<PAGE>

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

                                   FORM 10-Q


(Mark One)

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

        For the quarterly period ended October 28, 2006

                                      OR

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

        For the transition period from ____________ to ____________


Commission File Number 1-7340

                               KELLWOOD COMPANY
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


            DELAWARE                                   36-2472410
-----------------------------------         ---------------------------------
   (State or other jurisdiction                       (IRS Employer
 of incorporation or organization)               Identification Number)

600 KELLWOOD PARKWAY, P.O. BOX 14374, ST. LOUIS, MO                        63178
------------------------------------------------------                ----------
     (Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code                (314) 576-3100

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 whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large Accelerated Filer [ ]    Accelerated Filer [X]   Non-Accelerated Filer [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange  Act).  YES [ ]    NO [X]

Number of shares of common stock, par value $0.01, outstanding at October 28,
2006: 25,161,044.


                                      1

<PAGE>
<PAGE>


<TABLE>
                                                KELLWOOD COMPANY
                                                ----------------

                                                     INDEX
                                                     -----


<CAPTION>
                                                                                                       Page No.
                                                                                                       --------
<C>                                                                                                    <C>
PART I.    FINANCIAL INFORMATION

         Item 1.  Financial Statements (Unaudited):

                  Condensed Consolidated Balance Sheets                                                    3

                  Condensed Consolidated Statements of Operations                                          4

                  Condensed Consolidated Statements of Cash Flows                                          5

                  Notes to Condensed Consolidated Financial Statements                                     6

         Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations                                         19

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk                              36

         Item 4.  Controls and Procedures                                                                 36


PART II.   OTHER INFORMATION

         Item 6.  Exhibits                                                                                37
</TABLE>


                                      2

<PAGE>
<PAGE>

PART I.  FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
----------------------------

<TABLE>
                                          KELLWOOD COMPANY AND SUBSIDIARIES
                                          ---------------------------------
                                  CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                  -------------------------------------------------
                                                (Amounts in thousands)


<CAPTION>
                                                              January 28,          October 29,         October 28,
                                                                 2006                 2005                2006
                                                          -----------------    -----------------    -----------------
<C>                                                       <C>                  <C>                  <C>
ASSETS
------
Current assets:
    Cash and cash equivalents                             $         406,706    $         252,445    $         394,349
    Receivables, net                                                278,270              320,275              324,587
    Inventories                                                     219,639              204,843              225,752
    Current deferred taxes and prepaid expenses                      45,976               56,779               44,243
    Current assets of discontinued operations                        90,211              102,519               25,713
                                                          -----------------    -----------------    -----------------
         Total current assets                                     1,040,802              936,861            1,014,644

Property, plant and equipment, net                                   78,174               77,237               73,233
Intangible assets, net                                              160,027              162,569              152,335
Goodwill                                                            200,837              192,346              200,887
Other assets                                                         26,506               27,568               23,454
Long-term assets of discontinued operations                           5,798                7,324                5,186
                                                          -----------------    -----------------    -----------------
Total assets                                              $       1,512,144    $       1,403,905    $       1,469,739
                                                          =================    =================    =================


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
    Notes payable and current portion
       of long-term debt                                  $          13,571    $              13    $          16,556
    Accounts payable                                                160,769              138,939              161,129
    Accrued salaries and employee benefits                           39,873               37,429               38,982
    Other accrued expenses                                           93,849               55,923               50,658
    Current liabilities of discontinued operations                   43,584               24,807               19,908
                                                          -----------------    -----------------    -----------------
         Total current liabilities                                  351,646              257,111              287,233

Long-term debt                                                      494,806              469,768              489,366
Deferred income taxes and other                                      56,325               77,924               66,891
Stockholders' equity:
    Common stock                                                    272,073              271,990              278,176
    Retained earnings                                               499,613              491,201              511,717
    Accumulated other comprehensive loss                             (8,634)             (10,310)              (9,331)
    Less treasury stock, at cost                                   (153,685)            (153,779)            (154,313)
                                                          -----------------    -----------------    -----------------
    Total stockholders' equity                                      609,367              599,102              626,249
                                                          -----------------    -----------------    -----------------

Total liabilities and stockholders' equity                $       1,512,144    $       1,403,905    $       1,469,739
                                                          =================    =================    =================


See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                     3

<PAGE>
<PAGE>

<TABLE>
                                           KELLWOOD COMPANY AND SUBSIDIARIES
                                           ---------------------------------
                              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                              -----------------------------------------------------------
                                     (Amounts in thousands, except per share data)


<CAPTION>
                                                            Three months ended                  Nine months ended
                                                      -------------------------------   -------------------------------
                                                        October 29,      October 28,      October 29,      October 28,
                                                           2005             2006             2005             2006
                                                      --------------   --------------   --------------   --------------
<C>                                                   <C>              <C>              <C>              <C>
Net sales                                             $      519,962   $      516,397   $    1,515,564   $    1,469,822
Cost of products sold                                        417,203          402,621        1,199,894        1,159,779
                                                      --------------   --------------   --------------   --------------
Gross profit                                                 102,759          113,776          315,670          310,043
Selling, general and administrative expenses                  80,169           82,227          246,814          243,229
Stock option expense                                               -              468                -            3,877
Amortization of intangible assets                              2,572            2,628            8,143            7,692
Impairment, restructuring and
    other non-recurring charges                                2,941           19,041           39,968           25,957
Interest expense, net                                          5,831            3,613           18,376           11,478
Other income, net                                               (389)            (614)            (882)          (1,937)
                                                      --------------   --------------   --------------   --------------
Earnings before income taxes                                  11,635            6,413            3,251           19,747
Income taxes                                                   3,756              892          (11,416)           5,202
                                                      --------------   --------------   --------------   --------------
Net earnings from continuing operations                        7,879            5,521           14,667           14,545
Net earnings (loss) from discontinued operations               8,309            2,554          (65,592)           9,890
                                                      --------------   --------------   --------------   --------------
Net earnings (loss)                                   $       16,188   $        8,075   $      (50,925)  $       24,435
                                                      ==============   ==============   ==============   ==============

Weighted average shares outstanding:
    Basic                                                     26,739           25,722           27,434           25,682
                                                      ==============   ==============   ==============   ==============

    Diluted                                                   26,799           25,834           27,559           25,820
                                                      ==============   ==============   ==============   ==============

Earnings (loss) per share:
    Basic:
      Continuing operations                           $         0.29   $         0.21   $         0.53   $         0.57
      Discontinued operations                                   0.31             0.10            (2.39)            0.39
                                                      --------------   --------------   --------------   --------------
      Net earnings (loss)                             $         0.61   $         0.31   $        (1.86)  $         0.95
                                                      ==============   ==============   ==============   ==============
    Diluted:
      Continuing operations                           $         0.29   $         0.21   $         0.53   $         0.56
      Discontinued operations                                   0.31             0.10            (2.38)            0.38
                                                      --------------   --------------   --------------   --------------
      Net earnings (loss)                             $         0.60   $         0.31   $        (1.85)  $         0.95
                                                      ==============   ==============   ==============   ==============

Dividends paid per share                              $         0.16   $         0.16   $         0.48   $         0.48
                                                      ==============   ==============   ==============   ==============


See accompanying notes to condensed consolidated financial statements.
</TABLE>


                                     4

<PAGE>
<PAGE>

<TABLE>
                                          KELLWOOD COMPANY AND SUBSIDIARIES
                                          ---------------------------------
                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                             -----------------------------------------------------------
                                                (Amounts in thousands)

<CAPTION>
                                                                                          Nine months ended
                                                                               --------------------------------------
                                                                                   October 29,         October 28,
                                                                                      2005                2006
                                                                               -----------------    -----------------
<C>                                                                            <C>                  <C>
OPERATING ACTIVITIES:

Net (loss) earnings                                                            $         (50,925)   $          24,435

Add/(deduct) items not affecting operating cash flows:
     Depreciation and amortization                                                        30,950               26,689
     Stock-based compensation expense                                                          -                3,877
     Deferred income taxes and other                                                      (9,235)               1,391
     Incremental tax benefits from stock options exercised                                     -                 (256)
     Non-cash adjustments related to impairment, restructuring
         and other non-recurring charges                                                  92,595               15,097
Changes in working capital components:
     Receivables, net                                                                    (11,217)             (14,923)
     Inventories                                                                          65,852               (1,314)
     Prepaid expenses                                                                     (7,199)              (3,804)
     Accounts payable and accrued expenses                                               (24,013)              (4,549)
     Payment of liabilities associated with the 2005 Restructuring Plan                   (5,131)             (23,626)
     Current deferred and accrued income taxes                                            12,193                1,613
                                                                               -----------------    -----------------
Net cash provided by operating activities                                                 93,870               24,630
                                                                               -----------------    -----------------

INVESTING ACTIVITIES:
Additions to property, plant and equipment                                               (14,787)             (13,875)
Acquisitions (additional cash purchase consideration)                                    (12,178)              (8,541)
Receipts for note receivable                                                               2,063                2,063
Dispositions of fixed assets                                                               3,762                  392
                                                                               -----------------    -----------------
Net cash used in investing activities                                                    (21,140)             (19,961)
                                                                               -----------------    -----------------

FINANCING ACTIVITIES:
Borrowings of notes payable                                                                    -               67,391
Payments of notes payable                                                                      -              (69,956)
Decrease in bank overdraft                                                                (5,014)              (3,767)
Dividends paid                                                                           (13,260)             (12,331)
Stock purchases under Stock Repurchase Program                                           (55,430)              (5,006)
Stock transactions under incentive plans                                                   4,028                6,387
Incremental tax benefits from stock options exercised                                          -                  256
                                                                               -----------------    -----------------
Net cash used in financing activities                                                    (69,676)             (17,026)
                                                                               -----------------    -----------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                    3,054              (12,357)

Cash and cash equivalents, beginning of period                                           249,391              406,706
                                                                               -----------------    -----------------
Cash and cash equivalents, end of period                                       $         252,445    $         394,349
                                                                               =================    =================



See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                      5

<PAGE>
<PAGE>


                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
       ----------------------------------------------------------------
                 (Dollars in thousands, except per share data)


NOTE 1. BASIS OF PRESENTATION. The condensed consolidated financial statements
include our accounts and the accounts of our majority-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated. These
financial statements have been prepared on a condensed basis, and accordingly,
certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The amounts and
disclosures included in the notes to the condensed consolidated financial
statements, unless otherwise indicated, are presented on a continuing
operations basis. In the opinion of management, the financial statements
contain all adjustments (consisting solely of normal recurring adjustments)
and disclosures necessary to make the information presented therein not
misleading. These financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes thereto included
in our Annual Report to Stockholders on Form 10-K for 2005 (the fiscal year
ended January 28, 2006). As used in this Report, unless the context requires
otherwise, "our," "us" and "we" refer to Kellwood Company and its
subsidiaries.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect reported amounts and related disclosures. Actual results could
differ from those estimates. Certain prior year amounts have been reclassified
to conform to the current year presentation. Our fiscal year ends on the
Saturday closest to January 31. Operating results for any quarter are
historically seasonal in nature and are not necessarily indicative of the
results expected for the full year.

NOTE 2. IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES. During the
second quarter of 2005, we announced a Restructuring Plan (the 2005
Restructuring Plan) aimed at advancing our corporate objectives of increasing
our penetration of consumer lifestyle brands with strong growth and profit
potential while reducing exposure to smaller volume brands and certain private
label businesses. The 2005 Restructuring Plan resulted from a thorough
strategic reassessment of all of our business operations. This reassessment
was performed in the second quarter of 2005 and was directed by our Chief
Executive Officer who was named to that position during the second quarter of
2005. The strategic reassessment focused on our businesses that had
experienced profitability issues and considered the alignment of the
businesses with our refreshed strategy, which considered, among other things,
market place developments affecting the retail landscape and our retail
customers.

The results of operations and impairment, restructuring and other
non-recurring charges for the businesses sold and shut down are reported as
discontinued operations. The gains and losses on consummated transactions
involving the sale of operations are included as part of net loss from
discontinued operations and are not significant. See Note 3 for further
information on the operating results and financial position of the
discontinued operations.

The total expected cost of the actions in connection with the 2005
Restructuring Plan and the provision recorded to date (the second quarter of
2005 through the third quarter of 2006) related to our reportable segments
(before tax) is as follows:

<TABLE>
<CAPTION>
                               Continuing Operations         Discontinued Operations                 Total
                           ----------------------------- -----------------------------  -----------------------------
                                               Total                          Total                         Total
                                Total        Provision        Total         Provision        Total        Provision
                              Expected       Recorded       Expected        Recorded       Expected       Recorded
                                Cost          to Date         Cost           to Date         Cost          to Date
                           -------------- -------------- --------------  -------------  -------------- --------------
<C>                        <C>            <C>            <C>             <C>            <C>            <C>
Women's Sportswear         $       45,879 $       38,072 $       21,972  $      21,972  $       67,851 $       60,044
Men's Sportswear                    1,022          1,022         12,452         12,452          13,474         13,474
Other Soft Goods                      815            815         31,500         30,325          32,315         31,140
General Corporate                  36,414         36,414          4,946          4,946          41,360         41,360
                           -------------- -------------- --------------  -------------  -------------- --------------
   Total                   $       84,130 $       76,323 $       70,870  $      69,695  $      155,000 $      146,018
                           ============== ============== ==============  =============  ============== ==============
</TABLE>


                                      6

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


For the three months ended October 29, 2005, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Three months ended October 29, 2005
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Net sales                                   $               2,400     $                   -     $               2,400
Cost of products sold                                       5,243                   (21,504)                  (16,261)
Restructuring and other
   non-recurring charges                                    2,941                     9,846                    12,787
                                            ---------------------     ---------------------     ---------------------
Total pretax cost                           $              10,584     $             (11,658)    $              (1,074)
                                            =====================     =====================     =====================
Total after tax cost                        $               7,408     $              (8,161)    $                (753)
                                            =====================     =====================     =====================
Diluted loss (income) per share             $                0.28     $               (0.30)    $               (0.03)
                                            =====================     =====================     =====================
</TABLE>

For the nine months ended October 29, 2005, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Nine months ended October 29, 2005
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Net sales                                   $               2,450     $               5,110     $               7,560
Cost of products sold                                       5,243                    34,831                    40,074
Impairment of goodwill and intangibles                     30,909                    18,657                    49,566
Restructuring and other
   non-recurring charges                                    9,059                    26,024                    35,083
                                            ---------------------     ---------------------     ---------------------
Total pretax cost                           $              47,661     $              84,622     $             132,283
                                            =====================     =====================     =====================
Total after tax cost                        $              33,361     $              59,236     $              92,597
                                            =====================     =====================     =====================
Diluted loss per share                      $                1.21     $                2.15     $                3.36
                                            =====================     =====================     =====================
</TABLE>

For the three months ended October 28, 2006, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Three months ended October 28, 2006
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Restructuring and other
   non-recurring charges                    $              19,041     $              (1,976)    $              17,065
                                            ---------------------     ---------------------     ---------------------
Total pretax cost                           $              19,041     $              (1,976)    $              17,065
                                            =====================     =====================     =====================
Total after tax cost                        $              12,092     $              (1,258)    $              10,834
                                            =====================     =====================     =====================
Diluted loss (income) per share             $                0.47     $               (0.05)    $                0.42
                                            =====================     =====================     =====================
</TABLE>


                                      7

<PAGE>
<PAGE>


                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)



For the nine months ended October 28, 2006, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Nine months ended October 28, 2006
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Net sales                                   $                   -     $              (2,192)    $              (2,192)
Cost of products sold                                           -                      (348)                     (348)
Restructuring and other
   non-recurring charges                                   25,957                       286                    26,243
                                            ---------------------     ---------------------     ---------------------
Total pretax cost (income)                  $              25,957     $              (2,254)    $              23,703
                                            =====================     =====================     =====================
Total after tax cost (income)               $              16,534     $              (1,437)    $              15,097
                                            =====================     =====================     =====================
Diluted loss (income) per share             $                0.64     $               (0.06)    $                0.58
                                            =====================     =====================     =====================
</TABLE>

Restructuring costs for the three and nine months ended October 28, 2006
include $17,000 before tax ($10,829 after tax) for estimated future payments
in connection with contractual obligations. These amounts were previously
planned to be expensed as they were incurred, in accordance with accounting
guidance in place when the 2005 Restructuring Plan was announced. On November
10, 2005, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 45-3, Application of FASB Interpretation No. 45 to Minimum
Revenue Guarantees Granted to a Business or Its Owners, which was applicable
for certain contractual obligations entered into in the first quarter
subsequent to its issuance. Contracts under which we were obligated and that
are part of the 2005 Restructuring Plan were amended during the three months
ended October 28, 2006; thus, the related obligations have been accrued in
accordance with the new guidance.

A rollforward of the major components of this non-recurring charge from July
29, 2006 to October 28, 2006 recorded in continuing operations is as follows:

<TABLE>
<CAPTION>
                                      Accrual as of                                                     Accrual as of
                                        July 29,                                                         October 28,
                                          2006          Provision        Reversals       Utilization        2006
                                      -------------  -------------   ---------------   --------------   -------------
<C>                                   <C>            <C>             <C>               <C>              <C>
Inventory and Purchase
    Commitment Reserves               $         250  $           -   $             -   $         (198)  $          52
Contractual Obligations                       1,816         18,579                 -           (1,990)         18,405
Employee Severance and
    Termination Benefits                      1,299            462                 -             (690)          1,071
                                      -------------  -------------   ---------------   --------------   -------------
Total                                 $       3,365  $      19,041   $             -   $       (2,878)  $      19,528
                                      =============  =============   ===============   ==============   =============
</TABLE>

A rollforward of the major components of this non-recurring charge from July
29, 2006 to October 28, 2006 recorded in discontinued operations is as
follows:

<TABLE>
<CAPTION>
                                      Accrual as of                                                     Accrual as of
                                        July 29,       Provision/                                        October 28,
                                          2006          (Income)         Reversals       Utilization        2006
                                      -------------  -------------   ---------------   --------------   -------------
<C>                                   <C>            <C>             <C>               <C>              <C>
Inventory and Purchase
    Commitment Reserves               $         146  $           -   $             -   $            -   $         146
Contractual Obligations                       7,679         (1,923)                -              283           6,039
Employee Severance and
    Termination Benefits                      4,503              -               (53)            (309)          4,141
                                      -------------  -------------   ---------------   --------------   -------------
Total                                 $      12,328  $      (1,923)  $           (53)  $          (26)  $      10,326
                                      =============  =============   ===============   ==============   =============
</TABLE>

                                      8

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)



Inventory and Purchase Commitment Reserves include provisions to reduce
inventory and purchase commitments to net realizable values. Contractual
Obligations are adverse contractual arrangements under which losses are
probable and estimatable and where there is no future economic benefit. These
include leases and minimum payments under license agreements. Employee
Severance and Termination Benefits are provided for in accordance with
Statement of Financial Accounting Standard (SFAS) No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. Total employee severance
and termination benefits will be recorded as incurred and relates to
approximately 1,400 employees.

Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other
indefinite-lived intangible assets are no longer amortized but are reviewed
for impairment at least annually and if a triggering event were to occur in an
interim period. The 2005 Restructuring Plan was a triggering event that
required impairment testing of certain divisions' goodwill and intangible
asset balances. In connection with the 2005 Restructuring Plan and pursuant to
our policies for assessing impairment of goodwill and long-lived assets,
$29,279 and $20,287 of goodwill and intangible assets, respectively, including
trademarks and customer lists, were written off during the second quarter of
2005. Of these amounts, $9,234 and $9,423 of goodwill and intangible assets,
respectively, relate to divisions that are included in discontinued
operations. Included in continuing operations is the write-off of $20,045 and
$10,864 of goodwill and intangible assets, respectively.

NOTE 3. DISCONTINUED OPERATIONS. During the third quarter of 2006, our New
Campaign and IZOD women's sportswear operation became discontinued. The
discontinuance of New Campaign was the result of our agreement during the
three months ended October 28, 2006 to transfer the business and sell business
assets to the licensor. We expect to receive proceeds of approximately $9
million and do not anticipate a significant gain or loss from this sale. We
expect to close this transaction in the first quarter of 2007. The
discontinuance of our IZOD women's sportswear operation was the result of our
agreement during the three months ended October 28, 2006 to terminate the
licensing agreement. We expect to close this transaction in the second quarter
of 2007 with no significant gain or loss. Prior to being classified as
discontinued, the New Campaign and IZOD operations were included in the
Women's Sportswear segment.

Related to our 2005 Restructuring Plan, as discussed in Note 2, our Private
Label Menswear (which does not include our Smart Shirts subsidiary) and
several labels at our Oakland Operation were discontinued during the fourth
quarter of 2005. During the third quarter of 2005, our Intimate Apparel and
Kellwood New England operations became discontinued. Prior to being classified
as discontinued, Kellwood New England and the labels at the Oakland Operation
were included in the Women's Sportswear segment, the Private Label Menswear
operations were included in the Men's Sportswear segment, and Intimate Apparel
was included in the Other Soft Goods segment.

The results of operations and impairment, restructuring and other
non-recurring charges for the discontinued operations (as discussed in Note 2)
are reported as discontinued operations for all periods presented.
Additionally, assets and liabilities of the discontinued operations are
segregated in the accompanying Condensed Consolidated Balance Sheets.



                                      9

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)



Operating results for the discontinued operations, including all charges
incurred during the periods presented for the 2005 Restructuring Plan related
to these divisions as described in Note 2, are as follows:

<TABLE>
<CAPTION>
                                                   Three months ended                  Nine months ended
                                            -------------------------------     ------------------------------
                                               October 29,     October 28,        October 29,     October 28,
                                                  2005            2006               2005            2006
                                            ---------------  --------------     --------------  --------------
<C>                                         <C>              <C>                <C>             <C>
Net sales                                   $       107,135  $       22,228     $      312,748  $       63,797
                                            ===============  ==============     ==============  ==============
Impairment, restructuring and other
     non-recurring charges (reversals)      $         9,846  $       (1,976)    $       44,681  $          286
                                            ===============  ==============     ==============  ==============
Earnings (loss) before income taxes                  12,139           3,949            (93,368)          5,699
Income taxes                                          3,830           1,395            (27,776)         (4,191)
                                            ---------------  --------------     --------------  --------------
Net earnings (loss)                         $         8,309  $        2,554     $      (65,592) $        9,890
                                            ===============  ==============     ==============  ==============
Diluted earnings (loss) per share           $          0.31  $         0.10     $        (2.38) $         0.38
                                            ===============  ==============     ==============  ==============
</TABLE>

Income taxes for the nine months ended October 28, 2006 includes a $6,300
reversal of allowances for tax exposures (related to a 2003 discontinued
operation) no longer deemed necessary due to finalization of an open tax year.

Summarized assets and liabilities of the discontinued operations are as
follows:

<TABLE>
<CAPTION>
                                                               January 28,      October 29,     October 28,
                                                                  2006             2005            2006
                                                             --------------  ---------------  --------------
<C>                                                          <C>             <C>              <C>
Cash and cash equivalents                                    $          253  $           561  $            5
Receivables, net                                                     42,806           65,080          12,227
Inventories                                                          13,481           31,238          11,749
Current deferred taxes and prepaid expenses                          33,671            5,640           1,732
                                                             --------------  ---------------  --------------
Current assets of discontinued operations                    $       90,211  $       102,519  $       25,713
                                                             ==============  ===============  ==============

Property, plant and equipment, net                           $        1,648  $         2,437  $        1,296
Goodwill                                                              2,995            2,995           2,995
Prepaid taxes                                                             -            1,590               -
Other assets                                                          1,155              302             895
                                                             --------------  ---------------  --------------
Long-term assets of discontinued operations                  $        5,798  $         7,324  $        5,186
                                                             ==============  ===============  ==============

Accounts payable                                             $       17,924  $        22,041  $        6,522
Accrued liabilities                                                  25,660            2,766          13,386
                                                             --------------  ---------------  --------------
Current liabilities of discontinued operations               $       43,584  $        24,807  $       19,908
                                                             ==============  ===============  ==============
</TABLE>


The accrued liabilities reflect the discontinued operations classification of
New Campaign and IZOD and also include charges taken in connection with the
2005 Restructuring Plan that have not yet been paid and primarily relate to
contractual obligations and employee severance and termination benefits. As
noted above, the transactions related to the New Campaign and IZOD women's
sportswear operations are expected to close in the first quarter and second
quarter of 2007, respectively.

NOTE 4. BUSINESS COMBINATIONS. In connection with our acquisition of Phat
Fashions, LLC and Phat Licensing, LLC (together referred to as Phat),
additional cash purchase consideration will be due if Phat achieves certain
specified financial performance targets for 2004 through 2010. This additional
cash purchase consideration is calculated based on a formula applied to
royalty revenue through 2010. The additional consideration for 2005 was
$2,095, which was paid out during the second quarter of 2006 and was recorded
as additional goodwill. The additional consideration for 2006 will be recorded
as additional goodwill when payment is deemed probable.

                                      10

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


In connection with our acquisition of Briggs New York Corp. (Briggs) in 2003,
additional cash purchase consideration will be due if Briggs achieves certain
annual operating results for each of the four years after the acquisition
(2003 through 2006). The additional cash purchase consideration for 2005 was
$6,446, which was paid out during the first quarter of 2006 and was recorded
as additional goodwill. The additional consideration for 2006 will be recorded
as additional goodwill when payment is deemed probable.

NOTE 5. INVENTORIES.  Inventories of continuing operations consist of the
following:

<TABLE>
<CAPTION>
                                                           January 28,       October 29,        October 28,
                                                              2006              2005               2006
                                                          -------------     -------------     --------------
<C>                                                       <C>               <C>               <C>
Inventories:
      Finished goods                                      $     168,343     $     159,329     $      166,204
      Work in process                                            29,240            22,327             27,538
      Raw materials                                              22,056            23,187             32,010
                                                          -------------     -------------     --------------
      Total inventories                                   $     219,639     $     204,843     $      225,752
                                                          =============     =============     ==============
Net of obsolescence reserves of:                          $      20,307     $      26,486     $       26,591
                                                          =============     =============     ==============
</TABLE>

NOTE 6. GOODWILL AND INTANGIBLE ASSETS. Changes in goodwill and intangible
assets of continuing operations since the beginning of 2006 are as follows:

<TABLE>
<CAPTION>
                                                            Goodwill         Intangibles
                                                          -------------     -------------
<C>                                                       <C>               <C>
Balance at January 28, 2006                               $     200,837     $     160,027
Changes:
   Adjustments to estimated contingent
     purchase price                                                  50                 -
Amortization expense                                                  -            (7,692)
                                                          -------------     -------------
Balance at October 28, 2006                               $     200,887     $     152,335
                                                          =============     =============
</TABLE>

Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other
indefinite-lived intangible assets are no longer amortized but are reviewed
for impairment at least annually and if a triggering event were to occur in an
interim period. No triggering events have occurred in 2006. We will complete
our annual goodwill impairment assessment in the fourth quarter of 2006. It is
possible that our estimates of future operating results for certain of our
divisions could change adversely and impact the evaluation of the
recoverability of the carrying value of goodwill and that the effect of such
changes on our Condensed Consolidated Financial Statements could be material.
While we believe that the current recorded carrying value of our goodwill is
not impaired, there can be no assurance that a significant non-cash write-down
or write-off will not be required in the future.

NOTE 7. NOTES PAYABLE AND LONG-TERM DEBT. On April 12, 2006, we executed a
$400,000 five-year secured, syndicated credit facility (the Senior Credit
Facility) and terminated our prior $400,000 five-year unsecured, syndicated
credit facility entered into on October 20, 2004. We and our subsidiaries (the
Borrowers) are the borrowers under the Senior Credit Facility. Borrowings
under the Senior Credit Facility are secured by the Borrowers' domestic
current assets, principally consisting of accounts receivable and inventory.
This does not include the stock of any subsidiaries. Borrowings under the
Senior Credit Facility are limited to the lesser of the commitment amount or
the borrowing base as defined in the credit agreement. The Senior Credit
Facility can be used to refinance existing indebtedness, for letters of
credit, for working capital needs and for other general corporate purposes.
Borrowings under the Senior Credit Facility bear interest at a rate equal to
LIBOR plus a spread of 1.00% to 2.00%, with such spread depending upon excess
liquidity, as defined in the credit agreement. The Senior Credit Facility
contains certain customary covenants, including: (a) when availability under
the Senior Credit Facility becomes less than $40,000, a minimum fixed charge
coverage ratio is required; and (b) so long as availability remains above
$60,000, Borrowers would generally not be restricted in terms of distributions
and dividends, investments, issuance of new indebtedness, granting of liens
(except to assets securing the Senior Credit Facility), acquisitions and
capital expenditures. At October 28, 2006, there were no borrowings
outstanding under the Senior Credit Facility, and we were in compliance with
all covenants. Letters of credit outstanding under the Senior Credit Facility
were $15,730 at October 28, 2006.

                                      11

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


On December 21, 2005, our Asian operations executed a $50,000 five-year
unsecured, syndicated term and revolving credit facility agreement to support
its working capital needs (the Asian Credit Facility). The term portion of the
Asian Credit Facility (the Asian Term Credit Facility) is $25,000 and requires
semiannual payments of principal beginning November 2006. The revolving
portion of the Asian Credit Facility (the Asian Revolving Credit Facility) is
$25,000 and can be used for borrowings and/or letters of credit. Borrowings
under the Asian Credit Facility bear interest at LIBOR plus a spread ranging
from 1.10% to 1.35% with such spread depending on our Asian operations'
leverage ratio. The Asian Credit Facility contains certain customary
covenants, which among other things, restrict our Asian operations' ability to
incur indebtedness, grant liens, make investments and acquisitions and sell
assets. The financial covenants of the Asian Credit Facility include
requirements that our Asian operations satisfy an interest coverage ratio, a
leverage ratio and a net worth maintenance covenant. At October 28, 2006, we
were in compliance with the covenants of the Asian Credit Facility. At October
28, 2006, there were $11,000 and $25,000 of borrowings outstanding under the
revolving and term portions of the Asian Credit Facility, respectively.

In addition to the revolving credit facilities discussed above, we maintain
uncommitted lines of credit, which totaled $39,043 at October 28, 2006. There
were no borrowings outstanding under these lines at October 28, 2006. We have
$10,984 in outstanding letters of credit used by our foreign operations under
these lines at October 28, 2006.

NOTE 8. STOCK REPURCHASE PROGRAM. In July 2005, we announced a stock
repurchase program (Stock Repurchase Program). The Board of Directors
authorized us to repurchase, at our discretion, up to ten percent of the
outstanding shares of our common stock through open market or privately
negotiated transactions. The Board of Directors has approved the investment of
up to $75,000 for this purpose. During fiscal year 2005, we repurchased
2,218,200 shares at an average price of $24.99 per share, totaling $55,430.
During the first quarter of 2006, we repurchased 173,600 shares at an average
price of $28.83 per share, totaling $5,006. We did not repurchase any shares
under the Stock Repurchase Program during the second and third quarters of
2006. Payments made under the Stock Repurchase Program are recorded in
Treasury Stock on the Condensed Consolidated Balance Sheets.

NOTE 9. COMPREHENSIVE INCOME (LOSS). Differences between net earnings (loss)
and total comprehensive income (loss) resulted from foreign currency
translation and unrecognized impacts of derivative instruments as follows:

<TABLE>
<CAPTION>
                                                          Three months ended                  Nine months ended
                                                     ----------------------------       ----------------------------
                                                      October 29,     October 28,        October 29,     October 28,
                                                         2005            2006               2005            2006
                                                     ------------    ------------       ------------   -------------
<C>                                                  <C>             <C>                <C>            <C>
Net earnings (loss)                                  $     16,188    $      8,075       $    (50,925)  $      24,435

Other comprehensive income:
   Currency translation adjustment                          1,352            (278)               805            (536)
   Unrecognized gain (loss) on derivatives                   (132)            102                282            (161)
                                                     ------------    ------------       ------------   -------------
   Total comprehensive income (loss)                 $     17,408    $      7,899       $    (49,838)  $      23,738
                                                     ============    ============       ============   =============
</TABLE>

NOTE 10. SHARE-BASED COMPENSATION. On January 29, 2006, we adopted SFAS No.
123(R), Share-Based Payment, requiring the recognition of compensation expense
in the Condensed Consolidated Statement of Operations related to the fair
value of our employee share-based options. SFAS No. 123(R) revises SFAS No.
123, Accounting for Stock-Based Compensation, and supercedes Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees. SFAS No. 123(R) is supplemented by Securities and Exchange
Commission (SEC) Staff Accounting Bulletin (SAB) No. 107, Share-Based Payment.
SAB No. 107 expresses the SEC staff's views regarding the interaction between
SFAS No. 123(R) and certain SEC rules and regulations including the valuation
of share-based payment arrangements. SFAS No. 123(R) amends SFAS No. 95,
Statement of Cash Flows, to require that excess tax benefits be reported as a
financing cash inflow rather than as a reduction of taxes paid, which is
included within operating cash flows. The adoption of SFAS No. 123(R) resulted
in a reclassification to reduce net cash provided by operating activities with
an offsetting increase to net cash provided by financing activities of $256
related to incremental tax benefits from stock options exercised in the nine
months ended October 28, 2006.

                                      12

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


Determining the fair value of share-based awards at the grant date requires
judgment, including estimating the expected term that stock options will be
outstanding prior to exercise, the associated volatility and the expected
dividends. Judgment is also required in estimating the amount of share-based
awards expected to be forfeited prior to vesting. If actual forfeitures differ
significantly from these estimates, share-based compensation expense could be
materially impacted. Prior to adopting SFAS No. 123(R), we applied APB Opinion
No. 25, and related Interpretations, in accounting for our stock-based
compensation plans. All employee stock options were granted at or above the
grant date market price. Accordingly, no compensation cost was recognized for
fixed stock option grants in prior periods.

We will recognize the cost of all employee stock options on a straight-line
attribution basis over their respective vesting periods. We have selected the
modified prospective method of transition; accordingly, prior periods have not
been restated. Total stock option expense recorded in the first through third
quarters of 2006 and in the pro forma table below for 2005 has been reduced by
an estimated forfeiture rate of 5.0%. This estimate will be revised in
subsequent periods if actual forfeitures differ from the original estimates.

We have issued stock options and restricted shares to employees under
share-based compensation plans. Stock options are issued at the current market
price, subject to a three to five year vesting period with a contractual term
of 10 years. Shares are issued from treasury stock upon the exercise of stock
options.

Compensation expense for restricted stock awards is measured at fair value on
the date of grant based on the number of shares granted and the quoted market
price of our common stock. For stock option awards, no compensation cost was
recognized prior to January 28, 2006. If the fair value method had been
applied, our net earnings and earnings per share for the three and nine months
ended October 29, 2005 would have been the pro forma amounts as follows:

<TABLE>
<CAPTION>
                                                                     Three months ended        Nine months ended
                                                                   ---------------------     ---------------------
                                                                      October 29, 2005         October 29, 2005
                                                                   ---------------------     ---------------------
<C>                                                                <C>                       <C>
Net earnings from continuing operations, as reported               $               7,879     $              14,667
Less: Share-based employee compensation expense
    determined under the fair value based method
    for all awards, net of related tax effects                                      (719)                   (6,685)
                                                                   ---------------------     ---------------------

Pro-forma net earnings from continuing operations                  $               7,160     $               7,982
                                                                   =====================     =====================

Earnings per share from continuing operations:
    Basic, as reported                                             $                0.29     $                0.53
    Basic, pro-forma                                               $                0.27     $                0.29
    Diluted, as reported                                           $                0.29     $                0.53
    Diluted, pro-forma                                             $                0.27     $                0.29
</TABLE>

The fair value of options granted is estimated on the date of grant using the
Black-Scholes option-pricing model. No options have been granted since the
first quarter of 2005. The following weighted average assumptions were used
for the options granted in the first quarter of 2005:


Expected option life                               6 years
Risk-free interest rate                               4.5%
Expected volatility of Kellwood stock                33.6%
Expected dividend yield on Kellwood stock             2.2%


                                      13

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


A summary of stock options outstanding as of January 28, 2006 and the plans'
activity during the nine months ended October 28, 2006 is presented below:

<TABLE>
<CAPTION>
                                                                                Weighted Average
                                                                                    Remaining            Aggregate
                                                         Weighted Average          Contractual           Intrinsic
(Shares in thousands)                    Shares           Exercise Price          Term (Years)             Value
                                    ----------------  ---------------------  ---------------------  -----------------
<C>                                 <C>               <C>                    <C>                    <C>
Outstanding at January 28, 2006                2,748  $               28.84
Granted                                            -                      -
Exercised                                       (296)                 22.72
Forfeited or expired                             (92)                 33.83
                                    ----------------  ---------------------  ---------------------  -----------------
Outstanding at October 28, 2006                2,360  $               29.42                    5.7  $           8,730
                                    ----------------  ---------------------  ---------------------  -----------------

Exercisable at October 28, 2006                1,781  $               30.08                    5.2  $           6,891
                                    ----------------  ---------------------  ---------------------  -----------------
</TABLE>

The total intrinsic value of options exercised during the three and nine month
periods ended October 29, 2005 were $128 and $1,422, respectively. The total
intrinsic value of options exercised during the three and nine month periods
ended October 28, 2006 were $191 and $2,301, respectively. The amount of cash
received from the exercise of stock options for the three months ended October
28, 2006 was $628.

A summary of the activity for nonvested stock option awards as of October 28,
2006 and changes during the nine months ended October 28, 2006 is presented
below:

<TABLE>
<CAPTION>
                                                         Weighted Average
                                                            Grant Date
(Shares in thousands)                    Awards        Fair Value per Award
                                    ----------------  ---------------------
<C>                                 <C>               <C>
Nonvested at January 28, 2006                  1,043  $                8.53
Granted                                            -                      -
Vested                                          (742)                  8.44
Cancelled                                        (24)                  8.52
                                    ----------------  ---------------------

Nonvested at October 28, 2006                    277  $                8.78
                                    ----------------  ---------------------
</TABLE>

For the nine months ended October 28, 2006, we recorded $3,877 of stock option
expense and a related deferred tax asset of $1,431. As of October 28, 2006,
there was $1,839 of total unrecognized compensation cost related to nonvested
share-based compensation awards granted under the stock option plans. The
following table represents the before-tax share-based compensation costs to be
recognized in the following fiscal years:

<TABLE>
<CAPTION>
                                                Future Share-Based
Fiscal Year                                    Compensation Expense
------------------                        -----------------------------
<C>                                       <C>
2006 (fourth quarter)                     $                         468
2007                                                              1,371
</TABLE>

NOTE 11. INCOME TAXES. The provision (benefit) for income taxes for continuing
operations consists of the following amounts for the three and nine month
periods ended October 29, 2005 and October 28, 2006:

<TABLE>
<CAPTION>
                                                          Three months ended                  Nine months ended
                                                     ----------------------------       ----------------------------
                                                      October 29,     October 28,        October 29,    October 28,
                                                         2005            2006               2005           2006
                                                     ------------    ------------       ------------   -------------
<C>                                                  <C>             <C>                <C>            <C>
Provision on pretax earnings                         $      3,756    $        892       $      1,584   $       5,202
Effect of repatriation of foreign earnings                      -               -            (13,000)              -
                                                     ------------    ------------       ------------   -------------
Total provision (benefit) for income taxes           $      3,756    $        892       $    (11,416)  $       5,202
                                                     ============    ============       ============   =============
</TABLE>

                                      14

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


In October 2004, the American Jobs Creation Act of 2004 (the Act) was signed
into law. The Act provides a special one-time deduction of 85% of foreign
earnings that are repatriated under a domestic reinvestment plan, as defined
therein. During 2005, the Company adopted a formal domestic reinvestment plan
that resulted in the repatriation of $160,000 of foreign earnings. This
repatriation resulted in a one-time tax benefit of $13,000 recorded during the
second quarter of 2005 due to the reversal of $23,500 of previously provided
taxes on foreign earnings, which will not be incurred under the new
regulations, offset by $10,500 of taxes provided on earnings to be
repatriated.

Our effective tax rate on pretax earnings from continuing operations for the
three and nine month periods ended October 28, 2006 was 13.9% and 26.3%,
respectively. These rates differ from the U.S. statutory rate of 35.0%
primarily due to the lower tax rate on foreign earnings that will be
permanently invested offshore.

NOTE 12. EARNINGS (LOSS) PER SHARE. The following is a reconciliation between
basic and diluted earnings (loss) per share:

<TABLE>
<CAPTION>
                                                          Three months ended                  Nine months ended
                                                     ----------------------------       ----------------------------
                                                      October 29,     October 28,        October 29,    October 28,
                                                         2005            2006               2005           2006
                                                     ------------    ------------       ------------   -------------
<C>                                                  <C>             <C>                <C>            <C>
Numerators:
   Net earnings (loss) from continuing operations    $      7,879    $      5,521       $     14,667   $      14,545
   Net earnings (loss) from discontinued operations         8,309           2,554            (65,592)          9,890
                                                     ------------    ------------       ------------   -------------
   Net earnings (loss)                               $     16,188    $      8,075       $    (50,925)  $      24,435
                                                     ============    ============       ============   =============

Denominators (000's):
   Average shares outstanding - Basic                      26,739          25,722             27,434          25,682
   Impact of stock options                                     60             112                125             138
                                                     ------------    ------------       ------------   -------------
   Average shares outstanding - Diluted                    26,799          25,834             27,559          25,820
                                                     ============    ============       ============   =============

Earnings (loss) per share:
   Basic:
    Continuing operations                            $       0.29    $       0.21       $       0.53   $        0.57
    Discontinued operations                                  0.31            0.10              (2.39)           0.39
                                                     ------------    ------------       ------------   -------------
    Earnings (loss) per share                        $       0.61    $       0.31       $      (1.86)  $        0.95
                                                     ============    ============       ============   =============

   Diluted:
    Continuing operations                            $       0.29    $       0.21       $       0.53   $        0.56
    Discontinued operations                                  0.31            0.10              (2.38)           0.38
                                                     ------------    ------------       ------------   -------------
    Earnings (loss) per share                        $       0.60    $       0.31       $      (1.85)  $        0.95
                                                     ============    ============       ============   =============
</TABLE>

The calculations of diluted earnings per share for the three and nine month
periods ended October 29, 2005 and October 28, 2006 exclude the impact of the
contingent convertible debt and 2,202,505, 1,216,400, 1,131,900 and 1,131,900
of stock options, respectively, because to include them would have been
antidilutive.

NOTE 13. REPORTABLE SEGMENTS. We and our subsidiaries are principally engaged
in the apparel and related soft goods industries. Our operations are managed
in a number of divisions that are organized around individual product lines
and brands. These divisions are aggregated into three major consumer market
product groupings along with General Corporate, which represent our reportable
segments. These segments are:

     o    Women's Sportswear,
     o    Men's Sportswear,
     o    Other Soft Goods, and
     o    General Corporate.

                                      15

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


For additional information regarding our reportable segments, refer to the
footnotes accompanying the 2005 financial statements contained in our Annual
Report to Stockholders on Form 10-K for 2005 (the fiscal year ended January
28, 2006).

Management evaluates the performance of our operating segments separately to
individually monitor the different factors affecting financial performance.
Segment earnings (loss) for the three major consumer market product segments
includes substantially all of the segment's costs of production, distribution
and administration.

Segment net assets measures net working capital, net fixed assets and other
noncurrent assets and liabilities of each segment. Goodwill, net intangibles,
debt, cash and certain corporate assets, including capitalized software, are
accounted for at the corporate level and as a result are included in the
General Corporate segment net assets. Stock option expense and amortization of
intangibles are accounted for at the corporate level and are not allocated to
the segments. Capital expenditures exclude the cost of long-lived assets
included in acquisitions accounted for under purchase accounting.

Sales, segment earnings (loss) and net assets for continuing operations by
segment for the three and nine month periods ended October 29, 2005 and
October 28, 2006 are as follows:

<TABLE>
<CAPTION>
                                                       Three months ended                   Nine months ended
                                                 -------------------------------    -------------------------------
                                                  October 29,       October 28,       October 29,      October 28,
                                                     2005              2006              2005             2006
                                                 -------------    --------------    -------------    --------------
<C>                                              <C>              <C>               <C>              <C>
Net sales:
    Women's Sportswear                           $     317,187    $      293,734    $     894,336    $      834,233
    Men's Sportswear                                   131,575           140,690          379,629           390,915
    Other Soft Goods                                    71,200            81,973          241,599           244,674
                                                 -------------    --------------    -------------    --------------
    Total net sales                              $     519,962    $      516,397    $   1,515,564    $    1,469,822
                                                 =============    ==============    =============    ==============

Segment earnings (loss):
    Women's Sportswear                           $      15,244    $       22,771    $      41,960    $       49,766
    Men's Sportswear                                    11,208            11,273           37,167            29,650
    Other Soft Goods                                     6,430             9,374           22,787            25,680
    General Corporate                                  (10,292)          (11,869)         (33,058)          (38,282)
                                                 -------------    --------------    -------------    --------------
    Total segments                                      22,590            31,549           68,856            66,814
Stock option expense                                         -               468                -             3,877
Amortization of intangible assets                        2,572             2,628            8,143             7,692
Impairment, restructuring and
    other non-recurring charges                          2,941            19,041           39,968            25,957
Interest expense, net                                    5,831             3,613           18,376            11,478
Other expense, net                                        (389)             (614)            (882)           (1,937)
                                                 -------------    --------------    -------------    --------------
Earnings before income taxes                     $      11,635    $        6,413    $       3,251    $       19,747
                                                 =============    ==============    =============    ==============

Net assets at quarter-end:
    Women's Sportswear                           $     222,169    $      194,924
    Men's Sportswear                                   169,602           120,718
    Other Soft Goods                                    49,313            49,196
    General Corporate                                   72,982           250,420
                                                 -------------    --------------
    Continuing Operations                              514,066           615,258
    Discontinued Operations                             85,036            10,991
                                                 -------------    --------------
    Kellwood total                               $     599,102    $      626,249
                                                 =============    ==============
</TABLE>

The decrease in segment net assets for Men's Sportswear and the increase in
segment net assets for General Corporate resulted primarily from the
repatriation of $160,000 of foreign earnings, $70,000 of which occurred in the
fourth quarter of 2005, as discussed in Note 11.

                                     16

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


NOTE 14. COMMITMENTS AND CONTINGENCIES. We have exclusive license agreements
to market apparel under trademarks owned by other parties. These include
Calvin Klein for women's better sportswear, Liz Claiborne(R) for women's
dresses and suits and XOXO(R) for junior's sportswear and dresses. These
agreements contain provisions for minimum royalty and advertising payments
based on anticipated sales in future periods.

During the third quarter of 2006, there were changes to our license
agreements. We extended the Calvin Klein women's better sportswear license for
North America. We were granted the ck Calvin Klein women's bridge sportswear
license for North America. We agreed to launch O Oscar, an Oscar de la Renta
Company, as a better women's sportswear collection. In addition, as discussed
in Note 3, we discontinued the New Campaign and IZOD operations, which
resulted in the termination of the related licensing agreements. These actions
resulted in changes of the future minimum royalty and advertising payments.
Detail of the future minimum payments for all license agreements is as
follows:

2006 (full year)                                 $    27,902
2007                                                  29,846
2008                                                  25,858
2009                                                  22,216
2010                                                  17,699
Thereafter                                            38,620
                                                 -----------
Total                                            $   162,141
                                                 ===========

NOTE 15. NEW ACCOUNTING STANDARDS. In September 2006, the FASB issued SFAS No.
157, Fair Value Measurements (SFAS No. 157), which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP) and expands disclosures about fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. We are currently evaluating the impact of SFAS No. 157 on
our financial statements.

In September 2006, the FASB issued SFAS No. 158, Employer's Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R) (SFAS No. 158), which requires an
employer to recognize the overfunded or underfunded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position and to recognize changes in
the funded status in the year in which the changes occur. SFAS No. 158 also
requires an employer to measure the funded status of a plan as of the date of
its year-end statement of financial position, with limited exceptions. An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006. We are currently evaluating the impact of SFAS No. 158 on
our financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN
48), which clarifies the accounting for uncertainty in income tax positions.
This Interpretation requires that the financial statement effects of a tax
position taken or expected to be taken in a tax return are to be recognized in
the financial statements when it is more likely than not, based on the
technical merits, that the position will be sustained upon examination. FIN 48
is effective for fiscal years beginning after December 15, 2006. We are
currently evaluating the impact of FIN 48 on our financial statements and do
not believe its adoption will significantly impact our financial position.



                                      17

<PAGE>
<PAGE>

                       KELLWOOD COMPANY AND SUBSIDIARIES
                       ---------------------------------
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
 ----------------------------------------------------------------------------
                 (Dollars in thousands, except per share data)


NOTE 16. SUBSEQUENT EVENT. On October 31, 2006, we completed the acquisition
of CRL Group, LLC, owner of the Vince(R) brand and trademark. Vince is a
contemporary women's sportswear collection. The acquisition of Vince will
expand our marketing-focused portfolio with higher profile, upscale brand
offerings.

The total purchase price for Vince was $80.4 million, including net
receivables of $11.5 million, prior to any subsequent working capital
adjustments. We are in the process of evaluating the tangible and intangible
assets and expect the purchase price allocations to be finalized in 2007. The
Vince acquisition will be accounted for under the purchase method of
accounting. Accordingly, the results of Vince will be included in the
consolidated financial statements from the acquisition date in our fiscal
fourth quarter. Vince will be part of the Women's Sportswear Segment.




                                      18

<PAGE>
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
-------------
(Dollars in thousands, except per share data)

The following discussion is focused on significant changes in financial
condition and results of operations in the condensed consolidated balance
sheets at October 29, 2005 and October 28, 2006, in the condensed consolidated
statements of operations for the three and nine month periods ended October
29, 2005 and October 28, 2006, and in the condensed consolidated statements of
cash flows for the nine months ended October 29, 2005 and October 28, 2006.
This discussion should be read in conjunction with the audited consolidated
financial statements and accompanying notes included in our Annual Report to
Stockholders on Form 10-K for 2005 (the fiscal year ended January 28, 2006).

Our internal reporting utilizes net earnings, earnings per share and gross
profit excluding the impairment, restructuring and other non-recurring
charges. Such items excluding the impairment, restructuring and other
non-recurring charges are referred to as ongoing. Management evaluates each of
its divisions using these ongoing measures in order to isolate the results of
operations by excluding these charges, which were non-recurring. Therefore,
throughout management's discussion and analysis of financial condition and
results of operations, there will be a discussion of operating results both
including and excluding the impairment, restructuring and other non-recurring
charges. The ongoing amounts that exclude the impairment, restructuring and
other non-recurring charges are non-GAAP measures and may not be comparable to
measures used by other entities.

OPERATING RESULTS
-----------------

IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES
---------------------------------------------------------
During the second quarter of 2005, we announced a Restructuring Plan (the 2005
Restructuring Plan) aimed at advancing our corporate objectives of increasing
our penetration of consumer lifestyle brands with strong growth and profit
potential while reducing exposure to smaller volume brands and certain private
label businesses. The 2005 Restructuring Plan resulted from a thorough
strategic reassessment of all of our business operations. This reassessment
was performed in the second quarter of 2005 and was directed by our Chief
Executive Officer who was named to that position during the second quarter of
2005. The strategic reassessment focused on our businesses that had
experienced profitability issues and considered the alignment of the
businesses with our refreshed strategy, which considered, among other things,
market place developments affecting the retail landscape and our retail
customers.

The results of operations and impairment, restructuring and other
non-recurring charges for the businesses sold and shut down are reported as
discontinued operations. The gains and losses on consummated transactions
involving the sale of operations are included as part of net loss from
discontinued operations and are not significant. See Note 3 to Condensed
Consolidated Financial Statements for further information on the operating
results and financial position of the discontinued operations.

The total expected cost of the actions in connection with the 2005
Restructuring Plan and the provision recorded to date (the second quarter of
2005 through the third quarter of 2006) related to our reportable segments
(before tax) is as follows:

<TABLE>
<CAPTION>
                               Continuing Operations         Discontinued Operations                 Total
                           ----------------------------- -----------------------------  -----------------------------
                                               Total                          Total                         Total
                                Total        Provision        Total         Provision        Total        Provision
                              Expected       Recorded       Expected        Recorded       Expected       Recorded
                                Cost          to Date         Cost           to Date         Cost          to Date
                           -------------- -------------- --------------  -------------  -------------- --------------
<C>                        <C>            <C>            <C>             <C>            <C>            <C>
Women's Sportswear         $       45,879 $       38,072 $       21,972  $      21,972  $       67,851 $       60,044
Men's Sportswear                    1,022          1,022         12,452         12,452          13,474         13,474
Other Soft Goods                      815            815         31,500         30,325          32,315         31,140
General Corporate                  36,414         36,414          4,946          4,946          41,360         41,360
                           -------------- -------------- --------------  -------------  -------------- --------------
   Total                   $       84,130 $       76,323 $       70,870  $      69,695  $      155,000 $      146,018
                           ============== ============== ==============  =============  ============== ==============
</TABLE>



                                      19

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


For the three months ended October 29, 2005, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Three months ended October 29, 2005
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Net sales                                   $               2,400     $                   -     $               2,400
Cost of products sold                                       5,243                   (21,504)                  (16,261)
Restructuring and other
   non-recurring charges                                    2,941                     9,846                    12,787
                                            ---------------------     ---------------------     ---------------------
Total pretax cost                           $              10,584     $             (11,658)    $              (1,074)
                                            =====================     =====================     =====================
Total after tax cost                        $               7,408     $              (8,161)    $                (753)
                                            =====================     =====================     =====================
Diluted loss (income) per share             $                0.28     $               (0.30)    $               (0.03)
                                            =====================     =====================     =====================
</TABLE>

For the nine months ended October 29, 2005, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Nine months ended October 29, 2005
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Net sales                                   $               2,450     $               5,110     $               7,560
Cost of products sold                                       5,243                    34,831                    40,074
Impairment of goodwill and intangibles                     30,909                    18,657                    49,566
Restructuring and other
   non-recurring charges                                    9,059                    26,024                    35,083
                                            ---------------------     ---------------------     ---------------------
Total pretax cost                           $              47,661     $              84,622     $             132,283
                                            =====================     =====================     =====================
Total after tax cost                        $              33,361     $              59,236     $              92,597
                                            =====================     =====================     =====================
Diluted loss per share                      $                1.21     $                2.15     $                3.36
                                            =====================     =====================     =====================
</TABLE>

For the three months ended October 28, 2006, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Three months ended October 28, 2006
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Restructuring and other
   non-recurring charges                    $              19,041     $              (1,976)    $              17,065
                                            ---------------------     ---------------------     ---------------------
Total pretax cost                           $              19,041     $              (1,976)    $              17,065
                                            =====================     =====================     =====================
Total after tax cost                        $              12,092     $              (1,258)    $              10,834
                                            =====================     =====================     =====================
Diluted loss (income) per share             $                0.47     $               (0.05)    $                0.42
                                            =====================     =====================     =====================
</TABLE>


                                      20

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


For the nine months ended October 28, 2006, the costs (income) related to the
2005 Restructuring Plan were recorded as follows:

<TABLE>
<CAPTION>
                                                                Nine months ended October 28, 2006
                                            -------------------------------------------------------------------------
                                                  Continuing               Discontinued
                                                  Operations                Operations                  Total
                                            ---------------------     ---------------------     ---------------------
<C>                                         <C>                       <C>                       <C>
Net sales                                   $                   -     $              (2,192)    $              (2,192)
Cost of products sold                                           -                      (348)                     (348)
Restructuring and other
   non-recurring charges                                   25,957                       286                    26,243
                                            ---------------------     ---------------------     ---------------------
Total pretax cost (income)                  $              25,957     $              (2,254)    $              23,703
                                            =====================     =====================     =====================
Total after tax cost (income)               $              16,534     $              (1,437)    $              15,097
                                            =====================     =====================     =====================
Diluted loss (income) per share             $                0.64     $               (0.06)    $                0.58
                                            =====================     =====================     =====================
</TABLE>

Restructuring costs for the three and nine months ended October 28, 2006
include $17,000 before tax ($10,829 after tax) for estimated future payments
in connection with contractual obligations. These amounts were previously
planned to be expensed as they were incurred, in accordance with accounting
guidance in place when the 2005 Restructuring Plan was announced. On November
10, 2005, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 45-3, Application of FASB Interpretation No. 45 to Minimum
Revenue Guarantees Granted to a Business or Its Owners, which was applicable
for certain contractual obligations entered into in the first quarter
subsequent to its issuance. Contracts under which we were obligated and that
are part of the 2005 Restructuring Plan were amended during the three months
ended October 28, 2006; thus, the related obligations have been accrued in
accordance with the new guidance.

A rollforward of the major components of this non-recurring charge from July
29, 2006 to October 28, 2006 recorded in continuing operations is as follows:

<TABLE>
<CAPTION>
                                      Accrual as of                                                     Accrual as of
                                        July 29,                                                         October 28,
                                          2006          Provision        Reversals       Utilization        2006
                                      -------------  -------------   ---------------   --------------   -------------
<C>                                   <C>            <C>             <C>               <C>              <C>
Inventory and Purchase
    Commitment Reserves               $         250  $           -   $             -   $         (198)  $          52
Contractual Obligations                       1,816         18,579                 -           (1,990)         18,405
Employee Severance and
    Termination Benefits                      1,299            462                 -             (690)          1,071
                                      -------------  -------------   ---------------   --------------   -------------
Total                                 $       3,365  $      19,041   $             -   $       (2,878)  $      19,528
                                      =============  =============   ===============   ==============   =============
</TABLE>

A rollforward of the major components of this non-recurring charge from July
29, 2006 to October 28, 2006 recorded in discontinued operations is as
follows:

<TABLE>
<CAPTION>
                                      Accrual as of                                                     Accrual as of
                                        July 29,       Provision/                                        October 28,
                                          2006          (Income)         Reversals       Utilization        2006
                                      -------------  -------------   ---------------   --------------   -------------
<C>                                   <C>            <C>             <C>               <C>              <C>
Inventory and Purchase
    Commitment Reserves               $         146  $           -   $             -   $            -   $         146
Contractual Obligations                       7,679         (1,923)                -              283           6,039
Employee Severance and
    Termination Benefits                      4,503              -               (53)            (309)          4,141
                                      -------------  -------------   ---------------   --------------   -------------
Total                                 $      12,328  $      (1,923)  $           (53)  $          (26)  $      10,326
                                      =============  =============   ===============   ==============   =============
</TABLE>


                                      21

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


Inventory and Purchase Commitment Reserves include provisions to reduce
inventory and purchase commitments to net realizable values. Contractual
Obligations are adverse contractual arrangements under which losses are
probable and estimatable and where there is no future economic benefit. These
include leases and minimum payments under license agreements. Employee
Severance and Termination Benefits are provided for in accordance with
Statement of Financial Accounting Standard (SFAS) No. 146, Accounting for
Costs Associated with Exit or Disposal Activities. Total employee severance
and termination benefits will be recorded as incurred and relates to
approximately 1,400 employees.

Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other
indefinite-lived intangible assets are no longer amortized but are reviewed
for impairment at least annually and if a triggering event were to occur in an
interim period. The 2005 Restructuring Plan was a triggering event that
required impairment testing of certain divisions' goodwill and intangible
asset balances. In connection with the 2005 Restructuring Plan and pursuant to
our policies for assessing impairment of goodwill and long-lived assets,
$29,279 and $20,287 of goodwill and intangible assets, respectively, including
trademarks and customer lists, were written off during the second quarter of
2005. Of these amounts, $9,234 and $9,423 of goodwill and intangible assets,
respectively, relate to divisions that are included in discontinued
operations. Included in continuing operations is the write-off of $20,045 and
$10,864 of goodwill and intangible assets, respectively.

DISCONTINUED OPERATIONS
-----------------------
During the third quarter of 2006, our New Campaign and IZOD women's sportswear
operation became discontinued. The discontinuance of New Campaign was the
result of our agreement during the three months ended October 28, 2006 to
transfer the business and sell business assets to the licensor. We expect to
receive proceeds of approximately $9 million and do not anticipate a
significant gain or loss from this sale. We expect to close this transaction
in the first quarter of 2007. The discontinuance of our IZOD women's
sportswear operation was the result of our agreement during the three months
ended October 28, 2006 to terminate the licensing agreement. We expect to
close this transaction in the second quarter of 2007 with no significant gain
or loss. Prior to being classified as discontinued, the New Campaign and IZOD
operations were included in the Women's Sportswear segment.

Related to our 2005 Restructuring Plan, as discussed in Note 2 to Condensed
Consolidated Financial Statements, our Private Label Menswear (which does not
include our Smart Shirts subsidiary) and several labels at our Oakland
Operation were discontinued during the fourth quarter of 2005. During the
third quarter of 2005, our Intimate Apparel and Kellwood New England
operations became discontinued. Prior to being classified as discontinued,
Kellwood New England and the labels at the Oakland Operation were included in
the Women's Sportswear segment, the Private Label Menswear operations were
included in the Men's Sportswear segment, and Intimate Apparel was included in
the Other Soft Goods segment.

The results of operations and impairment, restructuring and other
non-recurring charges for the discontinued operations (as discussed in Note 2
to Condensed Consolidated Financial Statements) are reported as discontinued
operations for all periods presented. Additionally, assets and liabilities of
the discontinued operations are segregated in the accompanying Condensed
Consolidated Balance Sheets.



                                      22

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


Operating results for the discontinued operations, including all charges
incurred during the periods presented for the 2005 Restructuring Plan related
to these divisions as described in Note 2 to Condensed Consolidated Financial
Statements, are as follows:

<TABLE>
<CAPTION>
                                                   Three months ended                  Nine months ended
                                            -------------------------------     ------------------------------
                                               October 29,     October 28,        October 29,     October 28,
                                                  2005            2006               2005            2006
                                            ---------------  --------------     --------------  --------------
<C>                                         <C>              <C>                <C>             <C>
Net sales                                   $       107,135  $       22,228     $      312,748  $       63,797
                                            ===============  ==============     ==============  ==============
Impairment, restructuring and other
     non-recurring charges (reversals)      $         9,846  $       (1,976)    $       44,681  $          286
                                            ===============  ==============     ==============  ==============
Earnings (loss) before income taxes                  12,139           3,949            (93,368)          5,699
Income taxes                                          3,830           1,395            (27,776)         (4,191)
                                            ---------------  --------------     --------------  --------------
Net earnings (loss)                         $         8,309  $        2,554     $      (65,592) $        9,890
                                            ===============  ==============     ==============  ==============
Diluted earnings (loss) per share           $          0.31  $         0.10     $        (2.38) $         0.38
                                            ===============  ==============     ==============  ==============
</TABLE>

Income taxes for the nine months ended October 28, 2006 includes a $6,300
reversal of allowances for tax exposures (related to a 2003 discontinued
operation) no longer deemed necessary due to finalization of an open tax year.

Summarized assets and liabilities of the discontinued operations are as
follows:

<TABLE>
<CAPTION>
                                                               January 28,      October 29,     October 28,
                                                                  2006             2005            2006
                                                             --------------  ---------------  --------------
<C>                                                          <C>             <C>              <C>
Cash and cash equivalents                                    $          253  $           561  $            5
Receivables, net                                                     42,806           65,080          12,227
Inventories                                                          13,481           31,238          11,749
Current deferred taxes and prepaid expenses                          33,671            5,640           1,732
                                                             --------------  ---------------  --------------
Current assets of discontinued operations                    $       90,211  $       102,519  $       25,713
                                                             ==============  ===============  ==============

Property, plant and equipment, net                           $        1,648  $         2,437  $        1,296
Goodwill                                                              2,995            2,995           2,995
Prepaid taxes                                                             -            1,590               -
Other assets                                                          1,155              302             895
                                                             --------------  ---------------  --------------
Long-term assets of discontinued operations                  $        5,798  $         7,324  $        5,186
                                                             ==============  ===============  ==============

Accounts payable                                             $       17,924  $        22,041  $        6,522
Accrued liabilities                                                  25,660            2,766          13,386
                                                             --------------  ---------------  --------------
Current liabilities of discontinued operations               $       43,584  $        24,807  $       19,908
                                                             ==============  ===============  ==============
</TABLE>

The accrued liabilities reflect the discontinued operations classification of
New Campaign and IZOD and also include charges taken in connection with the
2005 Restructuring Plan that have not yet been paid and primarily relate to
contractual obligations and employee severance and termination benefits. As
noted above, the transactions related to the New Campaign and IZOD women's
sportswear operations are expected to close in the first quarter and second
quarter of 2007, respectively.


                                      23

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


RECONCILIATION OF OPERATING RESULTS - CONTINUING OPERATIONS
The following tables provide non-GAAP operating results for the three and nine
month periods ended October 29, 2005 and October 28, 2006, for the ongoing
operations, income tax repatriation and impairment, restructuring and other
non-recurring charges, separately. The tables present this breakdown of our
operations in a manner that reconciles to our consolidated results as
presented in the condensed consolidated financial statements. The non-GAAP
results of operations for the ongoing operations are presented separately from
the income tax repatriation and impairment, restructuring and other
non-recurring charges to enhance the user's overall understanding of our
current financial performance. We believe the non-GAAP adjusted operating
results provide useful information to both management and investors by
excluding non-recurring expenses that we believe are not indicative of our
core operating results. Operating results for ongoing operations is the
primary measure used by management to evaluate our performance, as well as the
performance of our divisions and segments. The non-GAAP financial information
should be considered in addition to, not as a substitute for or as being
superior to, operating income, cash flows or other measures of financial
performance prepared in accordance with GAAP. The following reconciliation and
analysis is for continuing operations only.

THREE MONTHS ENDED OCTOBER 29, 2005

<TABLE>
<CAPTION>
                                                             Impairment,
                                                          restructuring and
                                           Total             other non-          Income Tax            Ongoing
                                        Continuing        recurring charges     Repatriation          Operations
                                    ------------------   ------------------- -------------------  -------------------
<C>                                 <C>                  <C>                 <C>                  <C>
Net sales                           $          519,962   $            2,400  $                 -  $           522,362
Cost of products sold                          417,203               (5,243)                   -              411,960
                                    ------------------   ------------------  -------------------  -------------------
Gross profit                                   102,759                7,643                    -              110,402
SG&A                                            80,169                    -                    -               80,169
Stock option expense                                 -                    -                    -                    -
Amortization of intangibles                      2,572                    -                    -                2,572
Impairment, restructuring and
   other non-recurring charges                   2,941               (2,941)                   -                    -
Interest expense, net                            5,831                    -                    -                5,831
Other expense, net                                (389)                   -                    -                 (389)
                                    ------------------   ------------------  -------------------  -------------------
Earnings before taxes                           11,635               10,584                    -               22,219
Income taxes                                     3,756                3,176                    -                6,932
                                    ------------------   ------------------  -------------------  -------------------
Net earnings from
   continuing operations            $            7,879   $            7,408  $                 -  $            15,287
                                    ==================   ==================  ===================  ===================
Effective tax rate                               32.3%                30.0%                   NM                31.2%



                                      24

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


<CAPTION>
THREE MONTHS ENDED OCTOBER 28, 2006
                                                             Impairment,
                                                          restructuring and
                                           Total              other non-         Income Tax            Ongoing
                                        Continuing        recurring charges     Repatriation          Operations
                                    ------------------   ------------------- -------------------  -------------------
<C>                                 <C>                  <C>                 <C>                  <C>
Net sales                           $          516,397   $                -  $                 -  $           516,397
Cost of products sold                          402,621                    -                    -              402,621
                                    ------------------   ------------------  -------------------  -------------------
Gross profit                                   113,776                    -                    -              113,776
SG&A                                            82,227                    -                    -               82,227
Stock option expense                               468                    -                    -                  468
Amortization of intangibles                      2,628                    -                    -                2,628
Impairment, restructuring and
   other non-recurring charges                  19,041              (19,041)                   -                    -
Interest expense, net                            3,613                    -                    -                3,613
Other income, net                                 (614)                   -                    -                 (614)
                                    ------------------   ------------------  -------------------  -------------------
Earnings before taxes                            6,413               19,041                    -               25,454
Income taxes                                       892                6,949                    -                7,841
                                    ------------------   ------------------  -------------------  -------------------
Net earnings from
   continuing operations            $            5,521   $           12,092  $                 -  $            17,613
                                    ==================   ==================  ===================  ===================
Effective tax rate                               13.9%                36.5%                   NM                30.8%

<CAPTION>
NINE MONTHS ENDED OCTOBER 29, 2005
                                                             Impairment,
                                                          restructuring and
                                           Total             other non-          Income Tax            Ongoing
                                        Continuing        recurring charges     Repatriation          Operations
                                    ------------------   ------------------- -------------------  -------------------
<C>                                 <C>                  <C>                 <C>                  <C>
Net sales                           $        1,515,564   $            2,450  $                 -  $         1,518,014
Cost of products sold                        1,199,894               (5,243)                   -            1,194,651
                                    ------------------   ------------------  -------------------  -------------------
Gross profit                                   315,670                7,693                    -              323,363
SG&A                                           246,814                    -                    -              246,814
Stock option expense                                 -                    -                    -                    -
Amortization of intangibles                      8,143                    -                    -                8,143
Impairment, restructuring and
   other non-recurring charges                  39,968              (39,968)                   -                    -
Interest expense, net                           18,376                    -                    -               18,376
Other income, net                                 (882)                   -                    -                 (882)
                                    ------------------   ------------------  -------------------  -------------------
Earnings before taxes                            3,251               47,661                    -               50,912
Income taxes                                   (11,416)              14,300               13,000               15,884
                                    ------------------   ------------------  -------------------  -------------------
Net earnings from
   continuing operations            $           14,667   $           33,361  $           (13,000) $            35,028
                                    ==================   ==================  ===================  ===================
Effective tax rate                                  NM                30.0%                   NM                31.2%




                                      25

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


<CAPTION>
NINE MONTHS ENDED OCTOBER 28, 2006
                                                             Impairment,
                                                          restructuring and
                                           Total             other non-          Income Tax            Ongoing
                                        Continuing        recurring charges     Repatriation          Operations
                                    ------------------   ------------------- -------------------  -------------------
<C>                                 <C>                  <C>                 <C>                  <C>
Net sales                           $        1,469,822   $                -  $                 -  $         1,469,822
Cost of products sold                        1,159,779                    -                    -            1,159,779
                                    ------------------   ------------------  -------------------  -------------------
Gross profit                                   310,043                    -                    -              310,043
SG&A                                           243,229                    -                    -              243,229
Stock option expense                             3,877                    -                    -                3,877
Amortization of intangibles                      7,692                    -                    -                7,692
Impairment, restructuring and
   other non-recurring charges                  25,957              (25,957)                   -                    -
Interest expense, net                           11,478                    -                    -               11,478
Other income, net                               (1,937)                   -                    -               (1,937)
                                    ------------------   ------------------  -------------------  -------------------
Earnings before taxes                           19,747               25,957                    -               45,704
Income taxes                                     5,202                9,423                    -               14,625
                                    ------------------   ------------------  -------------------  -------------------
Net earnings from
   continuing operations            $           14,545   $           16,534  $                 -  $            31,079
                                    ==================   ==================  ===================  ===================
Effective tax rate                               26.3%                36.3%                   NM                32.0%

<FN>
NM - Not meaningful
</TABLE>

CONTINUING OPERATIONS - ONGOING OPERATIONS: The following tables provide
non-GAAP summarized financial data for the three and nine month periods ended
October 29, 2005 and October 28, 2006 (percentages are calculated based on
actual data and columns may not add due to rounding). These tables present the
same information for the ongoing operations as presented in the Reconciliation
of Operating Results - Continuing Operations shown earlier. The non-GAAP
financial information should be considered in addition to, not as a substitute
for or as being superior to, operating income, cash flows or other measures of
financial performance prepared in accordance with GAAP.

<TABLE>
<CAPTION>
                                              Three months ended                       Nine months ended
                                    --------------------------------------  --------------------------------------
                                     October 29,  October 28,    Percent     October 29,  October 28,    Percent
                                        2005         2006        Change         2005         2006        Change
                                    ------------ ------------ ------------  ------------ ------------ ------------
<C>                                 <C>          <C>          <C>           <C>          <C>          <C>
Net sales                           $    522,362 $    516,397        (1.1%) $  1,518,014 $  1,469,822        (3.2%)
Cost of products sold                    411,960      402,621        (2.3%)    1,194,651    1,159,779        (2.9%)
                                    ------------ ------------ ------------  ------------ ------------ ------------
Gross profit                             110,402      113,776         3.1%       323,363      310,043        (4.1%)
SG&A                                      80,169       82,227         2.6%       246,814      243,229        (1.5%)
                                    ------------ ------------ ------------  ------------ ------------ ------------
Operating earnings before
    stock option expense
    and amortization(1)                   30,233       31,549         4.4%        76,549       66,814       (12.7%)
Stock option expense                           -          468           NM             -        3,877           NM
Amortization of intangibles                2,572        2,628         2.2%         8,143        7,692        (5.5%)
                                    ------------ ------------ ------------  ------------ ------------ ------------
Operating earnings                        27,661       28,453         2.9%        68,406       55,245       (19.2%)
Interest expense, net                      5,831        3,613       (38.0%)       18,376       11,478       (37.5%)
Other income, net                           (389)        (614)       57.8%          (882)      (1,937)      119.6%
                                    ------------ ------------ ------------  ------------ ------------ ------------
Earnings before taxes                     22,219       25,454        14.6%        50,912       45,704       (10.2%)
Income taxes                               6,932        7,841        13.1%        15,884       14,625        (7.9%)
                                    ------------ ------------ ------------  ------------ ------------ ------------
Net earnings from
    continuing operations           $     15,287 $     17,613        15.2%  $     35,028 $     31,079       (11.3%)
                                    ============ ============ ============  ============ ============ ============
Effective tax rate                         31.2%        30.8%                      31.2%        32.0%


                                      26

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


<CAPTION>
                                              Three months ended                       Nine months ended
                                    --------------------------------------  --------------------------------------
                                     October 29,  October 28,                October 29,  October 28,
As a percentage of net sales:           2005         2006      Difference       2005         2006      Difference
-----------------------------       ------------ ------------ ------------  ------------ ------------ ------------
<C>                                 <C>          <C>          <C>           <C>          <C>          <C>
Net sales                                 100.0%       100.0%         0.0%        100.0%       100.0%         0.0%
Cost of products sold                      78.9%        78.0%        (0.9%)        78.7%        78.9%         0.2%
                                    ------------ ------------ ------------  ------------ ------------ ------------
Gross profit                               21.1%        22.0%         0.9%         21.3%        21.1%        (0.2%)
SG&A                                       15.3%        15.9%         0.6%         16.3%        16.5%         0.2%
                                    ------------ ------------ ------------  ------------ ------------ ------------
Operating earnings before
    stock option expense
    and amortization(1)                     5.8%         6.1%         0.3%          5.0%         4.5%        (0.5%)
Stock option expense                        0.0%         0.1%         0.1%          0.0%         0.3%         0.3%
Amortization of intangibles                 0.5%         0.5%         0.0%          0.5%         0.5%         0.0%
                                    ------------ ------------ ------------  ------------ ------------ ------------
Operating earnings                          5.3%         5.5%         0.2%          4.5%         3.8%        (0.7%)
Interest expense, net                       1.1%         0.7%        (0.4%)         1.2%         0.8%        (0.4%)
Other income, net                          (0.1%)       (0.1%)        0.0%         (0.1%)       (0.1%)        0.0%
                                    ------------ ------------ ------------  ------------ ------------ ------------
Earnings before taxes                       4.3%         4.9%         0.6%          3.4%         3.1%        (0.3%)
Income taxes                                1.3%         1.5%         0.2%          1.0%         1.0%         0.0%
                                    ------------ ------------ ------------  ------------ ------------ ------------
Net earnings from
    continuing operations                   2.9%         3.4%         0.5%          2.3%         2.1%        (0.2%)
                                    ============ ============ ============  ============ ============ ============

<FN>
NM - Not meaningful

(1) Operating earnings before stock option expense and amortization is a
non-GAAP measure that differs from operating earnings in that it excludes
stock option expense and amortization of intangibles. Operating earnings
before stock option expense and amortization should not be considered as an
alternative to operating earnings. Operating earnings before stock option
expense and amortization is the primary measure used by management to evaluate
our performance, as well as the performance of our divisions and segments.
Management believes the comparison of operating earnings before stock option
expense and amortization between periods is useful in showing the interaction
of changes in gross profit and SG&A without inclusion of stock option expense
and amortization of intangibles, the change in which is explained elsewhere.
The subtotal of operating earnings before stock option expense and
amortization may not be comparable to any similarly titled measure used by
another company.
</TABLE>

SEASONALITY Kellwood's businesses are seasonal and are impacted by the general
seasonal trends characteristic of the apparel industry. We generally sell our
products prior to the principal retail selling seasons: spring, summer, fall
and holiday. As the timing of shipment of products may vary from year to year,
the result for any particular quarter may not be indicative of results for the
full year.

SALES for ongoing operations for the third quarter of 2006 were $516,397,
decreasing $5,965 or 1.1% versus the third quarter of 2005. Sales in our Other
Soft Goods and Men's Sportswear segments achieved strong growth. This was
offset by a decline in sales due to cutbacks in Fall open-to-buy for some of
our legacy brands as well as customer consolidation at retail associated with
our Women's Sportswear segment. Sales for ongoing operations for the nine
months ended October 28, 2006 were $1,469,822, decreasing $48,192 or 3.2%
versus the nine months ended October 29, 2005. The decline in sales for the
nine months ended October 28, 2006 is due to a decrease in orders for certain
legacy brands and consolidations at retail associated with our Women's
Sportswear segment.

GROSS PROFIT for ongoing operations for the third quarter of 2006 was $113,776
or 22.0% of sales, increasing $3,374 or 0.9 percentage points versus the third
quarter of 2005. The increase in our gross margin rate of 0.9 percentage
points for the three months ended October 28, 2006 resulted from improved
performance by many of our brands at retail, which resulted in lower markdown
allowances and reduced costs of liquidating surplus inventory. Gross profit
for ongoing operations for the nine months ended October 28, 2006 was $310,043
or 21.1% of sales, decreasing $13,320 versus the nine months ended October 29,
2005, due to the decrease in sales.

                                      27

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


SG&A EXPENSE for ongoing operations for the third quarter of 2006 was $82,227,
increasing $2,058 or 2.6% versus the third quarter of 2005. The increase in
SG&A expense for the three months ended October 28, 2006 is primarily due to
changes in the timing of the accrual of incentive programs. SG&A expense for
ongoing operations for the nine months ended October 28, 2006 was $243,229 or
16.5% of sales, decreasing $3,585 versus the nine months ended October 29,
2005. In anticipation of lower sales levels we took various actions to resize
parts of our organization and reduce our expenses for the nine months ended
October 28, 2006.

INTEREST EXPENSE, NET for ongoing operations for the third quarter of 2006
decreased $2,218 or 38.0% versus the third quarter of 2005. Interest expense
for the third quarter of 2006 was $8,839, increasing $621 versus the third
quarter of 2005. Interest income for the third quarter of 2006 was $5,226,
increasing $2,839 versus the third quarter of 2005. Interest expense, net for
ongoing operations for the nine months ended October 28, 2006 decreased $6,898
or 37.5% versus the nine months ended October 29, 2005. Interest expense for
the nine months ended October 28, 2006 was $26,095, increasing $1,707 versus
the nine months ended October 29, 2005. Interest income for the nine months
ended October 28, 2006 was $14,617, increasing $8,605 versus the nine months
ended October 29, 2005. The decline in our interest expense, net for the three
and nine month periods ended October 28, 2006 is due to an increase in
interest income resulting from higher short term interest rates and an
increase in cash due to the successful execution of the 2005 Restructuring
Plan.

INCOME TAXES. Our effective tax rates on pretax earnings from ongoing
operations for the three and nine month periods ended October 28, 2006 were
30.8% and 32.0%, respectively. These rates differ from the U.S. statutory rate
of 35.0% due to the lower tax rate on foreign earnings that will be
permanently invested offshore and was lowered to 32.0% during the third
quarter based on higher projected foreign earnings, which are taxed at a lower
rate.

SHARE-BASED COMPENSATION
------------------------
On January 29, 2006, we adopted Statement of Financial Accounting Standard
(SFAS) No. 123(R), Share-Based Payment (SFAS No. 123(R)), requiring the
recognition of compensation expense in the Condensed Consolidated Statement
of Operations related to the fair value of our employee share-based options.
SFAS No. 123(R) revises SFAS No. 123, Accounting for Stock-Based
Compensation, and supercedes Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees (APB Opinion No. 25).
See Note 10 to Condensed Consolidated Financial Statements for additional
discussion.

We will recognize the cost of all employee stock options on a straight-line
attribution over their respective vesting periods, net of estimated
forfeitures. We have selected the modified prospective method of transition;
accordingly, prior periods have not been restated. We have not modified any
unvested awards subsequent to adoption. Prior to adopting SFAS No. 123(R), we
applied APB Opinion No. 25, and related Interpretations in accounting for our
stock-based compensation plans. All employee stock options were granted at or
above the grant date market price. Accordingly, no compensation cost was
recognized for fixed stock option grants in prior periods. For the nine months
ended October 28, 2006, we recorded $3,877 of stock option expense; we expect
$468 to be expensed during the fourth quarter of 2006 and $1,371 of stock
option expense in fiscal year 2007.

GOODWILL AND OTHER INTANGIBLE ASSETS
------------------------------------
Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other
indefinite-lived intangible assets are no longer amortized but are reviewed
for impairment at least annually and if a triggering event were to occur in an
interim period. No triggering events have occurred in 2006. We will complete
our annual goodwill impairment assessment in the fourth quarter of 2006. It is
possible that our estimates of future operating results for certain of our
divisions could change adversely and impact the evaluation of the
recoverability of the carrying value of goodwill and that the effect of such
changes on our Condensed Consolidated Financial Statements could be material.
While we believe that the current recorded carrying value of our goodwill is
not impaired, there can be no assurance that a significant non-cash write-down
or write-off will not be required in the future.


                                      28

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


NEW ACCOUNTING STANDARDS
------------------------
In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 157, Fair Value Measurements (SFAS No. 157), which defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP) and expands disclosures about fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. We are currently evaluating the impact of SFAS No. 157 on
our financial statements.

In September 2006, the FASB issued SFAS No. 158, Employer's Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R) (SFAS No. 158), which requires an
employer to recognize the overfunded or underfunded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position and to recognize changes in
the funded status in the year in which the changes occur. SFAS No. 158 also
requires an employer to measure the funded status of a plan as of the date of
its year-end statement of financial position, with limited exceptions. An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006. We are currently evaluating the impact of SFAS No. 158 on
our financial statements.

In June 2006, the FASB issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN
48), which clarifies the accounting for uncertainty in income tax positions.
This Interpretation requires that the financial statement effects of a tax
position taken or expected to be taken in a tax return are to be recognized in
the financial statements when it is more likely than not, based on the
technical merits, that the position will be sustained upon examination. FIN 48
is effective for fiscal years beginning after December 15, 2006. We are
currently evaluating the impact of FIN 48 on our financial statements and do
not believe its adoption will significantly impact our financial position.

DISCONTINUED OPERATIONS: The following table provides summarized operating
results for the three and nine month periods ended October 29, 2005 and
October 28, 2006, for the discontinued operations.

<TABLE>
<CAPTION>
                                                      Three months ended              Nine months ended
                                                 ----------------------------   ----------------------------
                                                  October 29,     October 28,    October 29,    October 28,
                                                     2005            2006           2005           2006
                                                 -------------  -------------   -------------  -------------
<C>                                              <C>            <C>             <C>            <C>
Net sales                                        $     107,135  $      22,228   $     312,748  $      63,797
Cost of products sold                                   69,998         16,534         311,128         46,107
                                                 -------------  -------------   -------------  -------------
Gross profit                                            37,137          5,694           1,620         17,690
SG&A                                                    15,192          3,725          49,532         11,741
                                                 -------------  -------------   -------------  -------------
Operating earnings (loss) before amortization
    and impairment, restructuring and other
    non-recurring charges(1)                            21,945          1,969         (47,912)         5,949
Amortization of intangibles                                  5              -             842              -
Impairment, restructuring and other
    non-recurring charges (reversals)                    9,846         (1,976)         44,681            286
                                                 -------------  -------------   -------------  -------------
Operating earnings (loss)                               12,094          3,945         (93,435)         5,663
Interest expense, net                                        -              -               -              -
Other income, net                                          (45)            (4)            (67)           (36)
                                                 -------------  -------------   -------------  -------------
Earnings (loss) before taxes                            12,139          3,949         (93,368)         5,699
Income taxes                                             3,830          1,395         (27,776)        (4,191)
                                                 -------------  -------------   -------------  -------------
Net earnings (loss) from discontinued operations $       8,309  $       2,554   $     (65,592) $       9,890
                                                 =============  =============   =============  =============
Effective tax rate                                       31.6%          35.3%           29.7%             NM

<FN>
NM - Not meaningful

See following page for footnote (1) to above table.

                                      29

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


(1) Operating earnings (loss) before amortization and impairment,
restructuring and other non-recurring charges is a non-GAAP measure that
differs from operating (loss) earnings in that it excludes amortization of
intangibles and impairment, restructuring and other non-recurring charges.
Operating earnings (loss) before amortization and impairment, restructuring
and other non-recurring charges should not be considered as an alternative to
operating earnings (loss). Operating earnings (loss) before amortization and
impairment, restructuring and other non-recurring charges is the primary
measure used by management to evaluate our performance, as well as the
performance of our divisions and segments. Management believes the comparison
of operating earnings (loss) before amortization and impairment, restructuring
and other non-recurring charges between periods is useful in showing the
interaction of changes in gross profit and SG&A without inclusion of the
amortization of intangibles and impairment, restructuring and other
non-recurring charges, the changes in which are explained elsewhere. The
subtotal of operating earnings (loss) before amortization and impairment,
restructuring and other non-recurring charges may not be comparable to any
similarly titled measure used by another company.
</TABLE>

During the third quarter of 2006, our New Campaign and IZOD women's
sportswear operations became discontinued. The transactions related to New
Campaign and IZOD are expected to close in the first quarter and the second
quarter of 2007, respectively. The other discontinued businesses ceased
operations in 2005. The sales amount related to the 2005 ceased operations
for the three and nine month periods ending October 29, 2005 primarily
represents the reversal of accrued estimated discounts, returns and
allowances determined not to be necessary. SG&A expense related to the 2005
ceased operations represents expenses for final asset liquidation
activities.

Income taxes for the nine months ended October 28, 2006 includes a $6,300
reversal of allowances for tax exposures (related to a 2003 discontinued
operation) no longer deemed necessary due to finalization of an open tax year.

Our effective tax rate on discontinued operations for the three months ended
October 28, 2006 was 35.3%. Our effective tax rate on discontinued operations,
excluding the reversal of tax reserves (see Note 3 to Condensed Consolidated
Financial Statements for further information related to the reversal of tax
reserves), was 37.0% for the nine months ended October 28, 2006.

SEGMENT RESULTS
---------------
We and our subsidiaries are principally engaged in the apparel and related
soft goods industry. Our divisions are aggregated into the following
reportable segments:

     o    Women's Sportswear,
     o    Men's Sportswear,
     o    Other Soft Goods, and
     o    General Corporate.

RECONCILIATION OF SEGMENT RESULTS - CONTINUING OPERATIONS: The following
tables provide the non-GAAP segment net sales and earnings (loss) for the
three and nine month periods ended October 29, 2005, for the ongoing
operations and impairment, restructuring and other non-recurring charges
separately. The tables present this breakdown of our operations in a manner
that reconciles to our consolidated results. The non-GAAP segment net sales
and earnings (loss) for the ongoing operations are provided separately from
impairment, restructuring and other non-recurring charges to enhance the
user's overall understanding of our current financial performance. We believe
that the non-GAAP segment net sales and earnings (loss) provide useful
information to both management and investors by excluding sales and expenses
that we believe are not indicative of our core operating results. Segment net
sales and earnings (loss) for ongoing operations are the primary measures we
use to evaluate our performance, as well as the performance of our divisions.
The non-GAAP financial information should be considered in addition to, not as
a substitute for or as being superior to, operating income, cash flows or
other measures of financial performance prepared in accordance with GAAP.
Segment sales and earnings (loss) for the three and nine month periods ended
October 28, 2006 do not include impairment, restructuring and other
non-recurring charges; therefore, ongoing and continuing operations are the
same, and no reconciliation is necessary.


                                      30

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


<TABLE>
<CAPTION>
                              Three months ended October 29, 2005            Nine months ended October 29, 2005
                        ---------------------------------------------- ----------------------------------------------
                                          Impairment,                                    Impairment,
                                         restructuring                                  restructuring
                                           and other                                      and other
                              Total      non-recurring     Ongoing          Total       non-recurring      Ongoing
Net sales                  Continuing       charges       Operations     Continuing        charges       Operations
---------               --------------- -------------- --------------- --------------- -------------- ---------------
<C>                     <C>             <C>            <C>             <C>             <C>            <C>
Women's Sportswear      $       317,187 $        2,400 $       319,587 $       894,336 $        2,400 $       896,736
Men's Sportswear                131,575              -         131,575         379,629              -         379,629
Other Soft Goods                 71,200              -          71,200         241,599             50         241,649
                        --------------- -------------- --------------- --------------- -------------- ---------------
Total net sales         $       519,962 $        2,400 $       522,362 $     1,515,564 $        2,450 $     1,518,014
                        =============== ============== =============== =============== ============== ===============

<CAPTION>
                              Three months ended October 29, 2005            Nine months ended October 29, 2005
                        ---------------------------------------------- ----------------------------------------------
                                          Impairment,                                   Impairment,
                                         restructuring                                 restructuring
                                           and other                                     and other
                              Total      non-recurring     Ongoing          Total      non-recurring      Ongoing
Segment earnings (loss)    Continuing       charges       Operations     Continuing       charges       Operations
----------------------- --------------- -------------- --------------- --------------- -------------- ---------------
<C>                     <C>             <C>            <C>             <C>             <C>            <C>
Women's Sportswear      $        15,244 $        7,614 $        22,858 $        41,960 $        7,614 $        49,574
Men's Sportswear                 11,208              -          11,208          37,167              -          37,167
Other Soft Goods                  6,430             29           6,459          22,787             79          22,866
General Corporate               (10,292)             -         (10,292)        (33,058)             -         (33,058)
                        --------------- -------------- --------------- --------------- -------------- ---------------
Segment earnings (loss) $        22,590 $        7,643 $        30,233 $        68,856 $        7,693 $        76,549
                        =============== ============== =============== =============== ============== ===============
</TABLE>

ONGOING OPERATIONS: The following tables provide segment sales and earnings
(loss) for the three and nine months ended October 29, 2005 and October 28,
2006. These tables provide non-GAAP data for ongoing operations and present
the same information for the ongoing operations as presented in the
Reconciliation of Segment Results - Continuing Operations shown earlier for
the three and nine month periods ended October 29, 2005. The non-GAAP
information should be considered in addition to, not as a substitute for or as
being superior to, operating income, cash flows or other measures of financial
performance prepared in accordance with GAAP. Segment sales and earnings
(loss) for the three and nine months ended October 28, 2006 do not include
impairment, restructuring and other non-recurring charges; therefore, ongoing
and continuing operations are the same.

<TABLE>
<CAPTION>
                                         Three months ended                          Nine months ended
                             ------------------------------------------  -----------------------------------------
                              October 29,    October 28,     Percent      October 29,   October 28,     Percent
Net sales                        2005           2006         Change          2005          2006         Change
---------                    -------------  ------------  -------------  ------------  ------------- -------------
<C>                          <C>            <C>           <C>            <C>           <C>           <C>
Women's Sportswear           $     319,587  $    293,734          (8.1%) $    896,736  $     834,233         (7.0%)
Men's Sportswear                   131,575       140,690           6.9%       379,629        390,915          3.0%
Other Soft Goods                    71,200        81,973          15.1%       241,649        244,674          1.3%
                             -------------  ------------  -------------  ------------  ------------- -------------
Total net sales              $     522,362  $    516,397          (1.1%) $  1,518,014  $   1,469,822         (3.2%)
                             =============  ============  =============  ============  ============= =============

<CAPTION>
                                    Three months ended - amounts             Three months ended - percentages
                             ------------------------------------------  -----------------------------------------
                              October 29,    October 28,     Percent      October 29,   October 28,
Segment earnings (loss)          2005           2006         Change          2005          2006        Difference
-----------------------      -------------  ------------  -------------  ------------  ------------- -------------
<C>                          <C>            <C>           <C>            <C>           <C>           <C>
Women's Sportswear           $      22,858  $     22,771          (0.4%)         7.2%           7.8%          0.6%
Men's Sportswear                    11,208        11,273           0.6%          8.5%           8.0%         (0.5%)
Other Soft Goods                     6,459         9,374          45.1%          9.1%          11.4%          2.3%
General Corporate                  (10,292)      (11,869)         15.3%            NM             NM            NM
                             -------------  ------------  -------------  ------------  ------------- -------------
Segment earnings             $      30,233  $     31,549           4.4%          5.8%           6.1%          0.3%
                             =============  ============  =============  ============  ============= =============


                                      31

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


<CAPTION>
                                     Nine months ended - amounts              Nine months ended - percentages
                             ------------------------------------------  -----------------------------------------
                              October 29,    October 28,     Percent      October 29,   October 28,
Segment earnings (loss)          2005           2006         Change          2005          2006        Difference
-----------------------      -------------  ------------  -------------  ------------  ------------- -------------
<C>                          <C>            <C>           <C>            <C>           <C>           <C>
Women's Sportswear           $      49,574  $     49,766           0.4%          5.5%           6.0%          0.5%
Men's Sportswear                    37,167        29,650         (20.2%)         9.8%           7.6%         (2.2%)
Other Soft Goods                    22,866        25,680          12.3%          9.5%          10.5%          1.0%
General Corporate                  (33,058)      (38,282)         15.8%            NM             NM            NM
                             -------------  ------------  -------------  ------------  ------------- -------------
Segment earnings             $      76,549  $     66,814         (12.7%)         5.0%           4.5%         (0.5%)
                             =============  ============  =============  ============  ============= =============

<FN>
NM - Not meaningful
</TABLE>

WOMEN'S SPORTSWEAR. Sales for ongoing operations for the third quarter of 2006
were $293,734, decreasing $25,853 or 8.1% versus the third quarter of 2005.
Sales for ongoing operations for the nine months ended October 28, 2006 were
$834,233, decreasing $62,503 or 7.0% versus the nine months ended October 29,
2005. The decrease in sales for the three and nine month periods ended October
28, 2006 is due to cutbacks in Fall open-to-buy for some of our legacy brands
and customer consolidation at retail.

Segment earnings for ongoing operations for the third quarter of 2006 were
$22,771, consistent with the third quarter of 2005. Segment earnings for
ongoing operations for the nine months ended October 28, 2006 were $49,766,
increasing slightly by $192 from the nine months ended October 29, 2005.
Segment earnings were relatively consistent for the three and nine months
despite lower sales due to improved performance of our brands at retail,
including Sag Harbor(R), Briggs New York(R), XOXO(R) and Napa Valley(R)
sportswear, and David Meister(R) and Liz Claiborne(R) dresses. This resulted
in lower markdown allowances and reduced costs of liquidating surplus
inventory compared to last year.

MEN'S SPORTSWEAR. Sales for ongoing operations for the third quarter of 2006
were $140,690, increasing $9,115 or 6.9% versus the third quarter of 2005. The
increase in sales is due to growth in the Smart Shirts private label and
branded business and increased licensing revenue as a result of strong
performance of the Baby Phat(R) brand. Sales for ongoing operations for the
nine months ended October 28, 2006 were $390,915, increasing $11,286 or 3.0%
versus the nine months ended October 29, 2005. The increase in sales for the
nine months ended October 28, 2006 resulted primarily from Smart Shirts
private label sales.

Segment earnings for ongoing operations for the third quarter of 2006 were
$11,273, increasing slightly by $65 versus the third quarter of 2005. Segment
earnings for ongoing operations for the nine months ended October 28, 2006
were $29,650, decreasing $7,517 versus the nine months ended October 29, 2005.
The decrease in segment earnings for the nine months ended October 28, 2006 is
primarily due to lower gross margins during the first six months resulting
from competitive price pressure and enhancing the quality and fashion level of
our products.

OTHER SOFT GOODS. Sales for ongoing operations for the third quarter of 2006
were $81,973, increasing $10,773 or 15.1% versus the third quarter of 2005.
The increase in sales is due to strong replenishment orders and increased
sales of seasonal product for Gerber Childrenswear and increased sales of
non-traditional camping products. Sales for ongoing operations for the nine
months ended October 28, 2006 were $244,674, increasing $3,025 or 1.3% versus
the nine months ended October 29, 2005.

Segment earnings for ongoing operations for the third quarter of 2006 were
$9,374, increasing $2,915 versus the third quarter of 2005. Segment earnings
for ongoing operations for the nine months ended October 28, 2006 were
$25,680, increasing $2,814 versus the nine months ended October 29, 2005. The
increase in segment earnings for the three and nine month periods ended
October 28, 2006 is primarily due to the increase in sales while controlling
selling, general and administrative expenses at their previous level.

GENERAL CORPORATE. Expense for the third quarter of 2006 was $11,869,
increasing $1,577 versus the third quarter of 2005. Expense for the nine
months ended October 28, 2006 was $38,282, increasing $5,224 versus the nine
months ended October 29, 2005. The increase in expense for the three and nine
month periods ended October 28, 2006 is primarily due to changes in the timing
of the accrual of incentive programs.

                                      32

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


FINANCIAL CONDITION
-------------------
Cash flow from operations continues to be our primary source of funds to
finance operating needs, capital expenditures, debt service and acquisitions.
We use financial leverage to minimize the overall cost of capital and maintain
adequate operating and financial flexibility. Management monitors leverage
through our debt-to-capital ratio (defined as total debt divided by the sum of
total debt and total stockholders' equity, or total capital). At October 28,
2006, our debt-to-capital ratio was 44.7%, down 0.8 percentage points from
January 28, 2006 and up 0.7 percentage points from October 29, 2005. The
increase from October 29, 2005 was primarily due to our stock repurchase
program (Stock Repurchase Program).

In July 2005, we announced the Stock Repurchase Program of up to ten percent
or $75,000 of our stock. During fiscal year 2005, we repurchased 2,218,200
shares at an average price of $24.99 per share, totaling $55,430. During the
first quarter of 2006, we repurchased 173,600 shares at an average price of
$28.83 per share, totaling $5,006. We did not repurchase any shares under the
Stock Repurchase Program during the second and third quarters of 2006.
Management believes that the current cash will provide the capital flexibility
necessary to fund the restructuring and the announced stock repurchase
program, and to meet existing obligations and engage in acquisitions
supporting our business strategy.

NET CASH PROVIDED BY OPERATING ACTIVITIES decreased $69,240 from $93,870 for
the nine months ended October 29, 2005 to $24,630 for the nine months ended
October 28, 2006. The $69,240 decrease in net cash provided by operating
activities from the nine months ended October 29, 2005 is due primarily to the
seasonal increase in inventory, which last year was more than offset by
inventory reductions from inventory management initiatives, and 2006 payments
of liabilities associated with the 2005 Restructuring Plan, as well as reduced
inventory and accounts receivable balances related to discontinued operations.

Working Capital
Working capital is significantly influenced by sales patterns, which are
highly seasonal. Inventories, accounts payable and accrued expenses are highly
dependent upon sales levels and order lead times. Receivable levels are driven
by recent months' sales and customer payment experience. The working capital
fluctuations from January 28, 2006 to October 28, 2006 are primarily a result
of seasonality of our businesses along with the payment of liabilities in 2006
associated with the 2005 Restructuring Plan. Comparisons from October 29, 2005
to October 28, 2006 include:

     -    Accounts receivable increased $4,312 from $320,275 at October 29,
          2005 to $324,587 at October 28, 2006. Days sales outstanding were 55
          days at October 29, 2005 compared to 54 days at October 28, 2006.

     -    Inventories increased $20,909 from $204,843 at October 29, 2005 to
          $225,752 at October 28, 2006. Days supply were 59 days at October
          29, 2005 compared to 66 days at October 28, 2006. The increase in
          days supply is due to higher levels of inventory for fourth quarter
          shipments in the current year versus the prior year and use of third
          quarter manufacturing capacity to build inventory for fourth quarter
          sales.

     -    Accounts payable increased $22,190 from $138,939 at October 29, 2005
          to $161,129 at October 28, 2006 primarily as a result of improved
          management of vendor terms and higher inventory purchases.

     -    Accrued expenses decreased $3,712 from $93,352 at October 29, 2005
          to $89,640 at October 28, 2006 primarily as a result of lower
          accrued income taxes.

Working capital of discontinued operations decreased $67,443 from October 29,
2005 to October 28, 2006 due to reduced inventory and accounts receivable
balances as these businesses are being liquidated and sold.

NET CASH USED IN INVESTING ACTIVITIES decreased $1,179 from $21,140 for the
nine months ended October 29, 2005 to $19,961 for the nine months ended
October 28, 2006. The $19,961 of cash used in investing activities for the
nine months ended October 28, 2006 is due primarily to the additional cash
purchase consideration paid to Briggs New York Corp. ($6,446) and Phat
Fashions ($2,095), and capital expenditures of $13,875.


                                      33

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


In the ordinary course of business, we consider various strategic initiatives
including acquisitions, strategic alliances and divestitures of existing
businesses. Management believes that the combined current cash, cash generated
from operations and availability under credit facilities will continue to
provide the capital flexibility necessary to fund future opportunities and to
meet existing obligations.

Subsequent Event
On October 31, 2006, we completed the acquisition of CRL Group, LLC, owner of
the Vince(R) brand and trademark. Vince is a contemporary women's sportswear
collection. The acquisition of Vince will expand our marketing-focused
portfolio with higher profile, upscale brand offerings.

The total purchase price for Vince was $80.4 million, including net
receivables of $11.5 million, prior to any subsequent working capital
adjustments. We are in the process of evaluating the tangible and intangible
assets and expect the purchase price allocations to be finalized in 2007. The
Vince acquisition will be accounted for under the purchase method of
accounting. Accordingly, the results of Vince will be included in the
consolidated financial statements from the acquisition date in our fiscal
fourth quarter. Vince will be part of the Women's Sportswear Segment.

NET CASH USED IN FINANCING ACTIVITIES decreased $52,650 from $69,676 for the
nine months ended October 29, 2005 to $17,026 for the nine months ended
October 28, 2006. The $52,650 decrease was primarily due to reduced stock
purchases under the Stock Repurchase Program for the nine months ended October
28, 2006 compared to the nine months ended October 29, 2005.

On April 12, 2006, we executed a $400,000 five-year secured, syndicated credit
facility (the Senior Credit Facility) and terminated our prior $400,000
five-year unsecured, syndicated credit facility entered into on October 20,
2004. The Senior Credit Facility can be used to refinance existing
indebtedness, for letters of credit, for working capital needs and for other
general corporate purposes, including acquisitions. Borrowings under the
Senior Credit Facility bear interest at a rate equal to LIBOR plus a spread of
1.00% to 2.00%, with such spreads depending upon excess liquidity, as defined
in the credit agreement. At October 28, 2006, there were no borrowings
outstanding under the Senior Credit Facility. Letters of credit outstanding
under the Senior Credit Facility were $15,730 at October 28, 2006. See Note 7
to Condensed Consolidated Financial Statements for further information.

On December 21, 2005, our Asian operations executed a $50,000 five-year
unsecured, syndicated term and revolving credit facility agreement to support
its working capital needs (the Asian Credit Facility). The revolving portion
of the Asian Credit Facility (the Asian Revolving Credit Facility) is $25,000
and can be used for borrowings and/or letters of credit. The term portion of
the Asian Credit Facility (the Asian Term Credit Facility) is $25,000 and
requires semiannual payments of principal beginning November 2006. Borrowings
under the Asian Credit Facility bear interest at LIBOR plus a spread ranging
from 1.10% to 1.35% with such spread depending on our Asian operations'
leverage ratio. At October 28, 2006, there were $11,000 and $25,000 of
borrowings outstanding under the revolving and term portions of the Asian
Credit Facility, respectively. See Note 7 to Condensed Consolidated Financial
Statements for further information.

In addition to the revolving credit facilities discussed above, we maintain
uncommitted lines of credit, which totaled $39,043 at October 28, 2006. There
were no borrowings outstanding under these lines at October 28, 2006. We have
$10,984 in outstanding letters of credit used by our foreign operations under
these lines at October 28, 2006.

CASH AND CASH EQUIVALENTS increased $141,904 from $252,445 at October 29, 2005
to $394,349 at October 28, 2006. This increase was primarily due to working
capital freed up as part of the 2005 Restructuring Plan as well as borrowing
under the Asian Revolving Credit Facility.


                                      34

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS
-----------------------------------------------------------------
This Quarterly Report contains statements which, to the extent they are not
statements of historical or present fact, constitute "forward-looking
statements" within the meaning of the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.
These forward-looking statements represent our expectations or beliefs
concerning future events and are based on various assumptions and subject to a
wide variety of risks and uncertainties. Although we believe that our
expectations reflected in the forward-looking statements are reasonable, we
cannot and do not give any assurance that such expectations will prove to be
correct.

Our forward-looking statements are based on certain assumptions, and our
operations are subject to various risks and uncertainties. Any one of these
factors or any combination of these factors could materially affect the
results of our operations and cause actual results to differ materially from
our expectations. These factors should be read in conjunction with the risk
factors included in our Annual Report to Stockholders on Form 10-K for 2005
(the fiscal year ended January 28, 2006). These factors include but are not
limited to:

     o    intense competition in the apparel industry on many fronts,
          including the following:
          -    establishing and maintaining favorable brand recognition,
          -    developing products that appeal to consumers,
          -    pricing products appropriately,
          -    obtaining access to and sufficient floor space in retail
               outlets;
     o    failing to continually anticipate fashion trends and customer
          tastes;
     o    uncertainties regarding consumer confidence and spending patterns;
     o    concentration of our customers;
     o    consolidation and change in the retail industry;
     o    loss of key personnel;
     o    impact of the extent of foreign sourcing and manufacturing, such as:
          -    uncertainty caused by the elimination of import quotas in
               China,
          -    political and economic instability in countries where our
               products are manufactured,
          -    imposition of regulations and quotas relating to imports,
          -    imposition of duties, taxes and other charges on imports,
          -    significant fluctuation of the value of the dollar against
               foreign currencies,
          -    restrictions on the transfer of funds to or from foreign
               countries,
          -    political instability, military conflict, or terrorism
               involving the United States,
          -    disease epidemics and health related concerns,
          -    reduced manufacturing flexibility because of geographic
               distance between us and our foreign manufacturers,
          -    violations by foreign contractors of labor and wage standards;
     o    continued value of licensed brands;
     o    ability to generate sufficient sales to offset the minimum royalty
          payments we must pay with respect to these products;
     o    inability to protect our intellectual property rights;
     o    fluctuations in the price, availability and quality of raw
          materials;
     o    reliance on independent manufacturers; and
     o    availability of suitable acquisition candidates and integrating them
          into our existing business.

The words "believe", "expect", "will", "estimate", "project", "forecast",
"planned", "should", "anticipate" and similar expressions may identify
forward-looking statements. Additionally, all statements other than statements
of historical facts included in this Form 10-Q are forward-looking.

                                      35

<PAGE>
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          -----------------------------------------------------------
                     AND RESULTS OF OPERATIONS (continued)
                     -------------------------------------
                 (Dollars in thousands, except per share data)


Forward-looking statements are not guarantees, as actual results could differ
materially from those expressed or implied in forward-looking statements. We
specifically disclaim any obligation to publicly update, modify, retract or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. All forward-looking statements contained herein,
the entire contents of our website, and all subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf,
are expressly qualified in their entirety by this cautionary statement.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------  ----------------------------------------------------------

At October 28, 2006, our debt portfolio was composed of 93% fixed-rate debt.
Our strategy regarding management of our exposure to interest rate
fluctuations did not change significantly during the quarter. Management does
not expect any significant changes in our exposure to interest rate
fluctuations or in how such exposure is managed during 2006.

Based on quoted market prices obtained through independent pricing sources for
the same or similar types of borrowing arrangements, our long-term debt has a
market value of approximately $499,812, which compares to the book value of
$505,922. Various financial instruments that we issue are sensitive to changes
in interest rates. Market interest rate changes would result in increases or
decreases in the market value of our fixed-rate debt. With respect to our
fixed-rate debt outstanding at October 28, 2006, a 10% increase in interest
rates would have resulted in approximately a $21,481 decrease in the market
value of our fixed-rate debt; a 10% decrease in interest rates would have
resulted in approximately a $23,175 increase in the market value of our
fixed-rate debt.

In addition, we do not believe that foreign currency risk, commodity price or
inflation risk are expected to be material to our business or our consolidated
financial position, results of operations or cash flows.

ITEM 4. CONTROLS AND PROCEDURES
-------------------------------

Disclosure Controls and Procedures

Our management, under the direction of our Chief Executive Officer and our
Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934) as of October 28, 2006. Based upon this
evaluation, our management, including our Chief Executive Officer and Chief
Financial Officer, concluded that our disclosure controls and procedures were
effective as of October 28, 2006 to ensure that information required to be
disclosed in the reports that we file or submit under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms,
and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding financial disclosures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during
the third quarter of fiscal 2006 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.


                                      36

<PAGE>
<PAGE>

PART II.  OTHER INFORMATION
--------  -----------------

ITEM 6. EXHIBITS
----------------

<TABLE>
<CAPTION>
S.E.C. Exhibit
Reference No.              Description
-------------              -----------
<C>                        <C>
10.32                      Supplemental Amendment No. 1 dated August 3, 2006
                           to US $50,000,000 Term and Revolving Credit
                           Facility Agreement by and among Smart Shirts
                           Limited, certain guarantors thereto and Banc of
                           America Securities Asia Limited as facility agent.

31.1                       Certification of Chief Executive Officer pursuant
                           to Section 302 of the Sarbanes-Oxley Act of 2002,
                           filed herewith.

31.2                       Certification of Chief Financial Officer pursuant
                           to Section 302 of the Sarbanes-Oxley Act of 2002,
                           filed herewith.

32                         Certification of Chief Executive Officer and Chief
                           Financial Officer pursuant to Section 906 of the
                           Sarbanes-Oxley Act of 2002, furnished herewith.
</TABLE>




                                      37

<PAGE>
<PAGE>

SIGNATURES

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

KELLWOOD COMPANY


December 6, 2006             /s/ W. Lee Capps III
                             ---------------------------------------------------
                             W. Lee Capps III
                             Chief Operating Officer and Chief Financial Officer
                             (Principal Financial Officer)


December 6, 2006             /s/ Gregory W. Kleffner
                             ---------------------------------------------------
                             Gregory W. Kleffner
                             Senior Vice President Finance and Controller
                             (Principal Accounting Officer)




                                      38