into forward exchange contracts and from time-to-time
purchases foreign currency options to hedge foreign currency transactions for
periods consistent with its identified exposures. These financial instruments
are designed to minimize exposure and reduce risk from exchange rate
fluctuations in the regular course of business. The Company does not engage in
speculation. Gains and losses on foreign exchange contracts which hedge
exposures on firm foreign currency commitments are deferred and recognized as
adjustments to the bases of those assets. For the years ended December 31, 2000,
January 2, 2000 and January 3, 1999, gains and losses on foreign exchange
contracts offset gains and losses on the underlying transactions.

    MANAGEMENT ESTIMATES

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses reported in those financial statements.
Actual results could differ from those estimates and assumptions.

    IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101 "Revenue Recognition in Financial Statements." The
effective date has been deferred pending additional interpretive guidance. Based
on current interpretations, no material impact on the Company's Financial
Statement is anticipated.

                                      F-10
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, which is required to be adopted in fiscal years
beginning after June 15, 2000. The Company will adopt the provisions of this
Statement effective January 1, 2001. This Statement requires that all
derivatives be recorded in the balance sheet as either an asset or liability
measured at fair value and that changes in fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. If the derivative is
a hedge, depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the hedged
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings. The Company's cumulative effect of adoption of this
Statement will not be material to the Company's results of operations or
financial condition.

NOTE 2.--BORROWINGS

    In February 2000, the Company amended the $150.0 million revolving Credit
Facility (the "Facility") in place at January 2, 2000 and extended its term, to
expire on May 1, 2003. Direct borrowings under the Facility bear interest at a
fixed spread over the lead bank's prime rate or, at the option of the Company,
at a fixed spread over the LIBOR and are limited to a borrowing base calculated
on eligible accounts receivable, inventory, and letters of credit. The Facility
is secured by accounts receivable and inventory of the Company, as well as a
pledge of all equity interests of the subsidiaries of the Company. The Facility
also contains certain restrictive covenants which, among other things, require
the Company to maintain certain financial ratios and restrict investments,
incurrence of additional indebtedness, and payment of dividends. At
December 31, 2000 and January 2, 2000, there were no direct borrowings
outstanding under the Facility.

    In connection with the Facility, the Company incurred certain financing
costs which were deferred and are being amortized over the remaining term of the
Facility. At December 31, 2000, and January 2, 2000 unamortized financing costs
of approximately $0.6 million and $0.6 million, respectively were included in
"Deposits and other noncurrent assets" in the accompanying balance sheets.
Amortization of deferred financing costs of approximately $0.8 million,
$1.3 million and $1.3 million in fiscal 2000, 1999 and 1998, respectively, were
included in interest expense.

    Letters of credit outstanding were approximately $56.6 million and
$60.3 million at December 31, 2000 and January 2, 2000, respectively.

NOTE 3.--FINANCIAL INSTRUMENTS

    DERIVATIVE FINANCIAL INSTRUMENTS RISK

    The Company selectively uses a combination of derivative financial
instruments to maintain the value-at-risk inherent in its foreign currency
exposures within acceptable parameters, as determined by senior management. The
purpose of this approach is to reduce the Company's exposure to market risk
resulting from fluctuations in foreign exchange rates. Derivative financial
instruments currently utilized by the Company principally include forward
exchange contracts and from time-to-time purchased foreign currency options.
Hedges are executed centrally to facilitate the netting of offsetting currency
exposures, to ensure control over the use of derivative financial instruments
and to minimize transaction costs. The Company does not hold or enter into
financial instruments for trading or speculative purposes.

                                      F-11
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    The Company has a policy of only entering into contracts with counterparties
that have at least an "A" (or equivalent) credit rating. The counterparties to
these contracts are major financial institutions and the Company does not have
significant exposure to any one counterpart. Management believes that risk of
loss is remote and in any event would be immaterial.

    FOREIGN EXCHANGE RISK MANAGEMENT

    The Company enters into forward exchange contracts to hedge inventory
purchases, accounts receivable and accounts payable denominated in foreign
currencies for periods consistent with its identified exposures. Gains and
losses related to qualifying hedges of these exposures are deferred and
recognized in operating income when the underlying hedged transaction occurs.
The Company also enters into purchased foreign currency options from
time-to-time to hedge anticipated transactions where there is a high probability
that anticipated exposures will materialize. Any gain realized on such options
that qualify as hedges are deferred and recognized in operating income when the
underlying hedged transactions occurs. Foreign currency transactions, which do
not qualify as hedges, are marked to market on a current basis with associated
gains and losses reflected in operating income. In addition, any previously
deferred gains and losses on hedges which are terminated prior to the
transaction date are recognized in current operations when the hedge is
terminated. The contracts have varying maturities with none exceeding
24 months. Foreign currencies exchanged under these contracts are principally
the Italian Lira, U.K. Pound, Dutch Guilder, Japanese Yen and the European
Economical Monetary Union Euro.

    Deferred unrealized gains and losses from derivative financial instruments
consist of the following:

<Table>
<Caption>
                                        DECEMBER 31, 2000                 JANUARY 2, 2000
                                  ------------------------------   ------------------------------
                                  NOTIONAL                         NOTIONAL
                                  AMOUNTS     GAINS      LOSSES    AMOUNTS     GAINS      LOSSES
                                  --------   --------   --------   --------   --------   --------
                                                          (IN THOUSANDS)
<S>                               <C>        <C>        <C>        <C>        <C>        <C>
Forward exchange contracts......  $131,198      $--       $901     $115,772    $2,859       $--
</Table>

    FAIR VALUE OF FINANCIAL INSTRUMENTS

    The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

    Cash and cash equivalents:

       The carrying amount approximated fair value, primarily because of the
       short maturity of cash equivalent instruments.

    Borrowing under revolving line of credit and Subordinated notes payable:

       The fair value of the Company's debt approximates its carrying value,
       primarily because they bear interest at a variable rate.

    Forward exchange contracts:

       The fair value of forward exchange contracts is the estimated amount the
       Company would receive or pay to terminate the agreements, as determined
       by dealer quotes.

                                      F-12
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    The estimated fair values of the Company's financial instruments are as
follows:

<Table>
<Caption>
                                                        DECEMBER 31, 2000        JANUARY 2, 2000
                                                      ---------------------   ---------------------
                                                      NOTIONAL                NOTIONAL
                                                       AMOUNT    FAIR VALUE    AMOUNT    FAIR VALUE
                                                      --------   ----------   --------   ----------
                                                                     (IN THOUSANDS)
<S>                                                   <C>        <C>          <C>        <C>
NONDERIVATIVES
Cash and cash equivalents...........................  $ 15,535    $ 15,535    $ 15,038    $ 15,038
Subordinated notes payable..........................     8,209       8,209       8,209       8,209

DERIVATIVES
Forward exchange contracts..........................  $131,198    $132,059    $115,772    $119,598
</Table>

NOTE 4.--EMPLOYEE BENEFIT PLANS

    The Company is required to make contributions to a multi-employer union
pension and health and welfare plan. These payments are based on wages paid to
the Company's union employees and amounts paid to contractors utilized by the
Company. The Company does not participate in the management of the plans and has
not been furnished with any information with respect to the type of benefits
provided, vested and nonvested benefits or plan assets. Health and welfare plan
expense approximated $1.1 million, $1.3 million and $1.7 million for the fiscal
years ended December 31, 2000, January 2, 2000 and January 3, 1999,
respectively. Pension expense approximated $0.4 million, $0.6 million and
$0.7 million for the fiscal years ended December 31, 2000, January 2, 2000 and
January 3, 1999, respectively. Separate actuarial calculations regarding the
Company's share of plan benefits and net assets available for plan benefits have
not been determined.

    Under the Employee Retirement Income Security Act of 1974, as amended, an
employer, upon withdrawal from or termination of a multi-employer plan, is
required to continue funding its proportionate share of the plan's unfunded
vested benefits. As of December 31, 2000, the Company had no intention of
withdrawing from the plan.

    The Company sponsors a defined contribution benefit plan covering its
non-union employees with a minimum of six months of eligible service. The
Company matches employee contributions at a rate of 50%, to a maximum of 6% of
an employee's annual salary. Under the terms of the plan, a participant is 100%
vested in the employer's matching contribution after six years of credited
service. Expenses under this plan, net of forfeitures, were approximately
$0.3 million, $0.8 million and $0.8 million for the fiscal years ended
December 31, 2000, January 2, 2000 and January 3, 1999, respectively.


    During 1997, the Company adopted a bonus plan covering executives and
certain members of management. Individual bonus payments are based on management
and compensation levels, performance goals and the Company's overall
performance. The Company also adopted a deferred compensation plan covering
certain senior executives, which is based on compensation, is dependent upon the
Company achieving profitability, and vests after a five year period. In
addition, amounts under the deferred compensation plan will become fully vested
upon a change in control of the Company (as defined in the plan), unless the
Company receives written notice, at least five days prior to the anticipated
closing date of the transaction giving rise to a change in control, from the
successor to all or a substantial portion of our business and/or assets that the
successor is willing to assume and agree to perform the Company's obligations
under the deferred compensation plan in the same manner and to the same extent
that the Company is required to perform, then no accelerated vesting will occur.
In fiscal 2000, 1999 and 1998, expenses under these plans were approximately
$8.0 million, $7.8 million and $5.9 million, respectively.


                                      F-13
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5.--LEASES

    Rent expense included in the Company's financial statements was
approximately $33.7 million, $32.3 million and $23.5 million for the fiscal
years ended December 31, 2000, January 2, 2000, and January 3, 1999,
respectively. At December 31, 2000, future minimum annual rental commitments
under noncancellable operating leases for office, warehouse and retail
facilities, and equipment are as follows (in thousands):

<Table>
<S>                                                           <C>
2001........................................................  $ 24,392
2002........................................................    22,177
2003........................................................    19,862
2004........................................................    17,842
2005........................................................    17,239
Thereafter..................................................    80,741
                                                              --------
                                                              $182,253
                                                              ========
</Table>

    In addition, certain of the leases contain options to renew for periods up
to 10 years and others include contingent payments based on sales.

    The Company has entered into certain sub-lease arrangements. At
December 31, 2000, future offsets to annual rental commitments as a result of
these subleases are as follows (in thousands):

<Table>
<S>                                                           <C>
2001........................................................   $1,626
2002........................................................    1,543
2003........................................................    1,310
2004........................................................    1,143
2005........................................................    1,143
Thereafter..................................................    2,535
                                                               ------
                                                               $9,300
                                                               ======
</Table>

NOTE 6.--SALE OF INTERESTS IN AFFILIATES

    In March 1998, the Company and a nonaffiliated party sold all of their
remaining outstanding shares in DKJ to a nonaffiliated party, a Japanese public
company. At the same time, DKJ was granted a 16-year exclusive license to
import, manufacture, license and/or distribute DONNA KARAN NEW YORK and DKNY
products in Japan, with certain exceptions. In addition, DKJ was granted the
exclusive right to develop and operate a total of 12 DONNA KARAN NEW YORK and
DKNY retail boutiques in Japan over the term of the agreement. On consummation
of the transaction, the Company received $15.9 million, which is being amortized
over the term of the agreement. The Company receives a royalty on net sales of
licensed products and a servicing fee on net sales of Donna Karan products
imported by DKJ.

    In consideration of the sale of its interest in DKJ, the Company received
approximately $646,000 and recognized a gain, net of transaction costs, of
approximately $88,000 in the fiscal year ended January 3, 1999. Equity in DKJ's
loss amounted to approximately $0.1 million for the fiscal year ended
January 3, 1999. As a result of the Company's agreement with DKJ in 1995, which
provided for a fee based upon net sales of DKJ, the Company recognized
management fee income, recorded as an offset of selling, general, and
administrative expenses of approximately $0.4 million, $0.6 million and

                                      F-14
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

$0.8 million during the years ended December 31, 2000, January 2, 2000, and
January 3, 1999, respectively.

NOTE 7.--APPAREL LICENSING AGREEMENT

    In December 1999, the Company consummated an agreement to grant to Liz
Claiborne Inc. ("LCI") the exclusive right to design, produce, market and sell a
new line of women's career and casual sportswear, which line launched for the
Spring 2001 season under the CITY DKNY label. Under the agreement, LCI is
obligated to pay the Company a royalty equal to a percentage of net sales of
such licensed product. Upon consummation of the transaction, the Company
received $6.4 million in prepaid royalties, which will be recognized as earned
as LCI ships the licensed product. The initial term of the license agreement is
for 6 years through December 31, 2005, with an option to renew for two
additional 5-year periods, if certain sales thresholds are met.

    On January 8, 1998, the Company and LCI consummated an agreement whereby the
Company granted to LCI exclusive, long-term rights to the DKNY JEANS and DKNY
ACTIVE trademarks for apparel products to market, distribute and sell both
collections in the Western Hemisphere. Under the agreement, LCI is obligated to
pay the Company a royalty equal to a percentage of net sales of the DKNY JEANS
and ACTIVE products. The initial term of the license agreement is for 15 years
through December 31, 2012, with an option to renew for an additional 15-year
period if certain sales thresholds are met, which would continue the license
through December 31, 2027. Upon consummation of the transaction, the Company
received from LCI $8.4 million in prepaid royalties, which were recognized as
earned as LCI shipped the licensed product. In addition, the Company received a
$21.6 million up-front payment in exchange for the exclusive rights granted.
This amount is being amortized on a straight-line basis into income over the
term of the agreement. Aggregate minimum royalties for the initial 15-year term
are $152.0 million.

NOTE 8.--BEAUTY LICENSING AGREEMENT

    On November 10, 1997, the Company and Estee Lauder Inc. ("ELI") consummated
an agreement whereby the Company granted to ELI exclusive worldwide rights to
the DONNA KARAN NEW YORK and DKNY trademarks for the manufacture, marketing,
distribution and sale of beauty and beauty-related products, including
fragrances, cosmetics, skincare products, and beauty-related accessories. In
connection therewith and with the sale to ELI of certain other assets relating
to the existing business, the Company received $25.0 million and receives
additional royalties from ELI based on sales of such beauty and beauty-related
products. Of this $25 million amount, $10 million represents prepaid royalties,
which are being recognized as earned as ELI ships the licensed product.

    Of the remaining $15.0 million, the Company recognized $10.0 million in
fiscal 1997 since, other than certain veto rights related to the product, the
Company would not be involved in the future day-to-day business and recognized a
one-time licensing credit of $5.0 million in fiscal 1999 as a result of
satisfying certain conditions of the beauty license related to the launch of new
products in accordance with an agreed-upon schedule.

    In fiscal 1997, upon closing the transaction with ELI, the Company recorded
a loss of approximately $21.1 million (net of a $2.2 million gain in connection
with the consummation of the transaction.) This loss represented reserves
recorded, primarily related to inventories, receivables and severance to cover
the shut-down of the Company's existing beauty business, and is net of a gain of
approximately $2.2 million, representing the portion of the proceeds recognized
as income (the aforementioned $10.0 million) reduced by the cost of exiting the
beauty business.

                                      F-15
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9.--RESTRUCTURING AND OTHER CHARGES


    On November 2, 1999, the Company announced that it was implementing a series
of strategic initiatives intended to further reduce costs, increase efficiencies
and focus on key business areas. In connection with the strategic initiatives,
and in accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and EITF Issue
94-3 "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)," the Company recorded in the fourth quarter restructuring and
other non-recurring charges of $11.0 million, of which $0.8 million was
classified as cost of sales, $6.1 million as selling, general and administrative
expenses and $4.1 million as restructuring charges. The strategic initiatives
included: (i) consolidating the Donna Karan New York and DKNY women's divisions
and integrating the marketing and public relations functions into one unit,
resulting in a charge of $2.6 million which was primarily for employee
severance, and is classified as a restructuring charge; (ii) closing seven
non-performing outlet stores, resulting in a charge of $2.2 million, which was
primarily for the write-down to net realizable value of inventory and fixed
assets, and the costs of buying out leases, of which $0.8 million was classified
as cost of sales, and $1.4 million was classified as a restructuring charge;
(iii) recognizing an impairment of under-performing retail stores based upon the
present value of projected cash flows to determine the fair value of the stores,
resulting in an impairment charge of $3.7 million, which was classified as
selling, general and administrative expenses; (iv) the write-off of certain
under-performing co-op shops that were identified and abandoned, resulting in a
charge of $1.1 million, which has been classified as selling, general and
administrative expenses; and (v) certain other non-recurring charges of
$1.4 million, primarily for the write-off of fixed assets and leasehold
improvements and the accrual of legal defense costs pertaining to contractor
wage and hour litigation, $1.3 million of which has been classified as selling,
general and administrative expenses, and $0.1 million as restructuring charges.
The Company anticipates achieving annual savings of approximately $6.0 million
as a result of these strategic initiatives. The cash and noncash elements of the
restructuring charge approximated $4.4 million and $6.6 million, respectively.
As a result of the strategic initiatives, approximately 160 positions were
eliminated in the Company, of which 50 were unfilled positions. Of the remaining
110 positions, 42 employees were terminated in fiscal 1999 and 68 employees were
terminated in fiscal 2000.


    Included in the aforementioned strategic initiatives and concurrent with the
Company's annual planning process, the Company determined that the estimated
future undiscounted cash flows were below the carrying value of certain retail
stores. Accordingly, during the fourth quarter of fiscal 1999, the Company
adjusted the carrying value of these stores to their estimated fair value and
recorded an impairment charge of $3.7 million. The Company calculated the
present value of projected cash flows to determine the fair value of the store
assets.


    During 1999, the Company analyzed its current portfolio of retail locations
and determined that there were seven stores that were non-performing, and as
such, decided to close these stores. In accordance with EITF 94-3, the Company
treated the closing of these retail locations as an "exit plan", and accrued all
costs that were incremental as a result of the exit plan, or were either
contractual obligations prior to the exit plan's commitment date, or penalties
incurred to cancel contractual obligations. The $2.2 million charge that related
to the closing of these seven outlet stores consisted of 1) $0.8 million of
losses estimated to be incurred by selling inventory below cost, which amount
was determined by estimating the average selling price to completely liquidate
merchandise prior to the closing of the stores, 2) $0.6 million of payments made
to landlords in order to terminate leases early, 3) $0.3 million in estimated
legal and professional fees related to negotiating with the landlords and
preparing severance agreements, 4) $257,000 in net book value of leasehold
improvements that were


                                      F-16
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


abandoned, 5) $0.1 million in estimated costs, such as demolition, cleaning and
painting, needed to return the locations to their original condition,
6) $46,000 in employee severance, and 7) $0.1 million in other miscellaneous
costs. Additionally, as a result of the strategic initiatives, certain
under-performing co-op shops were identified to be abandoned, resulting in the
recording of a charge of approximately $1.1 million.


    The major components of the fiscal 1999 restructuring and other charges are
as follows:


<Table>
<Caption>
                                                          FISCAL YEAR ENDED JANUARY 2, 2000
                                               --------------------------------------------------------
                                                                UTILIZED                    BALANCE AT
                                               ORIGINAL    -------------------     NOT      JANUARY 2,
                                                ACCRUAL      CASH     NONCASH    UTILIZED      2000
                                               ---------   --------   --------   --------   -----------
<S>                                            <C>         <C>        <C>        <C>        <C>
Restructure Charges
  Employee termination and severance costs...   $ 2,283     $  340     $   --     $   --      $1,943
  Writedown of long-lived assets.............       464         --        464         --          --
  Exit costs.................................     1,097        605         --         --         492
  Other......................................       233         --         --         --         233
                                                -------     ------     ------     ------      ------
                                                  4,077        945        464         --       2,668
                                                -------     ------     ------     ------      ------

Other Charges
  Writedown of long-lived assets.............     5,373         --      5,061         --         312
  Inventory markdowns........................       801         --         --         --         801
  Other......................................       700         19         --         --         681
                                                -------     ------     ------     ------      ------
                                                  6,874         19      5,061         --       1,794
                                                -------     ------     ------     ------      ------
                                                $10,951     $  964     $5,525     $   --      $4,462
                                                =======     ======     ======     ======      ======
</Table>



<Table>
<Caption>
                                                        FISCAL YEAR ENDED DECEMBER 31, 2000
                                     -------------------------------------------------------------------------
                                     BALANCE AT                      UTILIZED                     BALANCE AT
                                     JANUARY 2,    ADDITIONAL   -------------------     NOT      DECEMBER 31,
                                        2000        ACCRUAL       CASH     NONCASH    UTILIZED       2000
                                     -----------   ----------   --------   --------   --------   -------------
<S>                                  <C>           <C>          <C>        <C>        <C>        <C>
Restructure Charges
  Employee termination and
    severance costs................    $ 1,943       $   --      $1,755     $   --     $   --       $  188
  Writedown of long-lived assets...         --           --          --         --         --           --
  Exit costs.......................        492           --         185         37        200           70
  Other............................        233           --         225         --         --            8
                                       -------       ------      ------     ------     ------       ------
                                         2,668           --       2,165         37        200          266
                                       -------       ------      ------     ------     ------       ------

Other Charges
  Writedown of long-lived assets...        312           --          --         --        312           --
  Inventory markdowns..............        801           --          --         --        801           --
  Other............................        681          312         367         --         --          626
                                       -------       ------      ------     ------     ------       ------
                                         1,794          312         367         --      1,113          626
                                       -------       ------      ------     ------     ------       ------
                                       $ 4,462       $  312      $2,532     $   37     $1,313       $  892
                                       =======       ======      ======     ======     ======       ======
</Table>


                                      F-17
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


    Other costs described in the roll-forward analysis amounting to
$0.9 million consist of $0.2 million in costs related to office space
consolidation in the Company's New York office and $0.7 million in estimated
legal defense costs related to contractor wage and hour litigation. Exit costs
amounting to $1.1 million relate to costs associated with the seven outlet
stores described above, excluding the amounts pertaining to leasehold
improvements that were abandoned, which is reflected in write-down of long-lived
assets, and $0.8 million of inventory markdowns.



    During the year ended December 31, 2000, the Company utilized approximately
$2.6 million of reserves previously established in connection with its fiscal
1999 restructuring plan and reversed $1.3 million that was no longer deemed
necessary. During 2000, the Company completed the shutdown of the seven outlet
stores, and was able to recover its cost on the liquidation of merchandise.
Therefore, the $0.8 million inventory reserve that had previously been recorded
was not needed and was reversed. In addition, the Company only incurred
$0.1 million in legal and professional fees related to the store shutdown, and
$0.2 million of the original $0.3 million reserved was reversed. The Company
anticipates utilizing the remaining balance of its reserves during fiscal 2001.



    In 1997, the Company recorded restructuring charges of approximately
$8.6 million, primarily for severance, the abandonment of leased space and the
closing of the Company's Prato, Italy office. In addition, during 1997 the
Company recognized other charges amounting to $17.0 million, primarily for
additional severance costs, costs related to the realignment of a retail and
distribution agreement in Europe, and other costs recorded during a cost
containment review process. In the fourth quarter of 1999, the Company completed
the closing of its Prato office, and $1.4 million in reserves that had been
recorded in connection with this closing, primarily estimated severance costs
and legal, accounting and other fees, were no longer needed, and, accordingly,
were reversed. Included in the other charges of $17.0 million was $0.6 million
that was accrued for certain unasserted claims and risks associated with the
closing of the Prato office. Subsequently, the Company was able to document that
it should not be held liable for such claims, and after determining that the
risk of litigation associated with these claims no longer existed, reversed the
$0.6 million reserve in the fourth quarter of 2000. This reversal was classified
in selling, general and administrative expenses.


                                      F-18
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    During the fiscal year ended December 28, 1997, the Company utilized
$9.2 million in reserves related to the 1997 restructuring and other charges.
The activity in the reserve account for the fiscal years 1998, 1999 and 2000 was
as follows:

<Table>
<Caption>
                                                           FISCAL YEAR ENDED JANUARY 3, 1999
                                              -----------------------------------------------------------
                                               BALANCE AT         UTILIZED                    BALANCE AT
                                              DECEMBER 28,   -------------------     NOT      JANUARY 3,
                                                  1997         CASH     NONCASH    UTILIZED      1999
                                              ------------   --------   --------   --------   -----------
<S>                                           <C>            <C>        <C>        <C>        <C>
Employee termination and severance costs....     $ 4,737      $3,281     $   --     $   --      $1,456
European retail and distribution
  agreement.................................       5,900         221         --         --       5,679
Writedown of long-lived assets..............         643          --        643         --          --
Other.......................................       5,142       2,054      1,818         --       1,270
                                                 -------      ------     ------     ------      ------
                                                 $16,422      $5,556     $2,461     $   --      $8,405
                                                 =======      ======     ======     ======      ======
</Table>

<Table>
<Caption>
                                                          FISCAL YEAR ENDED JANUARY 2, 2000
                                              ---------------------------------------------------------
                                              BALANCE AT        UTILIZED                    BALANCE AT
                                              JANUARY 3,   -------------------     NOT      JANUARY 2,
                                                 1999        CASH     NONCASH    UTILIZED      2000
                                              ----------   --------   --------   --------   -----------
<S>                                           <C>          <C>        <C>        <C>        <C>
Employee termination and severance costs....   $ 1,456      $  631     $   --     $  822      $    3
European retail and distribution
  agreement.................................     5,679       5,679         --         --          --
Other.......................................     1,270          --         --        604         666
                                               -------      ------     ------     ------      ------
                                               $ 8,405      $6,310     $   --     $1,426      $  669
                                               =======      ======     ======     ======      ======
</Table>

<Table>
<Caption>
                                                          FISCAL YEAR ENDED DECEMBER 31, 2000
                                              -----------------------------------------------------------
                                              BALANCE AT        UTILIZED                     BALANCE AT
                                              JANUARY 2,   -------------------     NOT      DECEMBER 31,
                                                 2000        CASH     NONCASH    UTILIZED       2000
                                              ----------   --------   --------   --------   -------------
<S>                                           <C>          <C>        <C>        <C>        <C>
Employee termination and severance costs....   $     3      $    3     $   --     $   --       $   --
Other.......................................       666          41         --        625           --
                                               -------      ------     ------     ------       ------
                                               $   669      $   44     $   --     $  625       $   --
                                               =======      ======     ======     ======       ======
</Table>

NOTE 10.--RELATED PARTY TRANSACTIONS

    In July 1996, the Company entered into a licensing agreement (the "Gabrielle
License") with Gabrielle Studio, Inc. ("Gabrielle Studio"), a corporation owned
by two of the Company's principal stockholders and their children's trust, which
grants the Company the exclusive worldwide rights, in perpetuity, to use, and to
sublicense the right to use, the trademarks "DONNA KARAN", "DONNA KARAN NEW
YORK", "DKNY", "DK" and all variations thereof and to use, and to sublicense the
right to use, the name, signature and likeness of Donna Karan in connection with
the design, manufacture, distribution, sale, advertising, marketing and
promotion of products of any kind, nature or description, except for specified
products and the provision of specified store services. The Gabrielle License
provides that the Company will pay to Gabrielle Studio an annual royalty equal
to 1.75% of the first $250 million of net sales for any year, plus 2.5% of the
next $500 million of net sales for that year, plus 3% of the next $750 million
of net sales for that year, plus 3.5% of all net sales for that year in excess
of $1.5 billion. For purposes of computing the annual royalty, "net sales"
includes sales by the Company, the Company's affiliates and subsidiaries and any
sublicensees of products bearing any of the licensed trademarks or the Donna
Karan name. The Company incurred $30.6 million, $25.0 million and

                                      F-19
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

$19.5 million in royalty expense for the years ended December 31, 2000,
January 2, 2000, and January 3, 1999, respectively, which was included in cost
of sales. Included in accrued expenses at December 31, 2000 and January 2, 1999,
were royalties payable of $12.9 million and $10.6 million, respectively.

    The Gabrielle License imposes obligations on the Company with respect to the
use of sales materials, protection of the licensed trademarks, indemnification
of Gabrielle Studio, the maintenance of public liability insurance and quality
control of products bearing the licensed trademarks or the Donna Karan name. The
Gabrielle License also limits the use of the licensed trademarks in specified
circumstances and in general prohibits any transfer or assignment of the
parties' rights under the Gabrielle License.

    The Gabrielle License may be terminated by Gabrielle Studio upon the failure
of the Company to pay any amount due within 60 days of receipt of notice of such
failure, or if the Company violates the quality control provisions of the
Gabrielle License and fails to initiate and thereafter pursue appropriate
corrective action within 60 days after a final unappealable determination by an
arbitration tribunal or court of competent jurisdiction that such violation has
occurred. The Gabrielle License also may be terminated by Gabrielle Studio upon
the occurrence of, among other events, a "change of control" of the Company,
including certain changes in the ownership of voting securities, an acquisition
by a third party of 30% or more of the voting securities of the Company,
mergers, sales of assets, and certain changes in the composition of the Board of
Directors.

    In January 2001, LVMH Moet Hennessey Louis Vuitton Inc. ("LVMH") consummated
the acquisition of Gabrielle Studio from two of the Company's principal
stockholders and their children's trust. The Company believes that its
relationship under the Gabrielle License will not materially change under this
new ownership.

    In October 1998, the Company and a wholly-owned affiliate of Ms. Donna
Karan, Chairman of the Board and Chief Designer of the Company, entered into a
boutique license agreement (the "Boutique Agreement"), granting the affiliated
entity the right to open and operate a DONNA KARAN NEW YORK Flagship Collection
Store. The Boutique Agreement has an initial five-year term, with two renewal
periods at the affililated entity's option if specified conditions are met. The
store, which is anticipated to open in 2001, will be located at 819 Madison
Avenue in New York City. The Boutique Agreement states that the Company will
provide the affiliated entity with certain management services related to the
operation of the store in exchange for an annual fee equal to the greater of
1.5% of sales and $75,000. The store will also be entitled to offer a limited
amount of non-branded products. In connection with the purchase of Gabrielle
Studio in January 2001, LVMH agreed to assume the rights and obligations of
Ms. Karan's affiliate in connection with the construction and operation of the
DONNA KARAN NEW YORK flagship store. The assumption of such rights and
obligations by LVMH shall be effective no earlier than June 15, 2001 and no
later than September 15, 2001.

    The Company has an employee discount policy, whereby employees of the
Company and their immediate family members may purchase Company products at
specified discounts from the stated wholesale price. As of December 31, 2000
Ms. Donna Karan owed the Company $221,000 for purchases made under this policy.
This amount has been classified in accounts receivable in the accompanying
balance sheet.

    Under a stockholders agreement entered into on June 10, 1996, Ms. Donna
Karan, Mr. Stephan Weiss (officers and principal stockholders of the Company),
their affiliated trusts and Gabrielle Studio, collectively referred to as the
"Karan/Weiss Group," are entitled to designate one member of the Company's board
of directors, in addition to Ms. Karan and Mr. Weiss, as long as the combined

                                      F-20
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

ownership of the shares of the Company's common stock held by members of the
Karan/Weiss Group is not less than 20% of the then outstanding common stock.
Additionally, under the stockholders agreement, Messrs. Tomio Taki and Frank R.
Mori, Takihyo Inc. (principal stockholders of the Company) and affiliates of
Messrs. Taki and Mori, collectively referred to as the "Takihyo Group," are
entitled to designate (1) two members of the Company's board of directors until
such time as the Takihyo Group sells any shares of common stock owned by it,
other than shares distributed to stockholders of Takihyo Inc., and
(2) thereafter, one member of the Company's board of directors as long as the
Takihyo Group owns not less than 10% of the then outstanding common stock.
However, if either Mr. Taki or Mr. Mori is otherwise able to serve, and is
serving, as the one designee of the Takihyo Group, then he will be entitled to
continue to serve as a director as long as the Takihyo Group continues to own
not less than 5% of the then outstanding common stock. The stockholders
agreement provides that none of Mr. Mori, Mr. Taki or any other affiliate of the
Takihyo Group may serve as a director as long as the Takihyo Group has an
ownership interest in, or either Mr. Mori or Mr. Taki is an officer or director
of, any of the Company's competitors. Under the stockholders agreement, the
Karan/Weiss Group, on the one hand, and the Takihyo Group, on the other hand,
have agreed to vote the shares of common stock owned by them for each other's
designees as directors and, in the case of the Takihyo Group, for Ms. Karan and
Mr. Weiss. The designee to the board of directors of the Karan/ Weiss Group and
designees of the Takihyo Group, other than Messrs. Taki or Mori, must be
reasonably satisfactory to the Company's board of directors. Ms. Karan and
Mr. Weiss currently are serving on the Company's board of directors as the only
designees of the Karan/Weiss Group. Mr. Mori currently is serving on the
Company's board of directors as the only designee of the Takihyo Group.

NOTE 11.--ACQUISITIONS

    In January 1999, the Company acquired the assets of three free-standing
retail stores in the United Kingdom which were previously owned and operated by
a Singapore-based company, for approximately $17.4 million. The aggregate
purchase price was financed with working capital and the issuance of
subordinated notes payable which mature in January 2002, and bear interest at
LIBOR.

    The acquisition was accounted for as a purchase business combination, with
any excess of the remaining purchase price over the estimated fair value of the
assets acquired, being recorded as goodwill.

NOTE 12.--STOCK OPTIONS AND RESTRICTED STOCK

    The Company has three plans which reserve shares of common stock for
issuance. One plan is for employees, officers, advisors and independent
consultants of the Company (the "Stock Incentive Plan"). The other two plans are
for non-employee directors (the "Non-Employee Director Stock Option Plan" and
the "Non-Employee Director Restricted Stock Plan"). Options and restricted stock
granted under the plans will become fully vested upon a change in control of the
Company (as defined in the plan). The Company has adopted the disclosure-only
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation cost has been recognized for the stock options
awarded under these plans. If compensation cost for the stock options awarded
had been determined based on the fair value at the grant dates for awards in
fiscal 2000, 1999 and 1998 consistent with the

                                      F-21
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

provisions of SFAS No. 123, the Company's pro forma net income (loss) and net
income (loss) per common share would have been as follows (in thousands, except
per share data):

<Table>
<Caption>
                                                                            YEAR ENDED
                                                              --------------------------------------
                                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                                  2000          2000         1999
                                                              ------------   ----------   ----------
<S>                                                           <C>            <C>          <C>
Net income--as reported.....................................     $19,187       $10,036      $   128
                                                                 =======       =======      =======
Net income (loss)--pro forma................................     $16,732       $ 6,624      $(1,829)
                                                                 =======       =======      =======

Net income (loss) per common share--basic
  As reported...............................................     $  0.89       $  0.46      $  0.01
  Pro forma.................................................     $  0.77          0.31        (0.08)

Net income (loss) per common share--diluted
  As reported...............................................     $  0.87       $  0.46      $  0.01
  Pro forma.................................................     $  0.76          0.31        (0.08)
</Table>

    The pro forma effect on net income for fiscal 2000, 1999 and 1998 is not
representative of the pro forma effect on net income in future years since
compensation cost is allocated on a straight-line basis over the vesting periods
of the grants which extends beyond the reported years.

    The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:

<Table>
<Caption>
                                                            YEAR ENDED
                                              --------------------------------------
                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                  2000          2000         1999
                                              ------------   ----------   ----------
<S>                                           <C>            <C>          <C>
Expected volatility.........................     60.6   %      57.4   %     59.2   %
Average expected option life................   6 years        6 years      6 years
Average risk free interest rate.............     5.1    %       6.7   %      5.1   %
Dividend yield..............................     0.0    %       0.0   %      0.0   %
</Table>

    Under the Stock Incentive Plan, which was amended in fiscal 1997, options to
purchase shares of common stock and awards of restricted shares of common stock
of up to a combined 2,600,000 shares may be granted (includes an award of
105,100 shares granted at the Company's initial public offering and 150,000
shares of restricted common stock (see Note 13)). The exercise price of the
options may not be less than 100% of the market value of a share of common stock
at the time of grant. An incentive stock option may not be exercised within one
year of the date of grant, and no options may be exercised after ten years from
the effective date of the plan. The options granted in fiscal 2000, fiscal 1999
and fiscal 1998 vest on a yearly basis in 33 1/3% increments, beginning on the
first anniversary of the date of grant. Common stock reserved for future grants
under the Stock Incentive Plan aggregated 1,056,420 shares as of December 31,
2000.

    Under the Non-Employee Director Stock Option Plan, options to purchase up to
100,000 shares of common stock may be granted, subject to adjustments in certain
circumstances. Each eligible director, on the initial grant date, is granted
options to purchase 7,500 shares of common stock. Each year, other than with
respect to the year in which an eligible director receives an initial grant of
options, each eligible director will receive an additional option to purchase
1,000 shares of common stock. Upon the exercise of an option, the purchase price
paid will be 100% of the market value of such share at the time of the grant of
the option. Options granted will be exercisable on or after the first
anniversary of the date of grant, and will expire on the tenth anniversary of
the date of grant. Common stock reserved

                                      F-22
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

for future grants under the Non-Employee Director Stock Option Plan aggregated
70,000 shares as of December 31, 2000.

    A summary of the Company's stock option programs as of fiscal 2000, 1999 and
1998 and changes during the years then ended, are presented below:

<Table>
<Caption>
                                                                                  NON-EMPLOYEE DIRECTOR
                                                     STOCK INCENTIVE PLAN           STOCK OPTION PLAN
                                                  ---------------------------   -------------------------
                                                                  WEIGHTED                    WEIGHTED
                                                                  AVERAGE                     AVERAGE
                                                    SHARES     EXERCISE PRICE    SHARES    EXERCISE PRICE
                                                  ----------   --------------   --------   --------------
<S>                                               <C>          <C>              <C>        <C>
Outstanding at December 28, 1997................   1,741,500       $18.74        23,500        $17.98
Granted.........................................     953,717         8.90         3,000         15.56
Forfeited or cancelled..........................  (1,413,707)       20.16            --            --
                                                  ----------                     ------        ------
Outstanding at January 3, 1999..................   1,281,510         9.85        26,500         17.71
Granted.........................................     405,540         6.87         9,500          8.53
Exercised.......................................      (1,459)        6.25            --            --
Forfeited or cancelled..........................    (137,581)       12.12        (1,000)        15.56
                                                  ----------                     ------
Outstanding at January 2, 2000..................   1,548,010         8.80        35,000         15.28
Granted.........................................     131,433         7.44         3,000          7.06
Exercised.......................................      (5,168)        6.41            --            --
Forfeited or cancelled..........................    (905,168)       10.35        (8,000)        19.90
                                                  ----------                     ------
Outstanding at December 31, 2000................     769,107       $ 6.74        30,000        $13.22
                                                  ==========                     ======
</Table>

    The weighted average fair value of options granted during 2000, 1999 and
1998 was $4.52, $4.21 and $5.36 per share, respectively.

    For various price ranges, weighted average characteristics of outstanding
stock options at December 31, 2000 are as follows:

<Table>
<Caption>
                                                            OUTSTANDING                         EXERCISABLE
                                              ----------------------------------------   -------------------------
                                                                           WEIGHTED                    WEIGHTED
                                                          REMAINING        AVERAGE                     AVERAGE
RANGE OF EXERCISE PRICES                      OPTIONS    LIFE (YEARS)   EXERCISE PRICE   OPTIONS    EXERCISE PRICE
------------------------                      --------   ------------   --------------   --------   --------------
<S>                                           <C>        <C>            <C>              <C>        <C>
STOCK INCENTIVE PLAN
  $5.94 to $6.25............................  510,089        6.4            $ 6.24       455,279        $ 6.25
  $7.00 to $7.44............................  251,518        5.8              7.23        72,848          7.16
  $24.00....................................    7,500        5.4             24.00         7,500         24.00
                                              -------                                    -------
  $5.94 to $24.00...........................  769,107        6.2              6.74       535,627          6.62
                                              =======                                    =======

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
  $7.06 to $11.00...........................   13,000        8.6            $ 8.29        10,000        $10.77
  $13.25 to $21.13..........................   17,000        5.6             17.00        17,000         17.00
                                              -------                                    -------
  $7.06 to $21.13...........................   30,000        6.9             13.22        27,000         14.69
                                              =======                                    =======
</Table>

    In January 2000, The Company' Incentive Compensation Subcommittee approved
an exchange program which permitted the Company's executive officers to elect to
have the Company cancel all of their existing vested and unvested options, and
receive an award of restricted shares of common stock intended to have the same
economic value as the options, determined on a Black-Scholes basis. The

                                      F-23
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

restricted shares will vest on the third anniversary of the date of the grant or
earlier in 20% increments if the Company's common stock attains certain price
levels. As a result of the program, options to purchase 770,000 shares were
cancelled and 388,226 restricted shares were awarded. The market value of these
shares on the date of grant has been recorded as unearned compensation and is
being charged to selling, general and administrative expenses over the
corresponding three-year vesting period. In addition, in March 2000, under the
Stock Incentive Plan, the Company awarded 140,791 restricted shares of common
stock to executive officers and certain key employees. The restricted shares
will vest on the fifth anniversary of the date of the grant or earlier in 20%
increments if the Company's common stock attains certain price levels. All of
the restricted shares awarded in 2000 are subject to certain restrictions on
transferability and a risk of forfeiture. The market value of these shares on
the date of grant has been recorded as unearned compensation, and is being
charged to selling, general and administrative expenses over the corresponding
vesting period. Compensation expense recognized during fiscal 2000, 1999 and
1998 related to restricted stock amounted to approximately $1.3 million,
$0.4 million and $0.2 million, respectively, and is included in selling, general
and administrative expenses.

    Under the Non-Employee Director Restricted Stock Plan, each non-employee
director is entitled to receive a grant of 500 shares of common stock as of the
first day of the month following the annual meeting of stockholders, which will
vest on the first anniversary of the date of grant. In addition, the restricted
stock award will become fully vested upon a change in control of the Company (as
defined in the plan).

    The following table summarizes the activity of restricted stock for fiscal
2000, 1999 and 1998:


<Table>
<Caption>
                                                                                       NON-EMPLOYEE
                                                                                         DIRECTOR
                                                          STOCK INCENTIVE PLAN    RESTRICTED STOCK PLAN
                                                         ----------------------   ----------------------
                                                                      WEIGHTED                 WEIGHTED
                                                                      AVERAGE                  AVERAGE
                                                          SHARES     FAIR VALUE    SHARES     FAIR VALUE
                                                         ---------   ----------   ---------   ----------
<S>                                                      <C>         <C>          <C>         <C>
Unvested shares outstanding at December 28, 1997.......   150,000      $10.63           --      $  --
Shares awarded.........................................        --          --           --         --
Shares forfeited.......................................        --          --           --         --
Shares vested..........................................        --          --           --         --
                                                          -------                  -------
Unvested shares outstanding at January 3, 1999.........   150,000       10.63           --         --
Shares awarded.........................................        --          --        1,500      11.00
Shares forfeited.......................................        --          --           --         --
Shares vested..........................................        --          --           --         --
                                                          -------                  -------
Unvested shares outstanding at January 2, 2000.........   150,000       10.63        1,500      11.00
Shares awarded.........................................   529,017        7.44        1,500       7.06
Shares forfeited.......................................    (9,644)       7.44           --         --
Shares vested..........................................        --          --       (1,500)     11.00
                                                          -------                  -------
Unvested shares outstanding at December 31, 2000          669,373      $ 8.15        1,500      $7.06
                                                          =======                  =======
</Table>


NOTE 13.--COMMITMENTS AND CONTINGENCIES

    The Company has employment agreements with key executives which provide for
guaranteed minimum compensation, minimum cash bonuses, stock options and
termination payments and benefits. One employment agreement calls for a
severance package, if the employee is terminated without cause

                                      F-24
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

during the one year period subsequent to a change in control, of three times the
employee's base salary plus three times the bonus compensation for the
immediately prior fiscal year. The employee is also entitled to receive $750,000
on the earlier of six months following a change in control, or termination
without cause on or after a change in control. If these payments, as well as any
other benefits due to the employee, are subject to an excise tax under the
Internal Revenue Code of 1986 as "excess parachute payments", then the employee
will be entitled to receive a tax gross-up so that the employee is in the same
tax position as if there were no such excise tax. This same agreement contains a
provision whereby the Company has granted 150,000 shares of restricted common
stock to the employee. These shares are subject to certain restrictions on
transferability and a risk of forfeiture. The forfeiture provisions expire at
the earlier of five years from the date of grant or upon the attainment of
certain market value goals for the common stock. As of December 31, 2000, all
150,000 shares were subject to the forfeiture provisions. These shares have been
recorded as unearned compensation and are presented as a separate component of
stockholders' equity. The unearned compensation is being charged to selling,
general and administrative expenses over the five-year vesting period, or until
such time as the market value goals are attained, in which case the expense will
be accelerated to match the amounts earned. Total expense for the fiscal 2000,
1999 and 1998 amounted to approximately $319,000, $398,000 and $239,000,
respectively. Another employment agreement contains a deferred compensation
clause whereby the employee is entitled to $1 million plus interest in
October 2005. This amount becomes vested at the rate of 20% per year in the
event the employee is terminated without cause, and becomes fully vested upon a
change in control of the Company.

    The Company has a severance plan that covers certain executive officers and
key employees of the Company. In the event of a change in control, as defined,
each covered employee who is terminated without cause during the one year period
subsequent to, or 90 days prior to, the change in control is entitled to
receive, in addition to severance benefits payable under such individual's
employment contract or other severance benefits due, a lump sum payment equal to
the employees then current annual salary.


    The Company has an Executive Incentive Plan ("EIP") whereby bonuses are
generally paid to certain executive officers and key employees, based on
pre-determined performance criteria. In the event of a change in control, under
the terms of the EIP, the Company is obligated to make at least a pro-rata award
through the date of change in control to each participant who is a participant
at the time of the change in control. An award equal to or less than the
individual target awards may be made by the Company either during or after the
plan year without regard to the actual achievement of the performance goals. All
payments made under this change in control provision will reduce the employee's
final award for such plan year.


    The Company also has a Voluntary Deferred Compensation Plan for Non-Employee
Directors of the Company. This plan provides that an eligible director, at the
election of the director, may defer payment of his or her cash retainer and
meeting fees for five years or until he or she ceases to be a director. The
deferred amounts, at the election of the director, during the deferral period
either (i) are credited with interest at prescribed rates or (ii) are converted
to the equivalent of that number of shares of the Company's common stock (based
on the market price at the time of the deferral) that could be purchased with
the deferred amounts. All payments under the Deferred Compensation Plan are in
the form of cash. The Deferred Compensation Plan provides that lump-sum payments
of all deferred compensation will be made as soon as administratively feasible
following the date that (i) the participating director ceases to be a member of
the Board of Directors or (ii) the Deferred Compensation Plan is terminated.

                                      F-25
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    In December 2000, several putative class actions were filed in state court
in Delaware and New York (collectively the "LVMH Actions") in connection with
the offer of LVMH to acquire the outstanding shares of the Company for a price
of $8.50 per share (the "LVMH Offer"). All of the complaints name the Company,
its Chairman, its Vice Chairman and its Chief Executive Officer as defendants.
Two of the complaints also name the Company's outside Board members as
defendants and three of the complaints also name LVMH as a defendant. None of
the lawsuits specifies any amount of damages sought and, therefore, it is not
practicable to estimate a range of possible loss in connection with this
litigation.

    The LVMH Actions allege, INTER ALIA, that the $8.50 price initially offered
by LVMH to purchase the Company's common stock is inadequate, that the
individual defendants breached their fiduciary duties in connection with the
LVMH Offer and that the Chairman and Vice Chairman furthered their own
interests, at the expense of the Company's interests, in allegedly negotiating
with LVMH concerning the proposed sale of the Company to LVMH.

    Following the commencement of the LVMH Actions, counsel for the Company and
the other defendants entered into (i) a stipulation with counsel for plaintiffs
in the actions filed in New York staying such actions and providing that the
outcome of those actions will be governed by the outcome of the actions filed in
Delaware; and (ii) a stipulation with counsel for plaintiffs in the actions
filed in Delaware providing that such actions will be consolidated and that
defendants need not respond to the individual complaints pending the filing of a
consolidated amended complaint. No consolidated amended complaint has been filed
and discovery has not commenced.

    The Company is also involved from time to time in routine legal matters and
litigation incidental to its business. While the outcome of these matters, as
well as the LVMH Actions, could have a material adverse effect on the Company's
results of operations and cash flows in the period in which such outcome is
determined, in the Company's opinion, the results of these matters are not
expected to have a material effect on the Company's financial position or
results of operations. Accordingly, no reserve for the outcome of these matters
has been recorded in the Company's financial statements as of December 31, 2000.

NOTE 14.--INCOME TAXES

    The Company accounts for income taxes under SFAS No. 109, "Accounting for
Income Taxes" which requires the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred income taxes are
recognized for the tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to differences between
the financial carrying amounts and the tax basis of existing assets and
liabilities.

                                      F-26
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    The income tax provision consists of the following:

<Table>
<Caption>
                                                                            YEAR ENDED
                                                              --------------------------------------
                                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                                  2000          2000         1999
                                                              ------------   ----------   ----------
                                                                          (IN THOUSANDS)
<S>                                                           <C>            <C>          <C>
Current income taxes:
  Federal Taxes.............................................     $ 3,523       $ 2,907      $(2,374)
  State and local taxes.....................................       1,115         1,485        1,245
  Foreign taxes.............................................         521           372        2,227
                                                                 -------       -------      -------
                                                                   5,159         4,764        1,098
Deferred income taxes.......................................      (1,996)       (4,211)        (988)
                                                                 -------       -------      -------
                                                                 $ 3,163       $   553      $   110
                                                                 =======       =======      =======
</Table>

    Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant items
comprising the Company's net deferred tax asset were as follows:

<Table>
<Caption>
                                                                     YEAR ENDED
                                                              -------------------------
                                                              DECEMBER 31,   JANUARY 2,
                                                                  2000          2000
                                                              ------------   ----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>            <C>
Current:
  Uniform inventory capitalization..........................    $  2,728      $  2,717
  Allowance for doubtful accounts and other receivable
    related reserves........................................      15,911        10,428
  Inventory.................................................       5,222         6,572
  Other accruals............................................       9,778        11,123
  Deferred revenue..........................................       2,963         5,989
  Net foreign operating loss carryforwards..................         737         1,074
                                                                --------      --------
                                                                  37,339        37,903
                                                                --------      --------
Non-Current:
  Deferred revenue..........................................      11,562        11,404
  Depreciation..............................................      11,304        13,711
  Foreign tax credit carryforwards..........................       1,742         2,933
                                                                --------      --------
                                                                  24,608        28,048
                                                                --------      --------

Valuation allowance.........................................     (14,000)      (20,000)
                                                                --------      --------
                                                                $ 47,947      $ 45,951
                                                                ========      ========
</Table>

    The Company has available foreign net operating loss carryforwards of
approximately $2.4 million to offset future taxable income. The foreign net
operating loss carryforwards do not expire. In addition, the Company has foreign
tax credit carryforwards of approximately $1.7 million which expire from fiscal
2002 through fiscal 2004.

    Realization of the future tax benefits related to the deferred tax assets is
dependent on many factors including the Company's ability to generate sufficient
taxable income within the net operating loss carry forward period and potential
limitations imposed by the Internal Revenue Code. Due to the inherent
uncertainties in estimating future taxable income, the Company recorded a
valuation

                                      F-27
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

allowance of $24.0 million in fiscal 1997. During fiscal 2000 and 1999, the
Company recognized certain deferred tax assets and reduced the valuation
allowance by $6.0 million and $4.0 million, respectively, based upon taxable
income in those years. The valuation allowances at December 31, 2000 and
January 2, 2000 were $14.0 million and $20.0 million, respectively.

    The foreign and domestic components of income before income taxes were a
foreign income of $4.8 million and domestic income of $17.5 million in 2000 and
foreign loss of $4.1 million and domestic income of $14.6 million in 1999.

    A reconciliation between the provision for income taxes computed by applying
the statutory Federal income tax rate to income before taxes and the actual
provision for income taxes is as follows:

<Table>
<Caption>
                                                                            YEAR ENDED
                                                              --------------------------------------
                                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                                  2000          2000         1999
                                                              ------------   ----------   ----------
                                                                          (IN THOUSANDS)
<S>                                                           <C>            <C>          <C>
Federal statutory rate......................................     $ 7,822       $ 3,706      $    83
State and local taxes, net of Federal tax benefits..........         892           711          770
Taxes related to foreign income, net of credits.............        (619)         (389)      (1,080)
Valuation allowance.........................................      (6,000)       (4,000)          --
Other items, net............................................       1,068           525          337
                                                                 -------       -------      -------
                                                                 $ 3,163       $   553      $   110
                                                                 =======       =======      =======
Effective tax rate..........................................        14.2%          5.2%        46.2%
                                                                 =======       =======      =======
</Table>

    Exclusive of the impact of the valuation allowance, the Company's effective
tax rate was 41.0% and 43.0% in fiscal 2000 and fiscal 1999, respectively.

NOTE 15.--COMPREHENSIVE INCOME (LOSS)

    Comprehensive income (loss) is comprised of net income and other
comprehensive income (loss), which contains gains or losses from foreign
currency translation. The change in accumulated other comprehensive loss,
exclusive of deferred income taxes, for the years ended at December 31, 2000 and
January 2, 2000 is as follows:

<Table>
<Caption>
                                                                     YEAR ENDED
                                                              -------------------------
                                                              DECEMBER 31,   JANUARY 2,
                                                                  2000          2000
                                                              ------------   ----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>            <C>
Foreign currency translation, beginning of year.............     $  (991)      $(1,206)
Current period income (loss)................................        (424)          215
                                                                 -------       -------
Foreign currency translation, end of year...................     $(1,415)      $  (991)
                                                                 =======       =======
</Table>

                                      F-28
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    Comprehensive income (loss) is as follows:

<Table>
<Caption>
                                                                        YEAR ENDED
                                                   -----------------------------------------------------
                                                   DECEMBER 31, 2000   JANUARY 2, 2000   JANUARY 3, 1999
                                                   -----------------   ---------------   ---------------
                                                                      (IN THOUSANDS)
<S>                                                <C>                 <C>               <C>
Net income.......................................       $19,187            $10,036            $ 128

Foreign currency translation adjustments,
  Before taxes...................................          (424)               215             (751)
Provision (benefit) for taxes(1).................            --                 --               --
                                                        -------            -------            -----
Foreign currency translation adjustments,
  net of taxes...................................          (424)               215             (751)
                                                        -------            -------            -----
Comprehensive income.............................       $18,763            $10,251            $(623)
                                                        =======            =======            =====
</Table>

------------------------

(1) For fiscal 2000, 1999 and 1998 there was no sale or liquidation of the
    Company's investment in a foreign entity. As such, no reclassification
    adjustments were required and gross amounts were displayed exclusive of any
    provision for income taxes.

                                      F-29
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 16.--SEGMENT INFORMATION

    The Company has three reportable business segments: wholesale, licensing,
and retail. The Company's wholesale business consists of three divisions:
womenswear, menswear, and accessories, all of which sell products under the
DONNA KARAN NEW YORK and DKNY brands to department stores, specialty stores,
boutiques, and to the Company's owned and licensed free-standing stores. The
accessories division also sells products under the DKNY JEANS, DKNY ACTIVE and
CITY DKNY brands. The Company also sells products in Europe under the DKNY JEANS
brand. The licensing division forms strategic alliances with companies, through
which it licenses the right to develop, market, and sell products under the
DONNA KARAN NEW YORK, DKNY, DKNY JEANS, DKNY ACTIVE and CITY DKNY brands, and
licenses, on a royalty-free basis, free-standing stores under the DONNA KARAN
NEW YORK, DKNY and DKNY JEANS names. The retail division operates outlet stores
and full-price, domestic free-standing retail stores.

    The Company's reportable segments are individual business units that offer
different products and services. They are managed separately because each
business requires different strategic initiatives, promotional campaigns,
marketing, and advertising, based upon its own individual positioning in the
market.

    The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based upon profit or loss from operations before interest expense
and interest income, nonrecurring gains and losses, and income taxes.

    Information related to the Company's geographic segments are as follows:

<Table>
<Caption>
                                              DECEMBER 31,   JANUARY 2,   JANUARY 3,
                                                  2000          2000         1999
                                              ------------   ----------   ----------
                                                          (IN THOUSANDS)
<S>                                           <C>            <C>          <C>
Net revenues:
United States...............................    $434,845      $462,752     $422,947
Japan.......................................      22,102        27,842       46,528
Other.......................................     205,748       171,243      153,171
                                                --------      --------     --------
                                                $662,695      $661,837     $622,646
                                                ========      ========     ========
</Table>

    In fiscal 2000, the Company had one customer who accounted for 10.2% of
revenues. In fiscal 1998 sales to entities affiliated with a Singapore-based
company, including DKJ, and certain free-standing international retail stores,
were 10.5% of the Company's revenues. In fiscal 1999, no customer accounted for
greater than 10% of revenues.

    Sales to Japan for the quarter ended March 28, 1998 were made to a 30% owned
subsidiary (see Note 6).

                                      F-30
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

    Intersegment sales and transfers are recorded at amounts that approximate
cost. All intercompany revenues and profit or loss is eliminated in
consolidation.

<Table>
<Caption>
                                               WHOLESALE      LICENSING       RETAIL            TOTAL
                                               ---------      ---------      ---------         --------
                                                                    (IN THOUSANDS)
<S>                                            <C>            <C>            <C>               <C>
DECEMBER 31, 2000
Net revenues from external customers.........  $490,684        $45,246       $ 126,765         $662,695
Intersegment revenues........................    68,834             --              --           68,834
Segment operating profit (loss)..............    16,068(1)      21,260         (12,383)(1)       24,945
Segment assets...............................   258,910         10,100          55,204          324,214

JANUARY 2, 2000
Net revenues from external customers.........  $496,288        $35,142(3)    $ 130,407         $661,837
Intersegment revenues........................    74,179             --              --           74,179
Segment operating profit (loss)..............    14,556(2)      18,022(3)      (17,899)(2)(4)    14,679
Segment assets...............................   240,440          4,729          59,122          304,291

JANUARY 3, 1999
Net revenues from external customers.........   510,872         18,458          93,316          622,646
Intersegment revenues........................    56,420             --              --           56,420
Segment operating profit (loss)..............    11,999          6,382         (16,116)           2,265
Segment assets...............................   242,399          1,421          34,909          278,729
</Table>

------------------------

(1) In fiscal 2000, the Company reversed previously recorded and other
    non-recurring charges of $1.6 million that were no longer deemed necessary,
    and recorded costs related to the LVMH Merger Offer of $2.4 million.
    Exclusive of these charges and credits, operating profit (loss) for the
    wholesale and retail segments would have been $17.8 million and
    ($13.4) million, respectively.

(2) In December 1999, the Company recorded restructuring and non-recurring
    charges related to the consolidation of divisions, the impairment of
    under-performing assets and the closing of outlet stores (see Note 9).
    Exclusive of these charges, operating profit (loss) for the wholesale and
    retail segments was $18.2 million and ($12.0) million, respectively.

(3) In fiscal 1999, includes recognition of a one-time licensing credit of
    $5.0 million, related to the ELI beauty license (see Note 8). Exclusive of
    the one-time licensing credit, segment net revenues and operating profit in
    fiscal 1999 was $30.1 million and $13.0 million, respectively.

(4) In fiscal 1999, The Company expensed $1.9 million of costs associated with
    the opening of its DKNY flagship store on Madison Avenue in New York City,
    New York (see Note 1). Prior to the charges (see note (2) above) and the
    opening costs, segment operating loss in fiscal 1999 was $10.1 million.

                                      F-31
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 17.--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

    The following summarizes the unaudited quarterly operating results of the
Company for fiscal 2000 and fiscal 1999 (in thousands, except per share
amounts):

<Table>
<Caption>
                                                                     QUARTER ENDED
                                                    -----------------------------------------------
2000                                                APRIL 2    JULY 2(1)    OCT. 1    DEC. 31(2)(3)
----                                                --------   ---------   --------   -------------
<S>                                                 <C>        <C>         <C>        <C>
Net revenues......................................  $172,770   $120,513    $203,741     $165,671
Gross profit......................................    55,979     32,324      72,648       56,964
Net income (loss).................................     3,329     (6,982)     13,980        8,860
Net income (loss) per common share:
  Basic...........................................      0.15      (0.32)       0.65         0.41
  Diluted.........................................      0.15      (0.32)       0.63         0.40
</Table>

<Table>
<Caption>
                                                                     QUARTER ENDED
                                                      -------------------------------------------
1999                                                  APRIL 4     JULY 4    OCT. 3(4)   JAN. 2(5)
----                                                  --------   --------   ---------   ---------
<S>                                                   <C>        <C>        <C>         <C>
Net revenues........................................  $160,720   $122,033   $202,511    $176,573
Gross profit........................................    47,199     33,638     72,498      57,816
Net income (loss)...................................     2,163     (7,870)    12,951       2,792
Net income (loss) per common share:
  Basic.............................................      0.10      (0.36)      0.60        0.13
  Diluted...........................................      0.10      (0.36)      0.60        0.13
</Table>

------------------------

(1) In fiscal 2000, includes the reversal of previously recorded restructuring
    and other non-recurring charges of $1.0 million that were no longer deemed
    necessary. Exclusive of these reversals, net loss per common share on a
    fully diluted basis was $0.34 per share.

(2) In fiscal 2000, includes the reversal of previously recorded restructuring
    and other non-recurring charges of $0.6 million that were no longer deemed
    necessary, costs related to a proposed merger of $2.4 million, and a $6.0
    million reduction in a previously recorded income tax valuation allowance
    (see Note 14). Exclusive of these charges and credits, net income per common
    share on a fully diluted bases was $0.18 per share.

(3) In the fourth quarter of fiscal 2000, gross profit includes $1.4 million, or
    $0.04 per share on a fully diluted basis, as a result of the resolution of
    certain amounts with third parties related to product costs, offset in part
    by unfavorable inventory variances. The net effect in the full fiscal year
    2000 for these items was not material.

(4) In fiscal 1999, includes recognition of the one-time licensing credit,
    relating to the ELI beauty license, amounting to $5.0 million (see Note 8).
    Exclusive of the licensing credit, net income per common share on a fully
    diluted basis was $0.46 per share.

(5) In fiscal 1999, includes restructuring and other non-recurring charges of
    $9.6 million (see Note 9) and a $4.0 million reduction in a previously
    recorded income tax valuation allowance (see Note 14). Exclusive of these
    charges and credits, net income per common share on a fully diluted basis
    was $0.19 per share.

                                      F-32
<Page>
                         DONNA KARAN INTERNATIONAL INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 18.--SUBSEQUENT EVENT

    On April, 2, 2001, the Company and LVMH announced that they had entered into
an Agreement and Plan of Merger, dated as of March 31, 2001 (the "Merger
Agreement"), which sets forth the terms and conditions of the proposed
acquisition of the Company by LVMH. Pursuant to the Merger Agreement, an
indirect wholly-owned subsidiary of LVMH will be merged with and into the
Company (the "Merger") and the Company will survive the Merger as an indirect
subsidiary of LVMH. The Merger is subject to the approval of the stockholders of
the Company and the satisfaction of other customary closing conditions,
including the receipt of required regulatory approvals.

NOTE 19.--SUBSEQUENT EVENT


    The Company's results of operations in the second and third quarters of
fiscal 2001, having been affected by business and economic conditions, are below
forecast and are expected to continue below forecast for the balance of the
fiscal year. In August 2001, the Company entered into an agreement with
Gabrielle Studio, Inc. (an LVMH affiliate) pursuant to which Gabrielle Studio,
Inc. agreed to defer until June 30, 2002 the payment of royalties owed by the
Company for the second, third and fourth quarters of 2001. In August 2001, the
Company also amended its credit facility. The August 2001 credit facility
amendment provides (i) that an event of default will occur on January 7, 2002 if
the merger with LVMH has not occurred, (ii) for changes in the application of
credit facility covenant calculations so as to exclude from such calculations,
the royalty payments deferred by the above referenced agreement with Gabrielle
Studio, Inc., together with certain unpaid severance and merger expenses, and
(iii) that the Company must maintain a minimum of $20 million in availability
under the credit facility from December 15, 2001 through the expiration of the
credit facility. In October 2001, the Company further amended its credit
facility. The October amendment, while waiving the need for the Company to meet
certain financial covenants as of the end of the third quarter, also reduced the
amount the Company can borrow under the facility to $102 million for the month
of November 2001, $90 million for the period from December 1, 2001 through
December 14, 2001 and $85 million thereafter. It also requires that the Company
maintain a minimum credit availability of $4 million for the period from October
22, 2001 through October 31, 2001, $8 million for the period from November 1,
2001 through November 14, 2001, and $11 million for the period from November 15,
2001 through December 14, 2001, in addition to the $20 million requirement for
the period subsequent to December 14, 2001 that was contained in the August
amendment. In addition to the October 2001 and August 2001 credit facility
amendments, in June 2001 the Company also amended its credit facility enabling
the Company to borrow amounts in excess of its calculated borrowing base during
the months of June, July and August 2001. The Company believes that its results
of operations for the balance of the fiscal year will cause it to violate
several year-end financial covenants of its most recently amended credit
facility. The failure of the Merger with LVMH to close by January 7, 2002 will
also cause an event of default under the credit agreement. The Company believes
that the Merger will occur prior to January 7, 2002, and if not, that it will be
required to amend its existing credit facility (which expires May, 2003), or
obtain an alternate source of long-term financing. However, there can be no
assurances that an amended credit facility or any new financing will be
available and, if available, that the terms will be as favorable as the existing
terms in the current credit facility.


                                      F-33
<Page>
                               INDEX TO EXHIBITS

<Table>
<Caption>
      EXHIBITS
---------------------
<C>                     <S>
         2.1            Agreement and Plan of Contribution, dated as of June 10,
                        1996, among the Company, Takihyo Inc., Donna Karan, Stephan
                        Weiss, Stephan Weiss, as trustee under Trust Agreement for
                        the benefit of Lisa Weiss Keyes, Corey Weiss, and Gabrielle
                        Karan, Stephan Weiss, as trustee under Trust Agreement for
                        the benefit of Donna Karan, Gabrielle Studio, Inc., Tomio
                        Taki, Frank R. Mori, Christopher Mori and Heather Mori
                        (Incorporated by reference from Exhibit 2.1 to the Company's
                        Registration Statement on Form S-1, dated June 27, 1996)

         3.1            Amended and Restated Certificate of Incorporation of the
                        Company (Incorporated by reference from Exhibit 3.2 to the
                        Company's Registration Statement on Form S-1, dated
                        June 27, 1996)

         3.2            Bylaws of the Company (Incorporated by reference from
                        Exhibit 3.3 to the Company's Registration Statement on
                        Form S-1, dated June 27, 1996)

         3.3            Amendment No. 1 to By-laws of the Company (Incorporated by
                        reference from Exhibit 3.1 to the Company's Form 10-Q for
                        the quarter ended September 28, 1997)

        10.1            Second Amended and Restated Credit Agreement, dated as of
                        January 29, 1998 among The Donna Karan Company, The Donna
                        Karan Company Store, G.P., Donna Karan Studio, DK Footwear
                        Partners, the institutions time to time parties thereto, and
                        Citibank, N.A., as administrative agent (Incorporated by
                        reference from Exhibit 10.1 to the Company's Form 10-K for
                        the year ended December 28, 1997)

        10.2            Registration Rights Agreement, dated as of June 10, 1996,
                        among the Company, Donna Karan, Stephan Weiss, Stephan
                        Weiss, as trustee under Trust under trust agreement for the
                        benefit of Lisa Weiss Keyes, Corey Weiss, and Gabrielle
                        Karan, Stephan Weiss, as trustee under Trust Agreement for
                        the benefit of Donna Karan, Gabrielle Studio, Inc., Takihyo
                        Inc., Tomio Taki, Frank R. Mori, Christopher Mori, and
                        Heather Mori (Incorporated by reference from Exhibit 10.4 to
                        the Company's Registration Statement on Form S-1, dated
                        June 27, 1996)

        10.3            License Agreement, dated as of July 3, 1996, between
                        Gabrielle Studio, Inc. and Donna Karan Studio (Incorporated
                        by reference from Exhibit 10.5 to the Company's Registration
                        Statement on Form S-1, dated June 27, 1996)

        10.4            Guaranty of License, dated as of July 3, 1996, from the
                        Company to Gabrielle Studio, Inc. (Incorporated by reference
                        from Exhibit 10.6 to the Company's Registration Statement on
                        Form S-1, dated June 27, 1996)

        10.5            License Agreement, dated as of July 3, 1996, between Donna
                        Karan Studio and Stephan Weiss (Incorporated by reference
                        from Exhibit 10.7 to the Company's Registration Statement on
                        Form S-1, dated June 27, 1996)

        10.6            Employment Agreement, dated as of July 3, 1996, between the
                        Company and Donna Karan (Incorporated by reference from
                        Exhibit 10.8 to the Company's Registration Statement on
                        Form S-1, dated June 27, 1996)*

        10.7            Employment Agreement, dated as of July 3, 1996, between the
                        Company and Stephan Weiss (Incorporated by reference from
                        Exhibit 10.9 to the Company's Registration Statement on
                        Form S-1, dated June 27, 1996)*

        10.8            Stockholders Agreement, dated as of June 10, 1996, among
                        Donna Karan, Stephan Weiss. Stephan Weiss as trustee under
                        Trust Agreement for the benefit of Lisa Weiss Keyes,
                        Corey Weiss, and Gabrielle Karan, Stephan Weiss as trustee
                        under Trust Agreement for the benefit of Donna Karan,
                        Gabriel Studio, Inc., Takihyo Inc., Tomio Taki,
                        Frank R. Mori, Christopher Mori, and Heather Mori
                        (Incorporated by reference from Exhibit 10.10 to the
                        Company's Registration Statement on Form S-1, dated
                        June 27, 1996)
</Table>

<Page>

<Table>
<Caption>
      EXHIBITS
---------------------
<C>                     <S>
        10.9            Employment Agreement, dated as of October 15, 1996, between
                        The Donna Karan Company and Joseph R. Parsons (Incorporated
                        by reference from Exhibit 10.14 to the Company's Form 10-K
                        for the year ended December 29, 1996)*

        10.10           Employment Agreement, dated as of July 25, 1997, among the
                        Company, The Donna Karan Company and John D. Idol, and
                        related bonus programs. (Incorporated by reference from
                        Exhibit 10.5 to the Company's Form 10-Q for the quarter
                        ended September 28, 1997)*

        10.11           Amendment No. 1 to Employment Agreement between the Company
                        and Donna Karan (Incorporated by reference from
                        Exhibit 10.2 to the Company's 10-Q for the quarter ended
                        September 28, 1997)*

        10.12           Amendment No. 1 to Employment Agreement between the Company
                        and Stephan Weiss (Incorporated by reference from
                        Exhibit 10.3 to the Company's Form 10-Q for the quarter
                        ended September 28, 1997)*

        10.13           Amendment No. 2 to Employment Agreement between the Company
                        and Stephan Weiss (Incorporated by reference from
                        Exhibit 10.4 to the Company's Form 10-Q for the quarter
                        ended September 28, 1997)*

        10.14           Agreement, dated as of September 30, 1997, between The
                        Donna Karan Company and Estee Lauder Inc. (Incorporated by
                        reference from Exhibit 2.1 to the Company's Form 8-K, dated
                        November 10, 1997)

        10.15           Amended and Restated Second Amendment, dated as of
                        October 30, 1998, among The Donna Karan Company. The
                        Donna Karan Company Store, G.P., Donna Karan Studio, and
                        DK Footwear Partners, the financial institutions time to
                        time parties thereto as lenders, the financial institutions
                        from time to time parties thereto as issuing banks, and
                        Citibank, N.A., as administrative agent (Incorporated by
                        reference from Exhibit 10.20 to the Company's Form 10-K for
                        the year ended January 3, 1999)

        10.16           Employment Agreement, dated as of December 18, 1998, between
                        the Company and Lee Goldenberg. (Incorporated by reference
                        from Exhibit 10.21 to the Company's Form 10-K for the year
                        ended January 3, 1999)*

        10.17           Voluntary Deferred Compensation Plan for Non-Employee
                        Directors (Incorporated by reference from Exhibit 10.3 to
                        the Company's Form 10-Q for the quarter ended June 28,
                        1998)*

        10.18           Amendment No. 2 to Employment Agreement, dated as of
                        November 1, 1999, by and between the Company and Donna Karan
                        (Incorporated by reference from Exhibit 10.25 to the
                        Company's Form 10-K for the year ended January 2, 2000)*

        10.19           Third Amendment, dated as of May 15, 1999, among The Donna
                        Karan Company, The Donna Karan Company Store, G.P., Donna
                        Karan Studio, and DK Footwear Partners, the financial
                        institutions from time to time parties thereto as lenders,
                        the financial institutions from time to time parties thereto
                        as issuing banks, Citibank, N.A., as administrative agent,
                        The Chase Manhattan Bank and Nationsbank, N.A., as co-agents
                        (Incorporated by reference from Exhibit 10.27 to the
                        Company's Form 10-K for the year ended January 2, 2000)

        10.20           Fourth Amendment, dated as of February 14, 2000, among The
                        Donna Karan Company, The Donna Karan Company Store, G.P.,
                        Donna Karan Studio, and DK Footwear Partners, the financial
                        institutions from time to time parties thereto as lenders,
                        the financial institutions from time to time parties thereto
                        as issuing banks, Citibank, N.A., as administrative agent,
                        The Chase Manhattan Bank and Nationsbank, N.A., as co-agents
                        (Incorporated by reference from Exhibit 10.28 to the
                        Company's Form 10-K for the year ended January 2, 2000)

        10.21           Fifth Amendment, dated as of June 9, 2000, among The Donna
                        Karan Company, The Donna Karan Company Store, G.P., Donna
                        Karan Studio, and DK Footwear Partners, the financial
                        institutions from time to time parties thereto as lenders,
                        the financial institutions from time to time parties thereto
                        as issuing banks, Citibank, N.A., as administrative agent,
                        The Chase
</Table>

<Page>

<Table>
<Caption>
      EXHIBITS
---------------------
<C>                     <S>
                        Manhattan Bank and Nationsbank, N.A., as co-agents.
                        (Incorporated by reference from Exhibit 10.1 to the
                        Company's Form 10-Q for the quarter ended July 2, 2000)

        10.22           Sixth Amendment, dated as of November 20, 2000, among The
                        Donna Karan Company, The Donna Karan Company Store, G.P.,
                        Donna Karan Studio, and DK Footwear Partners, the financial
                        institutions from time to time parties thereto as issuing
                        banks, Citibank, N.A., as administrative agent, The Chase
                        Manhattan Bank and Nationsbank, N.A., as co-agents.**

        10.23           Amendment, dated as of November 30, 2000, to the Employment
                        Agreement among the Company, The Donna Karan Company, and
                        John D. Idol and related letter agreement, dated as of
                        December 14, 2000*/**

        10.24           Employment Agreement, dated as of October 10, 2000, between
                        The Donna Karan Company and Joseph B Parsons*/**

        10.25           Amendment, dated October 10, 2000, to the Employment
                        Agreement between the Company and Lee Goldenberg*/**

        10.26           Donna Karan International Inc. 1996 Non-Employee Director
                        Stock Option Plan (as amended and restated through
                        December 8, 2000)*/**

        10.27           Donna Karan International Inc. 1996 Stock Incentive Plan (as
                        amended and restated through December 8, 2000)*/**

        10.28           Donna Karan International Inc. Wealth Accumulation Plan,
                        effective December 28, 1997 (amended and restated through
                        December 8, 2000)*/**

        10.29           Donna Karan International Inc. Executive Incentive Plan,
                        effective December 28, 1997 (amended and restated through
                        December 8, 2000)*/**

        10.30           Donna Karan International Inc. 1998 Non-Employee Director
                        Restricted Stock Plan (as amended and restated through
                        December 8, 2000)*/**

        10.31           Donna Karan International Inc. Deferred Bonus Plan,
                        effective as of February 1, 1999 (amended and restated
                        through December 8, 2000)*/**

        10.32           Donna Karan International Inc. Executive Severance Plan,
                        effective as of November 30, 2000 (as amended through
                        December 8, 2000)*/**

        10.33           Amendment, dated as of March 30, 2001, to the Employment
                        Agreement among the Company. The Donna Karan Company, and
                        John D. Idol*/**

        21.1            Subsidiaries of the Company**

        23.1            Consent of Ernst & Young LLP
</Table>

------------------------

*   Exhibit is a management contract or compensatory plan or arrangement

**  Previously Filed
<Page>
                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to the Annual Report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized.


<Table>
<S>                                          <C>  <C>
                                             DONNA KARAN INTERNATIONAL INC.
                                             (Registrant)

Dated:  October 26, 2001                     By:             /s/ JOSEPH B. PARSONS
                                                  -------------------------------------------
                                                               Joseph B. Parsons,
                                                     CHIEF FINANCIAL AND OPERATIONS OFFICER
</Table>