UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  Form
10-Q  (X)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934  For
the quarterly period ended June 30, 2009 or  (
 )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934  Commission File Number 1-13082  KENNETH COLE PRODUCTIONS, INC. (Exact name of registrant as specified in its charter)  New York
13-3131650(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)  603 West 50th Street, New York, NY
10019(Address of principal executive offices)
(Zip Code)  (212)
265-1500 (Registrants telephone number, including area code)  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 has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).  Yes ( ) No ( )  Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.  See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule
12b-2 of the Exchange Act.  Large accelerated filer ( )
  Accelerated filer (X) Non-accelerated filer ( ) (Do not check if a
smaller reporting company) Smaller reporting company ( ).  Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 Yes ( ) No (X)  Indicate the number of shares outstanding
of each of the issuers classes of common stock, as of the latest practicable
date:  Class
August 6, 2009Class A Common Stock ($.01 par
value)
10,008,199Class B Common Stock ($.01 par
value)
8,010,497      Kenneth Cole Productions, Inc. Index
to Form 10-Q  Part
I.
FINANCIAL
INFORMATIONItem
1.
Financial
Statements (Unaudited)Condensed Consolidated Balance
Sheets as of June 30, 2009 and
December
31, 2008
3Condensed
Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008
5Condensed
Consolidated Statement
of Changes in Shareholders Equity
for
the six months ended June 30, 2009
6Condensed
Consolidated
Statements of Cash Flows for the six months  ended June 30, 2009 and
2008
7Notes
to Condensed Consolidated Financial Statements
8Item
2.
Managements
Discussion and Analysis of Financial Condition and
Results
of Operations
17Item
3.
Quantitative
and Qualitative Disclosures about Market Risk
24Item
4.
Controls
and Procedures
25Part
II.
OTHER
INFORMATIONItem
1.
Legal
Proceedings
25Item
1A.
Risk
Factors
25Item
2.
Unregistered
Sales of Equity Securities and Use of Proceeds
25Item
3.
Defaults
Upon Senior Securities
25Item
4.
Submission
of Matters to a Vote of Security Holders
25Item
5.
Other
Information
27Item
6.
Exhibits
27Signatures
28   2       Part I. FINANCIAL
INFORMATION  Item 1.
 Financial Statements     Kenneth
Cole Productions, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)   June 30,
2009
December 31,
2008AssetsCurrent
assets:Cash
and cash equivalents
$
 57,903,000
$
64,704,000Due
from factors
1,051,000
9,190,000Accounts
receivable, net
27,822,000
32,018,000Inventories,
net
35,069,000
43,342,000Prepaid
expenses and other current assets
4,122,000
2,738,000Deferred
taxes, net
4,941,000
5,645,000Total
current assets
130,908,000
157,637,000Property
and equipment, at cost, less accumulateddepreciation
and amortization
60,411,000
57,790,000  Other
assets:Intangible
assets, net
20,247,000
19,842,000Deferred
taxes, net
39,916,000
33,541,000Investments
and other
7,653,000
7,280,000Deferred
compensation plans assets
39,626,000
37,345,000Total
other assets
107,442,000
98,008,000Total
Assets
$298,761,000
$313,435,000    See
accompanying notes to condensed consolidated financial statements.   3     Kenneth
Cole Productions, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (continued) (Unaudited)  June 30,
2009
December 31,
2008Liabilities
and Shareholders EquityCurrent
liabilities:Accounts
payable and accrued expenses
$
35,402,000
$
42,935,000Other
current liabilities
9,449,000
11,669,000Deferred
income
5,966,000
5,512,000Total
current liabilities
50,817,000
60,116,000Accrued
rent and other long-term liabilities
18,189,000
17,842,000Deferred
compensation plans liabilities
37,856,000
35,715,000Commitments
and contingenciesShareholders
Equity:Series
A Convertible Preferred Stock, par value
$1.00,
1,000,000 shares authorized,
none
outstanding
--
--Class
A Common Stock, par value $.01,
40,000,000
shares authorized; 15,857,349
and
15,726,672 issued as of June 30, 2009 and December 31, 2008,
respectively
159,000
157,000Class
B Convertible Common Stock, par value $.01,
9,000,000
shares authorized; 8,010,497 issued
and
outstanding as of June 30, 2009
and
December 31, 2008, respectively
80,000
80,000Additional
paid-in capital
105,954,000
103,318,000Accumulated
other comprehensive (loss)/income
(483,000)
650,000Retained
earnings
211,110,000
220,478,000316,820,000
324,683,000Class
A Common Stock in treasury, at cost,  5,855,550 shares as of June 30,
2009 and December 31, 2008, respectively
(124,921,000)
(124,921,000)Total
shareholders equity
191,899,000
199,762,000Total
Liabilities and Shareholders Equity
$298,761,000
$313,435,000   See
accompanying notes to condensed consolidated financial statements.  4      Kenneth
Cole Productions, Inc. and Subsidiaries  Condensed Consolidated Statements of Operations (Unaudited)   Three Months Ended
June 30,
Six Months Ended
June
30,2009
2008

2009
2008Net
sales
$84,748,000
$100,893,000

$179,122,000
$213,508,000Royalty
revenue
9,152,000
10,258,000

18,153,000
20,140,000Net
revenues
93,900,000
111,151,000

197,275,000
233,648,000Cost
of goods sold
54,087,000
65,107,000

122,390,000
137,377,000Gross
profit
39,813,000
46,044,000

74,885,000
96,271,000Selling,
general and administrative expenses
44,965,000
49,102,000

92,638,000
98,217,000Operating
loss
(5,152,000)
(3,058,000)

(17,753,000)
(1,946,000)Interest
income, net
114,000
354,000

320,000
1,242,000Impairment
of investments
(41,000)
(238,000)

(440,000)
(832,000)Loss
before benefit from income taxes
(5,079,000)
(2,942,000)

(17,873,000)
(1,536,000)Benefit
from income taxes
(1,813,000)
(890,000)

(6,439,000)
(291,000)Net
loss
$(3,266,000)
$
(2,052,000)

$ (11,434,000)
$
(1,245,000)Loss per
share:Basic
$(0.18)
$(0.11)

$(0.64)
$(0.07)Diluted
$(0.18)
$(0.11)

$(0.64)
$(0.07)Dividends
declared per
share
--
$0.09

--
$0.18Shares
used to compute loss per share:Basic
17,954,000
18,583,000

17,922,000
18,954,000Diluted
17,954,000
18,583,000

17,922,000
18,954,000     See
accompanying notes to condensed consolidated financial statements.  5


Kenneth
Cole Productions, Inc. and Subsidiaries  Condensed Consolidated Statement of Changes in Shareholders
Equity (Unaudited)   Class A
Common Stock
Class B
Common Stock
Additional
Accumulated
Other

Treasury StockNumber
of
shares
Amount
Number
of
shares
Amount
Paid-in
Capital
Comprehensive
Income/(Loss)
Retained
Earnings
Number of
Shares
Amount
TotalShareholders
equity
January
1, 2009
15,726,672
$157,000
8,010,497
$80,000
$103,318,000
$650,000
$220,478,000
(5,855,550)
$(124,921,000)
$199,762,000Adjustment
for adoption of FSP 115-2 (See FN 4)





(2,298,000)
2,298,000


--Net loss






(11,434,000)


(11,434,000)Translation
adjustment for foreign currency, net of taxes of $(89,000)





158,000



158,000Unrealized
gain on available-for-sale securities, net of taxes of $(147,000)





1,007,000



1,007,000Comprehensive
loss









(10,269,000)Stock-based
compensation expense




4,141,000




4,141,000Issuance
of restricted stock and related tax benefits
185,347
2,000


(1,120,000)




(1,118,000)Shares
surrendered by employees to pay taxes on restricted stock
(69,473)



(470,000)




(470,000)Issuance
of Class A Common Stock from ESPP
14,803



85,000




85,000Prior
year dividends associated with vesting of restricted stock






(232,000)


(232,000)Shareholders
equity
June
30, 2009
15,857,349
$159,000
8,010,497
$80,000
$105,954,000
$(483,000)
$211,110,000
(5,855,550)
$(124,921,000)
$191,899,000 See
accompanying notes to condensed consolidated financial statements.   6    Kenneth Cole
Productions, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Six
Months Ended
June 30,2009
2008Cash
flows provided by operating activitiesNet
loss
$(11,434,000)
$(1,245,000)Adjustments
to reconcile net loss to net cash
provided
by operating activities:Depreciation
and amortization
4,770,000
4,609,000Provision
for doubtful accounts
563,000
60,000Benefit
from deferred taxes
(6,937,000)
(290,000)Unrealized
(gain)/loss from available-for-sale securities
(1,154,000)
1,182,000Writedown
of investments
440,000
832,000Stock-based
compensation expense
4,170,000
2,647,000Tax
benefit from stock option exercises and restricted stock vestings
(483,000)
(875,000)Changes
in operating assets and liabilities:Decrease
in due from factors
8,138,000
7,071,000Decrease
in accounts receivable
3,634,000
2,347,000Decrease/(increase)
in inventories
8,273,000
(808,000)Increase
in prepaid expenses and other current assets
(2,019,000)
(4,279,000)Decrease
in other assets
333,000
48,000Decrease
in accounts payable and accrued expenses
(7,533,000)
(1,215,000)(Decrease)/increase
in deferred income and other current liabilities
(1,642,000)
1,830,000Increase
in other long-term liabilities
2,488,000
382,000Net
cash provided by operating activities
1,607,000
12,296,000Cash
flows used in investing activitiesAcquisition
of property and equipment
(7,216,000)
(2,843,000)Purchase
of intangible assets
(580,000)
(3,050,000)Net
cash used in investing activities
(7,796,000)
(5,893,000)Cash
flows used in financing activitiesShares
surrendered by employees to pay taxes on restricted stock
(470,000)
(757,000)Excess tax
benefit from stock options
--
7,000Proceeds
from exercise of stock options
--
58,000Proceeds
from employee stock purchase plan
85,000
112,000Acquisition
of treasury shares
--
(19,967,000)Dividends
paid to shareholders
(232,000)
(3,603,000)Net
cash used in financing activities
(617,000)
(24,150,000)Effect
of exchange rate changes on cash
5,000
(39,000)Net
decrease in cash
(6,801,000)
(17,786,000)Cash
and cash equivalents, beginning of period
64,704,000
90,653,000Cash
and cash equivalents, end of period
$57,903,000
$72,867,000Supplemental
disclosures of cash flow informationCash
paid during the period for:Interest
$       16,000
$
      26,000Income
taxes, net
$  1,431,000
$
 2,836,000 See
accompanying notes to condensed consolidated financial statements.  7


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)   1.  Basis of Presentation  The accompanying unaudited condensed consolidated financial
statements have been prepared by Kenneth Cole Productions, Inc. (the Company)
in accordance with accounting principles generally accepted in the United States
for interim financial information.  Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.  Certain
items contained in these financial statements are based on estimates.  In
the opinion of the Companys management, the accompanying unaudited condensed
consolidated financial statements reflect all significant adjustments,
consisting of only normal and recurring adjustments, necessary for a fair
presentation of the financial position and results of operations and cash flows
for the periods presented.  All significant intercompany transactions have
been eliminated.  Operating results for the six months ended June 30, 2009 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2009.  These unaudited condensed consolidated financial
statements should be read in conjunction with the financial statements and
footnotes included in the Companys Annual Report on Form 10-K for the year
ended December 31, 2008.  The Companys consolidated Balance Sheet at December 31, 2008, as
presented, was derived from the audited financial statements included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2008.
 Certain amounts in the Companys previous financial statements have been
reclassified to conform to the 2009 presentation. (See Note 7.)  2.  Stock-Based Compensation  The Company has stock-based compensation plans under which
directors, officers and other eligible employees receive stock options,
restricted stock, and other equity-based awards, and accounts for the related
stock-based compensation under Statement of Financial Accounting Standards No.
123R, Share-Based Payment (SFAS 123R), as described in Note 13 to the
Companys Consolidated Financial Statements for the year ended December 31,
2008.  Stock options are granted with an exercise price equal to the
market value of a share of common stock on the date of grant.  Stock option
grants expire within 10 years and generally vest on a graded basis within two to
five years from the date of grant.  Restricted stock unit awards generally
vest on a graded basis over a two to four year period or cliff vest after three
years.  During the six months ended June 30, 2009 and 2008, the Company
granted 698,656 and 841,500 stock options, respectively. The Company granted
151,272 shares of restricted stock during the six months ended June 30, 2009, as
compared to 127,462 shares granted during the six months ended June 30, 2008.
 Stock options outstanding and unvested restricted stock amounted to
2,932,986 and 647,444 shares, respectively, as of June 30, 2009.


8


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)   2.  Stock-Based Compensation (continued)  The following table summarizes the components of stock-based
compensation expense for the three and six months ended June 30, 2009 and 2008,
all of which is included in Selling, general, and administrative expenses in the
Condensed Consolidated Statements of Operations:  Three months ended
June 30,
Six months ended
June 30,2009
2008
2009
2008Stock
options
$ 332,000
$  204,000
$1,773,000 (1)
$  360,000Restricted
stock units and employee stock purchase plan
1,312,000
1,484,000
2,397,000
2,208,000Total
stock-based compensation expense
$1,644,000
$1,688,000
$4,170,000
$2,568,000 (1)  The Companys Chairman and CEO elected to receive 100%
and 50%, respectively, of their 2008 annual bonuses in stock options in lieu of
cash which amounted to $1,167,000 during the six months ended June 30, 2009.
 These amounts were accrued within payroll expense as of December 31,
2008.  The fair value of stock options was estimated using the
Black-Scholes option-pricing model.  The following table summarizes the
assumptions used to compute the weighted-average fair value of stock option
grants for the three and six months ended June 30, 2009 and 2008:  Three months ended
June 30,
Six months ended
June 30,2009
2008
2009
2008 (1)Weighted-average
volatility
56.3%
38.4%
55.0%
38.4%Risk-free
interest rate
3.3% to 3.7%
4.0% to 4.1%
3.0%-3.7%
4.0% to 4.1%Weighted-average
dividend yield
0%
2.4%
0%
2.4%Expected
term
3-9 years
4-9 years
3-9 years
4-9 years (1)  No stock options were granted in the first quarter.  The weighted-average volatility for the current period was
developed using historical volatility for periods equal to the expected term of
the options.  The risk-free interest rate was developed using the U.S.
Treasury yield curve for periods equal to the expected term of the options on
the grant date.  The dividend yield is calculated by using the dividends
declared per share and the Companys stock price on the date of grant.  The
expected term of stock option grants was developed after considering vesting
schedules, life of the option, historical experience and estimates of future
exercise behavior patterns.  The fair value of restricted stock was calculated by multiplying
the Companys stock price on the date of grant by the number of shares granted
and is being amortized on a straight-line basis over the vesting periods.
 SFAS 123R requires the recognition of stock-based compensation for the
number of awards that are ultimately expected to vest.  As a result, for
most awards, recognized stock compensation expense was reduced for estimated
forfeitures prior to vesting primarily based on historical annual forfeiture
rates by employee classification.  Estimated forfeitures will continue to
be reassessed in subsequent periods and may change based on new facts and
circumstances.  As of June 30, 2009, approximately $7.8 million of unrecognized
stock compensation expense related to unvested stock options and restricted
stock awards, net of estimated forfeitures, is expected to be recognized over a
weighted-average period of 2.3 years compared to approximately $12.2 million of
unrecognized stock compensation expense as of June 30, 2008.


9


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)   3. Loss Per Share  The Company calculates earnings/(loss) per share in accordance
with SFAS No. 128, Earnings Per Share.  Basic earnings/(loss) per
share is calculated by dividing net income/(loss) by weighted-average common
shares outstanding.  Diluted earnings/(loss) per share is calculated
similarly, except that it includes the dilutive effect of the assumed exercise
of securities under the Companys stock incentive plans.  Dilutive
securities, which include stock options and restricted stock, are determined
under the treasury stock method by calculating the assumed proceeds available to
repurchase stock using the weighted-average shares outstanding for the period.
 All stock options and restricted stock outstanding as of June 30, 2009 and
2008 have been excluded in the diluted per share calculation as the impact would
be antidilutive.  Basic and diluted loss per common share consists of the
following:  Three Months Ended
Six Months EndedJune  30, 2009
June  30,
2008
June  30, 2009
June  30,
2008Weighted-average commonshares outstanding
17,954,000
18,583,000
17,922,000
18,954,000Effect of dilutive securities:Restricted stock & employee
    stock purchase plan
--
--
--
--Stock options
--
--
--
--Weighted-average commonshares outstanding and commonshare equivalents
17,954,000
18,583,000
17,922,000
18,954,000  4. Investments  The Company reviews its investments for other-than-temporary
impairment whenever the fair value of an investment is less than the amortized
cost and evidence indicates that an investments carrying value may not be
recoverable within a reasonable period of time.  The fair value of the
Companys auction-rate securities (marketable securities), which have maturity
dates ranging from 2025 to 2050, is determined from an independent third-party
valuation.  The primary variables used in determining fair value include
collateral, rating, insurance, credit risk and downgrade risk of the security.
 In the Companys evaluation of its investments it also considered its
ability and intent to hold the investment until the market price recovers, the
reasons for the decline in fair value, the duration of the decline in fair value
and expected future performance.  Based on this evaluation, the Company
recorded an other-than temporary impairment of investments of $0.4 million
related to marketable securities during the six months ended June 30, 2009 (the
majority of which was applicable to the quarter ended March 31, 2009).
 This charge is included within Impairment of investments in the Condensed
Consolidated Statements of Operations for the six months ended June 30,
2009.


10


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)  4. Investments (continued)  The following table presents gross unrealized gains on, and
estimated fair value of, the Companys long-term investments as of June 30, 2009
and December 31, 2008:  June 30, 2009Historical Cost
Cost Basis
Estimated Fair Value
Gross UnrealizedGains
LossesAuction-rate securities
$  8,600,000
$4,645,000
$4,937,000
$   292,000
--Equity securities
5,338,000
717,000
1,762,000
1,045,000
--Total
$13,938,000
$5,362,000
$6,699,000
$1,337,000
--  December 31, 2008Historical Cost
Cost Basis
Estimated Fair Value
Gross UnrealizedGains
LossesAuction-rate securities
$
 8,600,000
$5,085,000
$5,085,000
$              --
--Equity securities
5,338,000
717,000
899,000
182,000
--Total
$13,938,000
$5,802,000
$5,984,000
$    182,000
--  During the quarter ended June 30, 2009, the Company adopted FASB
issued Staff Position FAS 115-2 and FAS 124-2, Recognition and Presentation
of Other-Than-Temporary Impairments (FSP 115-2).  FSP 115-2 is
intended to bring greater consistency to the timing of impairment recognition
and provide greater clarity to investors about the credit and noncredit
components of impaired debt securities that are not expected to be sold.
 The measure of impairment in comprehensive income remains fair value.
 As the result of adopting FSP 115-2, the Company recorded a balance sheet
reclassification between Retained Earnings and Accumulated Other Comprehensive
Loss of $2.3 million related to previous writedowns of auction-rate securities
in the Statements of Operations that would not have been recorded if FSP 115-2
was in effect in prior periods.  This amount relates to the non-credit
component of the $4.0 million impairment.  The remaining $1.7 million of
the impairment reflects credit losses and was recorded in the Statements of
Operations.  5. Fair Value Measurement  The Company adopted FASB Statement No. 157, Fair Value
Measurements (SFAS 157) provisions on January 1, 2008.  The
Companys financial assets, measured at fair value on a recurring basis, were as
follows:  Fair Value at
June 30, 2009
Fair Value at
December 31, 2008
HierarchyInvestments
$   1,762,000
$
    899,000
Level 1Deferred
compensation plans assets
$   35,044,000
$32,909,000
Level 2Marketable
Securities
$   4,937,000
$
 5,085,000
Level 3  A Level 1 hierarchy represents a fair value that is derived from
unadjusted quoted prices in active markets for identical assets or liabilities
that the Company has the ability to access at the measurement date.  A
Level 2 hierarchy represents a fair value that is derived from inputs other than
quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.  A Level 3 hierarchy represents a
fair value that is derived from inputs that are unobservable or from observable
inputs based on unobservable data in an inactive market.


11


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)   5. Fair Value Measurement (continued)  The following table presents the reconciliation of the beginning
and ending fair value measurements of the Companys Level 3 inputs, marketable
securities, measured at fair value using observable inputs based on unobservable
data in an inactive market for the six months ended June 30, 2009:  Beginning balance at January 1, 2009
$5,085,000Unrealized
gains recorded in other comprehensive income
292,000Impairment
charge included in Statement of Operations
(440,000)Ending balance
at June 30, 2009
$4,937,000  The Company recorded a $0.4 million writedown in its marketable
securities, specifically auction-rate securities, within Impairment of investments in the
Condensed Consolidated Statements of Operations during the six months ended June
30, 2009.  6. Comprehensive Loss  Comprehensive loss is comprised of net loss, the effect of foreign
currency translation and changes in unrealized gains and losses on
available-for-sale securities.  Comprehensive loss for the three and six
months ended June 30, 2009 amounted to $2,417,000 and $10,269,000, respectively.
 Comprehensive loss for the three and six months ended June 30, 2008
amounted to $2,667,000 and $2,365,000, respectively.  7. Segment Information  The Company has three reportable segments:  Wholesale,
Consumer Direct and Licensing.  The Wholesale segment designs and sources a
broad range of fashion footwear, handbags, accessories, and apparel and markets
its products for sale to approximately 5,700 department and specialty store
locations and to the Companys Consumer Direct segment.  The Consumer
Direct segment markets a broad selection of the Companys branded products,
including licensee products, for sale directly to the consumer through its own
channels of distribution, which include full-priced retail stores, Company
Stores (outlets) and e-commerce (at website address
www.kennethcole.com).  The Licensing segment, through
third-party licensee agreements, has evolved the Company from a footwear
resource to a diverse lifestyle brand competing effectively in approximately 30
apparel and accessories categories for men, women and children.  The
Company maintains control over quality, image and distribution of the licensees.
 This segment primarily consists of royalties earned on licensee sales to
third parties of the Companys trademarks, trade names and royalties earned on
the purchase and sale to foreign retailers, distributors, or to consumers in
foreign countries.  The Companys reportable segments are business units
that offer products to overlapping consumers through different channels of
distribution.  Each segment is managedseparately, althoughplanning, implementation and results across segments are reviewed internally
by the executive management committee.  The Company evaluates performance
of each of its segments and allocates resources based on profit or loss before
stock-based compensation expense, writedown of marketable securities,
unallocated corporate overhead, and income taxes for each segment.
 Intersegment sales between the Wholesale and Consumer Direct segments are
eliminated in consolidation.


12


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited) 7. Segment Information (continued) Financial information of the Companys reportable segments is as
follows (in thousands):  Three Months Ended

Six Months EndedJune 30, 2009

June 30, 2009Consumer




ConsumerWholesale
Direct
Licensing
Totals

Wholesale
Direct
Licensing
TotalsRevenue from external customers
$46,165
$38,583
$9,152
$93,900

$107,823
$71,299
$18,153
$197,275Intersegment revenues
7,163
--
--
7,163

16,313
--
--
16,313Segment
(loss)/income (1)
(3,968)
(4,928)
7,452
(1,444)

(7,707)
(16,465)
14,468
(9,704)Segment assets (2)





188,518
54,310
55,933
298,761  Three Months Ended

Six Months EndedJune 30, 2008

June 30, 2008Consumer




ConsumerWholesale
Direct
Licensing
Totals

Wholesale
Direct
Licensing
TotalsRevenue from external customers
$57,934
$42,959
$10,258
$111,151

$132,031
$81,477
$20,140
$233,648Intersegment revenues
10,622
--
--
10,622

20,502
--
--
20,502Segment
(loss)/income (1)
(3,659)
(2,760)
7,539
1,120

(491)
(8,631)
15,033
5,911Segment assets (2)





216,764
52,267
61,603
330,634 _________________ (1) Segment (loss)/income excludes stock-based compensation expense,
writedown of marketable securities, unallocated corporate overhead and income
taxes.  In 2009, the Company reclassified the writedown of marketable
securities from the Wholesale segment to an unallocated corporate charge.
 Amounts in 2008 have been reclassified to conform to the 2009
presentation. (2) The Wholesale segment includes corporate assets.  The
reconciliation of the Companys reportable segment revenues and loss are as
follows (in thousands):  Three Months
Ended
Six Months EndedJune 30, 2009
June 30, 2008
June 30, 2009
June 30, 2008RevenuesRevenues for reportable
segments
$93,900
$111,151
$197,275
$233,648Intersegment revenues
7,163
10,622
16,313
20,502Elimination of intersegment
revenues
(7,163)
(10,622)
(16,313)
(20,502)Total consolidated
revenues
$93,900
$111,151
$197,275
$233,648(Loss)/IncomeTotal (loss)/income for reportable
segments (1)
$(1,444)
$    1,120
$  (9,704)
$    5,911Elimination of unallocated corporate overhead,
stock-based compensation expense and writedown of marketable
securities
(3,635)
(4,062)
(8,169)
(7,447)Total loss before benefit from income taxes
$(5,079)
$ (2,942)
$(17,873)
$  (1,536) (1) Total (loss)/income for reportable segments excludes stock-based
compensation expense, writedown of marketable securities, unallocated corporate
overhead and income taxes.  Revenues from international customers were approximately 3.3% and
3.0% of the Companys consolidated revenues for the three months ended June 30,
2009 and 2008, respectively, and approximately 4.2% and 3.7% of the Companys
consolidated revenues for the six months ended June 30, 2009 and June 30, 2008,
respectively.


13


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)   8. Income Taxes  Income taxes are accounted for in accordance with SFAS No. 109,
Accounting for Income Taxes and FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes.  Deferred income taxes
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.  The Company reviews its historical and projected taxable income
quarterly and considers its prior period cumulative results and other available
objective evidence to determine if it is more likely than not that the deferred
tax assets will be realized.  The Company currently has $44.9 million of
net deferred tax assets as of June 30, 2009 inclusive of $12.3 million of net
operating loss carryforwards that expire between 2028 and 2029 and valuation
allowances of $3.0 million for unrealized tax losses on available for sale
securities.  9. Related Party Transactions  The Company has an exclusive license agreement with Iconix Brand
Group, Inc. and its trademark holding company, IP Holdings, LLC (Iconix), to
use the Bongo trademark in connection with the manufacture, sale and
distribution of womens, mens and childrens footwear in certain territories.
 The Chairman and Chief Executive Officer of Iconix is the brother of the
Companys Chairman and Chief Creative Officer.  The term of the agreement
was through December 31, 2010.  In April 2009, the Company terminated the
agreement effective December 31, 2009 which eliminates any future obligation for
2010.  Management believes that the license agreement with Iconix was
entered into at arms length.  The Company is obligated to pay Iconix a
percentage of net sales based upon the terms of the agreement.  The Company
recorded approximately $37,000 and $257,000 in aggregate royalty and advertising
expense under the agreement for the three and six months ended June 30, 2009,
respectively. The Company recorded approximately $284,000 and $573,000 in
aggregate royalty and advertising expense under the agreement for the three and
six months ended June 30, 2008, respectively.  The Company recorded expenses of approximately$163,000 and$206,000 for the three and six months ended June
30, 2009, respectively, to a third-party aviation company which hires and
uses an aircraft partially owned by Emack LLC, a company which is wholly owned
by the Companys Chairman and Chief Creative Officer.  During the three and
six months ended June 30, 2008, the Company recorded expenses of approximately
$91,000 and $266,000, respectively, for hire and use of aircraft partially owned
by Emack LLC.  Management believes that all transactions were made on terms
and conditions similar to or more favorable than those available in the
marketplace from unrelated parties.  10. Common Stock Repurchase  During the three months ended June 30, 2008, the Company
repurchased 868,600 of its shares at an aggregate price of $13,167,000. During
the six months ended June 30, 2008, the Company repurchased 1,282,000 of its
shares at an aggregate price of $19,967,000.  No shares were repurchased by
the Company during the three and six months ended June 30, 2009.


14


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)   11. Intangible Asset Purchase  In 2007, the Company acquired the Le Tigretrademark and
other intellectual property associated with the Le Tigre brand from Le
Tigre, LLC (the Seller).  During 2008, pursuant to two amendments to the
Asset Purchase Agreement, the Company paid the Seller an additional $5.5
million.  In accordance with SFAS No. 142 Goodwill and Other Intangible
Assets, the Company recorded the intellectual property in Intangible
Assets on the accompanying Condensed Consolidated Balance Sheets at fair value.
 Based on an independent third party valuation, management allocated the
majority of the $18.5 million paid as an indefinite lived intangible asset and a
nominal amount as a finite lived intangible asset.  12. New Accounting Pronouncements  In June 2009, the FASB issued SFAS No. 168 The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles - a replacement of FASB Statement No. 162 (SFAS 168).
 The FASB Accounting Standards CodificationTM
(Codification) will become the source of authoritative U.S. generally accepted
accounting principles (GAAP) recognized by the FASB to be applied by
nongovernmental entities.  Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants.  The
Codification will supersede all then-existing non-SEC accounting and reporting
standards.  All other nongrandfathered non-SEC accounting literature not
included in the Codification will become nonauthoritative.  SFAS 168 is
effective for financial statements issued for interim and annual periods ending
after September 15, 2009.  The Company expects that SFAS 168 will not have
a material impact on the Companys consolidated financial statements.  In May 2009, the FASB issued SFAS No. 165 Subsequent
Events (SFAS 165).  SFAS 165 is intended to establish general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  SFAS 165 sets forth the period after the balance sheet date
during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial
statements, and the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date.  SFAS 165 is
effective for interim and annual periods ending after June 15, 2009.  The
Company adopted SFAS 165 on June 15, 2009 and determined that is did not have a
material impact on the Companys consolidated financial statements.  In April 2009, the FASB issued Staff Position FAS 157-4,
Determining Fair Value When the Volume and Level of Activity for the Asset
or Liability Have Significantly Decreased and Identifying Transactions That Are
Not Orderly (FSP 157-4).  FSP 157-4 provides guidance on
estimating fair value when market activity has decreased and on identifying
transactions that are not orderly.  Additionally, entities are required to
disclose in interim and annual periods the inputs and valuation techniques used
to measure fair value.  FSP 157-4 is effective for interim and annual
periods ending after June 15, 2009.  The implementation of FSP 157-4
did not have a material impact on the Companys consolidated financial
statements.


15


Kenneth Cole Productions, Inc. and Subsidiaries Notes to
Consolidated Financial Statements (Unaudited)   12. New Accounting Pronouncements (continued)  In April 2009, the FASB issued the Staff Position FAS 107-1
and APB 28-1, Interim Disclosures About Fair Value of Financial
Instruments (FSP 107-1).  FSP 107-1 requires disclosures about fair
value of financial instruments in interim reporting periods of publicly-traded
companies that were previously only required to be disclosed in annual financial
statements.  FSP 107-1 is effective for interim reporting periods ending
after June 15, 2009.  The implementation of FSP 107-1 did not have a
material impact on the Companys consolidated financial statements.  13.  Subsequent Event  The Company evaluated subsequent events through August 10, 2009,
the date the financial statements were issued and determined that there were no
subsequent events to disclose except for the following:  On July 31, 2009, the Company executed an amendment to its senior
unsecured revolving credit facility with various lenders (the Amended
Facility).  The Amended Facility is converted to a revolving senior
secured asset based credit facility terminating on December 20, 2011.
 Pursuant to the terms of the Amended Facility, the Company may borrow
based on a percentage of receivables and inventory as defined.  The amounts
that may be borrowed by the Company under the amended facility are expected to
be used for working capital and other general corporate purposes.  The
Amended Facility provides for issuance of standby letters of credit and a
swingline loan.


16


Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS  Forward-Looking Statements Disclosure  The statements contained in this report which are not historical
facts, including, without limitation, statements that relate to future
performance and/or statements regarding the Companys anticipated results or
level of business for 2009 or any other future period, may be deemed to
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.  Such statements are based on
current expectations only, and actual future results might differ materially
from those projected in such statements due to a number of risks and
uncertainties, including, but not limited to, demand and competition for the
Companys products, the ability to enter into new licensee agreements, to
maintain and renew existing licensing agreements, and to open new stores,
changes in consumer preferences or fashion trends, events causing disruption in
product shipment, change in import regulations, dependence on certain large
customers, changes in the Companys relationships with vendors and other
resources, the launching or prospective development of new business initiatives,
future licensee sales growth, gross margins, store expansion, renovation and
openings, changes in distribution centers, and the implementation of management
information systems.  The forward-looking statements contained herein are
also subject to other risks and uncertainties that are described in the
Companys reports and registration statements filed with the Securities and
Exchange Commission.  The Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result of new
information, future results or otherwise.  Update on Critical Accounting Policies and Estimates  The Companys consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States,
which require the Company to make estimates in the application of its accounting
policies based on the best assumptions, judgments and opinions of management.
 There have been no changes to the Companys significant accounting
policies from the policies previously disclosed in the Companys Consolidated
Financial Statements included in the Companys Annual Report on Form 10-K for
the year ended December 31, 2008 except as follows:  Income Taxes  Income taxes are accounted for in accordance with SFAS No. 109,
Accounting for Income Taxes(SFAS 109).Deferred income
taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.  SFAS 109 requires that deferred
taxes be evaluated for future realization and reduced by a valuation allowance
to the extent that management believes a portion will not be realized.  The
Companys assessment of deferred tax assets is performed quarterly and many
factors are considered when assessing the likelihood of future realization of
deferred tax assets, including the recent earnings experience and expectations
of future taxable income by taxing jurisdiction, the carryforward periods
available for tax reporting purposes, tax planning strategies and other relevant
factors.  The actual realization of deferred tax assets may differ
significantly from the amounts the Company has recorded.  The Companys income taxes are routinely under audit by federal,
state or local authorities.  These audits include questioning of the timing
and amount of deductions and the allocation of income among various tax
jurisdictions.  Based on its quarterly evaluations of tax positions, the
Company believes it has appropriately accrued for probable exposures.  To
the extent the Company is required to pay amounts in excess of recorded income
tax liabilities, the Companys effective tax rate in a given financial statement
period could be materially impacted.  The Company adopted Financial
Accounting Standards Board Interpretation No. 48 Accounting for Uncertainty
in Income Taxes (FIN 48) on January 1, 2007 which requires financial
statement recognition and measurement of a tax position taken or expected to be
taken in a return.


17


Overview  Kenneth Cole Productions, Inc. designs, sources and markets a
broad range of fashion footwear, handbags and apparel and, through license
agreements, designs and markets apparel and accessories under its Kenneth
Cole New York, Kenneth Cole Reaction, Unlistedand Gentle Souls brand
names.  The Company also designs, develops, markets and sources sportswear,
footwear, handbags and other accessories under the Le Tigrebrand name.
 In addition, the Company designs, develops and sources private label
footwear and handbags for selected retailers.  The Companys products are
targeted to appeal to fashion conscious consumers, reflecting a modern
metropolitan perspective and a lifestyle uniquely associated with Kenneth
Cole.  These products include core basics that generally remain in
demand from season to season and fashion products that are designed to establish
or capitalize on market trends.  The combination of core products and
fashion styles provides freshness in assortments and maintains a fashion-forward
image, while a multiple brand strategy helps diversify business risk.  The Company markets its products to approximately 5,700 department
and specialty store locations, as well as through its Consumer Direct business,
which includes full-priced retail stores, Company Stores (outlets) and
e-commerce.  The Company believes the diversity of its product offerings
distinguishes the Company from its competitors in terms of product
classifications (mens, womens and childrens footwear, handbags, apparel and
accessories), prices (bridge, better and moderate) and styling.  The
Company believes the diversity of its product mix provides balance to its
overall sales and increases opportunities in all channels of distribution.  The popularity of the Kenneth Cole brand names, including
Kenneth Cole New York, Kenneth Cole Reaction and Unlisted,among
consumers has enabled the Company to expand its product offerings and channels
of distribution through licensing agreements.  The Company offers, through
these agreements, a lifestyle collection of mens product categories, including
tailored clothing, dress shirts, dress pants, neckwear, outerwear, sleepwear,
underwear, socks, belts, sunglasses, prescription eyewear, watches, fragrance,
jewelry, luggage, business cases and small leather goods.  Womens product
categories currently being sold pursuant to license agreements include
sportswear, outerwear, swimwear, sleepwear, small leather goods, belts,
sunglasses, prescription eyewear, watches, jewelry, fragrance and luggage.
 In addition, the Company licenses its childrens apparel.  The Companys opportunities for long-term growth are accompanied
by challenges and risks, particularly in the current recessionary
environment.  The Companys results are dependent on consumer demand for
its products and may be influenced by economic factors not within the Companys
control, including general economic and business conditions, interest rate
fluctuations, consumer credit availability, energy costs, geopolitical
stability, customer traffic, tax law, stock market activity and other consumer
impacting conditions.  Over the past year, these economic factors have
resulted in an environment of unprecedented volatility and disruption in both
capital and consumer markets.  National unemployment and wealth and income
declines, among other factors, have reduced consumer confidence to levels that
have not been seen in decades.  In the aggregate, customer spending on
fashion and fashion-related products has reduced dramatically in the economic
environment.  The Company cannot predict the duration of the current
economic downturn.  The macroeconomic environment and related factors could
have a material adverse effect on the Companys results of operations and
financial condition.  The Company recorded net revenues of $93.9 million for the three
months ended June 30, 2009.  Diluted loss per share was $(0.18) for the
three months ended June 30, 2009 compared to $(0.11) for the three months ended
June 30, 2008.  As of June 30, 2009, the Company had $57.9 million in cash
and cash equivalents and no long-term debt.


18


Results of Operations  The following table sets forth the Companys Condensed
Consolidated Statements of Operations in thousands of dollars and as a
percentage of net revenues for the three and six months ended June 30, 2009 and
June 30, 2008.  Three Months Ended June 30,

Six Months Ended June 30,2009
2008

2009
2008Net sales
$84,748
90.3%
$100,893
90.8%

$179,122
90.8%
$213,508
91.4%Royalty revenue
9,152
9.7
10,258
9.2

18,153
9.2
20,140
8.6Net revenues
93,900
100.0
111,151
100.0

197,275
100.0
233,648
100.0Gross profit (1)
39,813
42.4
46,044
41.4

74,885
38.0
96,271
41.2Selling, general and
administrative expenses
44,965
47.9
49,102
44.2

92,638
47.0
98,217
42.0Operating loss
(5,152)
(5.5)
(3,058)
(2.7)

(17,753)
(9.0)
(1,946)
(0.8)Interest income, net
114
0.1
354
0.3

320
0.1
1,242
0.5Impairment of Investments
(41)
0.0
(238)
(0.2)

(440)
(0.2)
(832)
(0.3)Loss before income taxes
(5,079)
(5.4)
(2,942)
(2.6)

(17,873)
(9.1)
(1,536)
(0.6)Income tax benefit
(1,813)
(1.9)
(890)
(0.8)

(6,439)
(3.3)
(291)
(0.1)Net loss
$(3,266)
(3.5)%
$(2,052)
(1.8)%

$(11,434)
(5.8)%
$(1,245)
(0.5)% _______________________  (1) Gross profit may not be comparable to other entities, since some
entities include the costs related to their distribution network (receiving and
warehousing) in cost of goods sold and other entities, similar to the Company,
exclude these costs from gross profit, including them instead in a line item
such as selling, general and administrative expenses.  Three Months Ended June 30, 2009 Compared to Three Months Ended
June 30, 2008  REVENUES:  Net revenues decreased $17.3 million, or 15.5%, to
$93.9 million for the three months ended June 30, 2009 from $111.2 million for
the three months ended June 30, 2008.  The decrease in revenues occurred in
each of the Companys business segments as further described below in the
sections entitled NET SALES and ROYALTY REVENUE.  NET
SALES: Wholesale net sales (excluding sales to the Companys Consumer Direct
business segment) decreased $11.8 million, or 20.3%, to $46.1 million for the
three months ended June 30, 2009 from $57.9 million for the three months ended
June 30, 2008.  The decrease was attributable to a decline in sales across
primarily all of the Companys wholesale businesses as a result of factors
including retailer destocking, a challenging retail environment and continued
stress in the macro-economic marketplace.  In addition, the decline
included the exiting of the Companys Tribeca business and terminating
its Bongo business.  Net
sales in the Companys Consumer Direct segment decreased $4.4 million, or 10.2%,
to $38.6 million for the three months ended June 30, 2009 from $43.0 million for
the three months ended June 30, 2008.  Comparable store sales decreased
14.7%, or $5.4 million.  Comparable stores are defined as new stores that
are open for longer than thirteen months.  A store that stops operations is
included in the comparable sales calculation through the date of closing.The Company opened seven Company Stores
(outlets) and closed one full-priced retail store during the three months
ended June 30, 2009.  ROYALTY
REVENUE:  Royalty revenue decreased $1.1 million, or 10.8%, to $9.2 million
for the three months ended June 30, 2009 from $10.3 million for the three months
ended June 30, 2008.  The decrease in royalty revenues was primarily
attributable to a reduction in contract initiation fees and a decrease in
certain international licensee sales.  GROSS
PROFIT:  Consolidated gross profit, as a percentage of net revenues,
increased to 42.4% for the three months ended June 30, 2009 from 41.4% for the
three months ended June 30, 2008.  The increase, as a percentage of net
revenues, was primarily the result of an increase in the Wholesale segment
margins, coupled with a revenue mix shifting


19


to
Consumer Direct and Licensing as a percentage of total revenues.  The
Consumer Direct segment, which operates at a higher gross profit level than the
Wholesale segment, increased revenues as a percentage of net revenues to 41.1%
for the three months ended June 30, 2009 compared to 38.7% for the three months
ended June 30, 2008, while the Wholesale segment revenues, as a percentage of
net revenues, decreased to 49.2% for the three months ended June 30, 2009 from
52.1% for the three months ended June 30, 2008.  The revenues in the
Licensing segment, which carries less cost of goods sold, increased as a
percentage of revenues, to 9.7% for the three months ended June 30, 2009
compared to 9.2% for the three months ended June 30, 2008.  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:  Selling,
general and administrative (SG&A) expenses, including warehousing and
receiving expenses, decreased $4.1 million to $45.0 million for the three months
ended June 30, 2009 from $49.1 million for the three months ended June 30, 2008.
 The decrease in SG&A expenses was primarily attributable to a
reduction in payroll and various cuts in discretionary spending offset by costs
associated with new stores and other expenses associated with the Companys
strategic initiatives.  Total SG&A expenses, as a percentage of
revenues, were 47.9% and 44.2% for the three months ended June 30, 2009 and
2008, respectively.  The increase was due to loss of leverage on the
decline in sales in Wholesale and Consumer Direct segments and the greater
portion of revenues from the Consumer Direct segment which carries a higher
SG&A expense level than the Wholesale and Licensing segments due primarily
to store occupancy and payroll costs.  INTEREST INCOME, NET:  Interest income, net decreased $0.2
million to approximately $0.1 million for the three months ended June 30, 2009
as compared to $0.3 million for the three months ended June 30,
2008.  The decrease is primarily due to the Companys lower average
cash balances and lower interest rates.  IMPAIRMENT OF INVESTMENTS:  The Company recorded an
other-than-temporary impairment of auction-rate securities of approximately $0.1
million during the three months ended June 30, 2009 as compared to $0.2 million
during the three months ended June 30, 2008.  INCOME
TAXES:The Companys effective tax rate increased to a 35.7%
benefit for the three months ended June 30, 2009 from a benefit of 30.3% for the
three months ended June 30, 2008.  The increase in the tax benefit is
primarily a result of an increase in the Companys net loss primarily offset by
the impact of interest and penalties on tax reserves for uncertain positions.
 The Company currently has $44.9 million of net deferred tax assets as of
June 30, 2009 inclusive of $12.3 million of net operating loss carryforwards
that expire between 2028 and 2029 and valuation allowances of $3.0 million for
unrealized tax losses on available for sale securities.  NET
LOSS:  As a result of the foregoing, net loss increased by $1.2 million to
$(3.3) million, or (3.5%) of net revenues, for the three months ended June 30,
2009 as compared to $(2.1) million or (1.8)% of net revenues, for the three
months ended June 30, 2008.  Six
Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008  REVENUES:  Net revenues decreased $36.3 million, or 15.6%, to
$197.3 million for the six months ended June 30, 2009 from $233.6 million for
the six months ended June 30, 2008.  The decrease in revenues occurred in
each of the Companys business segments as further described below in the
sections entitled NET SALES and ROYALTY REVENUE.  NET
SALES: Wholesale net sales (excluding sales to the Companys Consumer Direct
business segment) decreased $24.2 million, or 18.3%, to $107.8 million for the
six months ended June 30, 2009 from $132.0 million for the six months ended June
30, 2008.  The decrease was attributable to a decline in sales across
primarily all of the Companys wholesale businesses as a result of factors
including retailer destocking, a challenging retail environment and continued
stress in the macro-economic marketplace.  In addition, the decline
included the exiting of the Companys Tribeca business and terminating
its Bongo business.


20


Net
sales in the Companys Consumer Direct segment decreased $10.2 million, or
12.5%, to $71.3 million for the six months ended June 30, 2009 from $81.5
million for the six months ended June 30, 2008.  Comparable store sales
decreased 17.4%, or $12.3 million.  Comparable stores are defined as new
stores that are open for longer than thirteen months.  A store that stops
operations is included in the comparable sales calculation through the date of
closing.The Company opened eight
Company Stores (outlets) and closed three full-priced retail stores during the
six months ended June 30, 2009 as compared to opening six Company Stores
(outlets) and opening two full-priced retail stores and closing two during the
six months ended June 30, 2008.  ROYALTY
REVENUE:  Royalty revenue decreased $1.9 million, or 9.9%, to $18.2 million
for the six months ended June 30, 2009 from $20.1 million for the six months
ended June 30, 2008.  The decrease in royalty revenues was primarily
attributable to a reduction in contract initiation fees and a decrease in
certain international licensee sales.  GROSS
PROFIT:  Consolidated gross profit, as a percentage of net revenues,
decreased to 38.0% for the six months ended June 30, 2009 from 41.2% for the six
months ended June 30, 2008.  The decrease, as a percentage of net revenues,
was primarily the result of a decrease in the Wholesale and Consumer Direct
segment margins, partially offset by the revenue mix shifting to Consumer Direct
and Licensing as a percentage of total revenues.  The Consumer Direct
segment, which operates at a higher gross profit level than the Wholesale
segment, increased revenues as a percentage of net revenues to 36.1% for the six
months ended June 30, 2009 compared to 34.9% for the six months ended June 30,
2008, while the Wholesale segment revenues, as a percentage of net revenues,
decreased to 54.7% for the six months ended June 30, 2009 from 56.5% for the six
months ended June 30, 2008.  The revenues in the Licensing segment, which
carries less cost of goods sold, increased as a percentage of revenues, to 9.2% for the six months ended June 30,
2009 compared to 8.6% for the six months ended June 30, 2008.  The decrease
in the Wholesale and Consumer Direct segment margins for the six months ended
June 30, 2009 compared to the six months ended June 30, 2008 was primarily due
to a promotional and challenging retail environment and the macro-economic
marketplace.  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:  SG&A
expenses, including warehousing and receiving expenses, decreased $5.6 million
to $92.6 million for the six months ended June 30, 2009 from $98.2 million for
the six months ended June 30, 2008.  The decrease in SG&A expenses was
primarily attributable to a reduction in payroll and various cuts in
discretionary spending offset by costs associated with new stores and other
expenses associated with the Companys strategic initiatives.  Total
SG&A expenses, as a percentage of revenues, were 47.0% and 42.0% for the six
months ended June 30, 2009 and 2008, respectively.  The increase was due to
loss of leverage on the decline in sales in the Wholesale and Consumer Direct
segments and the greater portion of revenues from the Consumer Direct segment
which carries a higher SG&A expense level than the Wholesale and Licensing
segments due primarily to store occupancy and payroll costs.  INTEREST INCOME, NET:  Interest income, net decreased $0.9
million to $0.3 million for the six months ended June 30, 2009 as compared to
$1.2 million for the six months ended June 30, 2008.  The decrease is
primarily due to the Companys lower average cash balances and lower interest
rates.  IMPAIRMENT OF INVESTMENTS:  The Company recorded an
other-than-temporary impairment of auction-rate securities of $0.4 million
during the six months ended June 30, 2009 as compared to $0.8 million during the
six months ended June 30, 2008.  INCOME
TAXES:The Companys effective tax rate increased to a 36.0%
benefit for the six months ended June 30, 2009 from a benefit of 18.9% for the
six months ended June 30, 2008.  The increase in the Companys tax rate is
a result of the tax benefit from the Companys net loss offset by the impact of
interest and penalties on income tax reserves for uncertain positions.  The
Company currently has $44.9 million of net deferred tax assets as of June 30,
2009 inclusive of $12.3 million of net operating loss carryforwards that expire
between 2028 and 2029 and valuation allowances of $3.0 million for unrealized
tax losses on available for sale securities.


21


NET
LOSS:  As a result of the foregoing, the Company recorded a net loss of
$(11.4) million for the six months ended June 30, 2009 ((5.8%) of net revenues)
compared to $(1.2) million ((0.5%) of net revenues) for the six months ended
June 30, 2008.  New
Accounting Pronouncements  In June 2009, the FASB issued SFAS No. 168 The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles - a replacement of FASB Statement No. 162 (SFAS 168).
 The FASB Accounting Standards CodificationTM
(Codification) will become the source of authoritative U.S. generally accepted
accounting principles (GAAP) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the Securities and
Exchange Commission (SEC) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants.  The Codification will
supersede all then-existing non-SEC accounting and reporting standards.
 All other nongrandfathered non-SEC accounting literature not included in
the Codification will become nonauthoritative.  SFAS 168 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009.  The Company expects that SFAS 168 will not have a
material impact on the Companys consolidated financial statements.  In May 2009, the FASB issued SFAS No. 165 Subsequent
Events (SFAS 165).  SFAS 165 is intended to establish general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  SFAS 165 sets forth the period after the balance sheet date
during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial
statements, and the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date.  SFAS 165 is
effective for interim and annual periods ending after June 15, 2009.  The
Company adopted SFAS 165 on June 15, 2009 and determined that is did not have a
material impact on the Companys consolidated financial statements.  In April 2009, the FASB issued Staff Position FAS 115-2 and FAS
124-2, Recognition and Presentation of Other-Than-Temporary Impairments
(FSP 115-2).  FSP 115-2 is intended to bring greater consistency to the
timing of impairment recognition, and provide greater clarity to investors about
the credit and noncredit components of impaired debt securities that are not
expected to be sold.  The measure of impairment in comprehensive income
remains fair value.  FSP 115-2 also requires increased and timelier
disclosures sought by investors regarding expected cash flows, credit losses,
and an aging of securities with unrealized losses.  FSP 115-2 is effective
for interim and annual periods ending after June 15, 2009, but entities may
early adopt for interim and annual periods ending after March 15, 2009.
 The Company adopted FSP 115-2 during the quarter ended June 30, 2009 and
recorded a balance sheet reclassification between Retained Earnings and
Accumulated Other Comprehensive Loss of $2.3 million related to previous
writedowns of auction-rate securities in the Statements of Operations that would
not have been recorded if FSP 115-2 was in effect in prior periods.  This
amount relates to the non-credit component of the $4.0 million impairment.
 The remaining $1.7 million of the impairment reflects credit losses and
was recorded in the Statements of Operations.  In April 2009, the FASB issued Staff Position FAS 157-4,
Determining Fair Value When the Volume and Level of Activity for the Asset
or Liability Have Significantly Decreased and Identifying Transactions That Are
Not Orderly (FSP 157-4).  FSP 157-4 provides guidance on
estimating fair value when market activity has decreased and on identifying
transactions that are not orderly.  Additionally, entities are required to
disclose in interim and annual periods the inputs and valuation techniques used
to measure fair value.  FSP 157-4 is effective for interim and annual
periods ending after June 15, 2009.  The implementation of FSP 157-4
did not have a material impact on the Companys consolidated financial
statements.  In April 2009, the FASB issued the Staff Position FAS 107-1
and APB 28-1, Interim Disclosures About Fair Value of Financial
Instruments (FSP 107-1).  FSP 107-1 requires disclosures about fair
value of financial instruments in interim reporting periods of publicly-traded
companies that were previously only required to be disclosed in annual


22


financial statements.  FSP 107-1 is effective for interim
reporting periods ending after June 15, 2009.  The implementation of
FSP 107-1 did not have a material impact on the Companys consolidated financial
statements.  Related Party Transactions  The Company has an exclusive license agreement with Iconix Brand
Group, Inc. and its trademark holding company, IP Holdings, LLC (Iconix), to
use the Bongo trademark in connection with the manufacture, sale and
distribution of womens, mens and childrens footwear in certain territories.
 The Chairman and Chief Executive Officer of Iconix is the brother of the
Companys Chairman and Chief Creative Officer.  The term of the agreement
was through December 31, 2010.  In April 2009, the Company terminated the
agreement effective December 31, 2009 which eliminates any future obligation for
2010.  Management believes that the license agreement with Iconix was
entered into at arms length.  The Company is obligated to pay Iconix a
percentage of net sales based upon the terms of the agreement.  The Company
recorded approximately $37,000 and $257,000 in aggregate royalty and advertising
expense under the agreement for the three and six months ended June 30, 2009,
respectively. The Company recorded approximately $284,000 and $573,000 in
aggregate royalty and advertising expense under the agreement for the three and
six months ended June 30, 2008, respectively.  The Company recorded expenses of approximately $163,000 and
$206,000 for the three and six months ended June 30, 2009, respectively, to a
third-party aviation company which hires and uses an aircraft partially owned by
Emack LLC, a company which is wholly owned by the Companys Chairman and Chief
Creative Officer.  During the three and six months ended June 30, 2008, the
Company recorded expenses of approximately $91,000 and $266,000, respectively,
for hire and use of aircraft partially owned by Emack LLC. Management believes
that all transactions were made on terms and conditions similar to or more
favorable than those available in the marketplace from unrelated parties.  Liquidity and Capital Resources  As of June 30, 2009, the Company had $57.9 million in cash and
cash equivalents, which consist primarily of government money market funds.
 The Company uses cash from operations as the primary source of financing
for its capital expenditures and seasonal requirements.  Cash requirements
vary from time to time as a result of the timing of the receipt of merchandise
from suppliers, the delivery by the Company of merchandise to its wholesale
customers and the level of inventory, accounts receivable and due from factors
balances.  At June 30, 2009 and December 31, 2008, working capital was
$80.1 million and $97.5 million, respectively.  Cash provided by operating activities was $1.6 million for the six
months ended June 30, 2009, compared to $12.3 million for the six months ended
June 30, 2008. The decrease in cash flows provided by operations is
primarily attributable to a decrease in net income and the timings of
receivables and payables.  Net cash used in investing activities totaled $7.8 million for the
six months ended June 30, 2009 compared to $5.9 million for the six months ended
June 30, 2008.  The increase was primarily attributable to a $4.4 million
increase in capital expenditures during the six months ended June 30, 2009
compared to June 30, 2008.  Included in capital expenditures for the six
months ended June 30, 2009 and 2008 were approximately $6.3 million and $2.4
million, respectively, for amounts associated with furniture, fixtures and
leasehold improvements for existing and new stores.  This was offset by a
$2.5 million decrease in intangible asset purchases during the six months ended
June 30, 2009 compared to the six months ended June 30, 2008.  The Company
paid $2.5 million during the six months ended June 30, 2008 as defined within
the Le TigreAsset Purchase Agreement Amendment.  Net cash used in financing activities was $0.6 million for the six
months ended June 30, 2009 compared to $24.2 million used in financing
activities for the six months ended June 30, 2008.  The decrease was
primarily attributable to no repurchases of treasury shares during the six
months ended June 30, 2009 as compared to $20.0 million used to repurchase
1,282,000 treasury shares during the six months ended June 30, 2008.  The
Company also did not pay a


23


quarterly dividend for the six months ended June 30, 2009 compared
to a $3.4 million quarterly dividend paid for the six months ended June 30,
2008.  During the six months ended June 30, 2009 the Company had a
revolving credit facility (the Facility) with various lenders, which provided
up to $100.0 million to finance working capital requirements, letters of credit
and other general corporate activities based on a maximum leverage ratio of 2.25
to 1.0 of consolidated debt to consolidated earning before interest, non-cash
compensation, income taxes and depreciation as defined in the Facility.
 During the six months ended June 30, 2009, the Company had no borrowing
availability under the Facility.  As of June 30, 2009, the Company has $2.8
million of standby and commercial open letters of credit under the Facility.
 On July 31, 2009, the Company amended the Facility (the Amended
Facility) (see Subsequent Event footnote) to convert it to a revolving senior
secured asset based credit facility.  Pursuant to the terms of the Amended
Facility, the Company may borrow based on a percentage of receivables and
inventory as defined.  The Company has a Receivables Management Agreement with The CIT
Group/Commercial Services, Inc. (CIT) whereby CIT acts as a collection agent
and credit guarantor for the Companys assigned receivables without transfer of
ownership, subject to credit approval and without recourse.  Based on this
agreement the Company records balances collected by CIT as Accounts Receivable.
 Prior to executing the Receivables Management Agreement on November 7,
2008, the Company sold primarily all of its accounts receivable to its factors
and recorded these receivables in Due from Factors.  The Company believes that it will be able to satisfy its current
expected cash requirements for 2009 with cash flow from operations and cash on
hand.  The Company did not have any off-balance sheet arrangements as of
June 30, 2009.  The foregoing commentary should be considered to fall within the
coverage of the Safe Harbor Statement under the Private Securities
Litigation reform Act of 1995 included in this report.  Item 3.
 Quantitative and Qualitative Disclosures About Market Risk  The Company has marketable securities, specifically auction rate
securities, that contain double A and single A rated debt obligations and a
preferred share close end fund that are substantially all insured.  All of
the Companys auction rate securities have failed at auction as a result of
illiquidity and imbalance in order flow within the market.  A failed
auction is not an indication of an increased credit risk or a reduction in the
underlying collateral; however, parties wishing to sell securities could not do
so.  Based on current market conditions, it is not known when or if the
capital markets will come back into balance to achieve successful auctions for
these securities.  If these auctions continue to fail, it could result in
the Company holding securities beyond their next scheduled auction reset dates
and will limit the liquidity of these investments.  Based on the Companys
expected operating cash flows, and other sources and uses of cash, the Company
does not anticipate that the lack of liquidity on these investments will affect
its ability to execute its current business plan.  These assets have been
classified as long-term in the Companys Condensed Consolidated Balance Sheets
and have been recorded at their fair value.  The Company is exposed to currency exchange rate risks with
respect to its inventory transactions denominated in Euros.  Business
activities in various currencies expose the Company to the risk that the
eventual net dollar cash flows from transactions with foreign suppliers
denominated in foreign currencies may be adversely affected by changes in
currency rates.  The Company manages these risks by utilizing foreign
exchange contracts.  The Company does not enter into foreign currency
transactions for speculative purposes.  At June 30, 2009, the Company had
no forward contracts outstanding.


24


The Companys earnings may also be affected by changes in
short-term interest rates as a result of borrowings that may be made under its
credit facilities.  A two or less percentage point increase in interest
rates affecting the Companys credit facilities would not have had a material
effect on the Companys operations.  The Company sources a significant amount of product from China and
is subject to foreign currency exposure.  If the Yuan is allowed to float
freely against other foreign currency, a two percent change in exchange rates
could have a material effect on the cost of future inventory purchases to be
transacted by the Company.   Item
4.  Controls and Procedures  Evaluation of disclosure controls and procedures  The Companys Chief Executive Officer and Chief Financial Officer
have evaluated the effectiveness of the Companys disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), as of the end of the
period covered by this quarterly report, and have concluded that the Companys
disclosure controls and procedures were effective and designed to ensure that
all material information required to be disclosed by the Company in reports
filed or submitted under the Exchange Act is (1) recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and (2) accumulated and communicated to the
Companys management, including the Companys Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosures.  Changes in internal control over financial reporting  There were no changes in the Companys internal controls over
financial reporting during the period covered by this report that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.   Part II - OTHER
INFORMATION   Item 1. Legal Proceedings.  None   Item
1A.  Risk Factors.  There have been no material changes during
the quarterly period ended June 30, 2009 from the risk factors previously
disclosed in the Companys Annual Report on Form 10-K for the year ended
December 31, 2008.   Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.  None   Item
3. Defaults
Upon Senior Securities.  None   Item
4. Submission
of Matters to a Vote of Security Holders.  (a) Kenneth Cole Productions, Inc.s Annual Meeting of Shareholders
was held on May 28, 2009.  (b) Election of Directors  All nominees were elected through proxies
solicited pursuant to Regulation 14A under the Securities and Exchange Act of
1934, as amended.  There was no solicitation in opposition to managements
nominees as listed in the Proxy Statement, and each of the nominees was elected
to hold office until the next Annual Meeting of Shareholders.  (c) Matters voted on at the Annual Meeting of Shareholders
included: (i) the election of directors, (ii) the approval of an amendment to
the Kenneth Cole Productions, Inc. Employee Stock Purchase Plan to increase


25


the number of shares of Class A Common Stock authorized for
issuance by 150,000 shares, (iii) the approval of the Kenneth Cole Productions,
Inc. 2009 Pay for Performance Bonus Plan, (iv) the approval of an amendment to
the Kenneth Cole Productions, Inc. 2004 Stock Incentive Plan to increase the
number of shares of Class A Common Stock authorized for issuance by 3,000,000
shares, and (v) the ratification of the selection of the Independent Registered
Public Accounting Firm for the 2009 fiscal year.  (i)
 Election of directors:  FOR
AGAINST/ABSTAIN
BROKER NON-VOTEKenneth D.
Cole
89,281,251
132,159
0Jill
Granoff
89,288,569
124,841
0Michael J.
Blitzer
9,281,033
27,407
0Martin E.
Franklin
84,150,365
5,263,045
0Robert C.
Grayson
88,329,493
1,083,917
0Denis F.
Kelly
88,343,257
1,070,153
0Philip R.
Peller
8,229,537
1,078,903
0  Holders of 9,308,440 shares of Class A Common Stock, and 8,010,497
shares of Class B Common Stock, constituting approximately 96.76% of the shares
entitled to vote, were present in person or by proxy at the Annual Meeting of
Shareholders.  Each record holder of Class A Common Stock is entitled to
one vote per share, and each record holder of Class B Common Stock is entitled
to 10 votes per share.  Holders of Class A Common Stock voted separately to
elect Michael J. Blitzer and Philip R. Peller.  (ii)  Amendment
to the Kenneth Cole Productions, Inc. Employee Stock Purchase Plan:  With regard to the approval of an amendment to the Kenneth Cole
Productions, Inc. Employee Stock Purchase Plan to increase the number of shares
of Class A Common Stock authorized for issuance by 150,000 shares, the results
were as follows:  FOR
AGAINST
ABSTAIN
BROKER NON-VOTE86,526,987
604,127
1,940
0  (iii) Approval of the
Kenneth Cole Productions, Inc. 2009 Pay for Performance Bonus Plan:  With regard to the approval of the Kenneth Cole Productions, Inc.
2009 Pay for Performance Bonus Plan, the results were as follows:  FOR
AGAINST
ABSTAIN
BROKER NON-VOTE89,269,529
138,802
5,079
0  (iv)  Amendment
to the Kenneth Cole Productions, Inc. 2004 Stock Incentive Plan:  With regard to the approval of an amendment to the Kenneth Cole
Productions, Inc. 2004 Stock Incentive Plan to increase the number of shares of
Class A Common Stock authorized for issuance by 3,000,000 shares, the results
were as follows:  FOR
AGAINST
ABSTAIN
BROKER NON-VOTE80,770,962
6,360,002
2,090
0


26


(v)
 Ratification of the Companys Independent Registered Public Accounting
Firm:  With regard to the ratification of the appointment of Ernst &
Young LLP as the Companys Independent Registered Public Accounting Firm for the
2009 fiscal year, the results were as follows:  FOR
AGAINST
ABSTAIN
BROKER NON-VOTE89,383,105
27,675
2,630
0   Item
5. Other
Information.  None  Item
6. Exhibits.  10.18
Kenneth Cole Productions, Inc. 2004 Stock Incentive Plan
(Incorporated by reference to the Companys Registration Statement on Form
S-8 Registration No. 333-160291 filed on June 29, 2009.31.1
Certification of Chief Executive Officer pursuant to
Securities Exchange Act Rule 13a-14 and 15d-14, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
Certification of Chief Financial Officer pursuant to
Securities Exchange Act Rule 13a-14 and 15d-14, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.


27


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.   Kenneth
Cole Productions, Inc. Registrant    August
10, 2009 /s/
DAVID P. EDELMAN David
P. Edelman Chief
Financial Officer


28


Exhibit 31.1  CERTIFICATION OF CHIEF EXECUTIVE OFFICER  I, Jill
Granoff, certify that:  1.
 I have reviewed this quarterly report on Form 10-Q of Kenneth Cole
Productions, Inc.;  2.
 Based on my knowledge, the report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by the report;  3.
 Based on my knowledge, the financial statements, and other financial
information included in the report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in the report;  4.
 The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:  (a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;  (b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;  (c) Evaluated the effectiveness of the registrants disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and  (d) Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and       5.
 The registrants other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):  (a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and  (b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal control
over financial reporting.     By: /s/
JILL GRANOFF -------------------------------------- Jill
Granoff Chief
Executive Officer    Date:  August
10, 2009                            Exhibit
31.2  CERTIFICATION OF CHIEF FINANCIAL OFFICER  I,
David P. Edelman, certify that:  1.
 I have reviewed this quarterly report on Form 10-Q of Kenneth Cole
Productions, Inc.;  2.
  Based on my knowledge, the report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the report;  3.
 Based on my knowledge, the financial statements, and other financial
information included in the report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in the report;  4.
 The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:  (a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;  (b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;  (c) Evaluated the effectiveness of the registrants disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and  (d) Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and       5.
 The registrants other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):  (a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and  (b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal control
over financial reporting.     By: /s/
DAVID P. EDELMAN ---------------------------------------- David
P. Edelman Chief
Financial Officer     Date:  August
10, 2009                           Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Quarterly Report of Kenneth Cole
Productions, Inc. (the Company) on Form 10-Q for the period ending June 30,
2009 as filed with the Securities and Exchange Commission on the date hereof
(the Report), I, Jill Granoff, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that: (1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and (2)
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.  /s/
JILL GRANOFF  Jill
GranoffChief Executive OfficerKenneth Cole Productions, Inc August
10, 2009            Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Quarterly Report of Kenneth Cole
Productions, Inc. (the Company) on Form 10-Q for the period ending June 30,
2009 as filed with the Securities and Exchange Commission on the date hereof
(the Report), I, David P. Edelman, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that: (1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and (2)
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.  /s/
DAVID P. EDELMAN  David
P. EdelmanChief Financial OfficerKenneth Cole Productions, Inc.
August 10, 2009      Exhibit 10.18  KENNETH COLE PRODUCTIONS, INC. 2004 STOCK INCENTIVE PLAN (Amended and Restated as of May 28, 2009)  1.  PURPOSE.  The purpose of the 2004 Stock Incentive Plan (the Plan) is to
induce key employees, consultants and directors who are not employees
(Non-Employee Directors) to remain in the employ and service of Kenneth Cole
Productions, Inc. (the Company) and any subsidiary corporations (each a
Subsidiary), as defined in section 424(f) of the Internal Revenue Code of
1986, as amended (the Code), and any affiliates of the Company to attract new
key employees, consultants and Non-Employee Directors and to encourage such key
employees, consultants and Non-Employee Directors to secure or increase on
reasonable terms their stock ownership in the Company and otherwise align their
interests with those of the shareholders of the Company. The Plan allows for the
grant of equity-based awards, including stock options (the Options), shares of
restricted stock (Restricted Stock), performance-based equity awards
(Performance-Based Awards) and other equity-based awards (Options, Restricted
Stock, Performance-Based Awards and other equity-based awards are hereafter
referred to as Awards). The Board of Directors of the Company (the Board)
believes that the granting of Awards under the Plan will promote continuity of
management and increased incentive and personal interest in the welfare of the
Company by those who are or may become primarily responsible for shaping and
carrying out the long-range plans of the Company and securing its continued
growth and financial success. Options granted hereunder are intended to be
either (a) incentive stock options (which term, when used herein, shall have
the meaning ascribed thereto by the provisions of Section 422(b) of the Code) or
(b) options which are not incentive stock options (non-incentive stock
options) or (c) a combination thereof, as determined by the Committee (the
Committee) referred to in Section 5 hereof at the time of the grant hereof.
 Unless specifically delineated as incentive stock options, all Options
granted hereunder shall be non-incentive stock options.  2.  EFFECTIVE DATE OF THE PLAN.  The Plan was adopted by the Board on February 25, 2004 and shall
become effective as of the date the Plan is approved by a majority of the
holders of all of the outstanding shares of the capital stock of the Company
(the Capital Stock) on or after the Company's 2004 annual meeting of
stockholders (the 2004 Annual Meeting).  3.  STOCK SUBJECT TO PLAN.  A.  Number of Shares Available for Delivery.
 Shares of the Class A Common Stock, $0.01 par value per share, of the
Company (the Class A Common Stock) have been reserved and authorized for
issuance pursuant to the Plan. Subject to adjustment as contemplated by Section
16 hereof, the maximum number of shares of Class A Common Stock which may be
issued pursuant to Awards under the Plan shall not exceed the sum of (i) that
number of shares of Class A Common Stock which remain available for grant of
options under the Amended and Restated Kenneth Cole Productions, Inc. 1994 Stock
Option Plan (the 1994 Plan) as of April 29, 2004 and (ii) 4,520,162 shares, as
replenished from time to time by (A) that number of shares of Class A Common
Stock which were or are reserved for issuance upon the exercise of Options or
Awards granted under the Plan, or under the 1994 Plan,which shall have
expired, been canceled, or terminated for any reason without having been
exercised in full, and (B) that number of shares which are withheld by the
Company from issuance pursuant to outstanding Options or Awards under the Plan,
or the 1994 Plan, as required to be withheld to satisfy any federal, state or
local tax  1     liability with respect to such Option or Award (the Share
Reserve). Shares of Class A Common Stock delivered under the Plan may consist
of authorized and unissued shares or previously issued shares of Class A Common
Stock reacquired by the Company on the open market or by private purchase.
 All of the shares in the Share Reserve may be issued pursuant to incentive
stock options.  B.  Share Counting Rules.  The Committee may
adopt reasonable counting procedures to ensure appropriate counting, avoid
double counting (as, for example, in the case of tandem or substitute awards)
and make adjustments if the number of shares of Stock actually delivered differs
from the number of shares previously counted in connection with an Award.
 To the extent that an Award expires or is canceled, forfeited, settled in
cash or otherwise terminated without a delivery to the Participant (as defined
below) of the full number of shares to which the Award related, the undelivered
shares will again be available for grant.  Shares withheld in payment of
the exercise price or taxes relating to an Award and shares equal to the number
surrendered in payment of any exercise price or taxes relating to an Award shall
be deemed to constitute shares not delivered to the Participant and shall be
deemed to again be available for Awards under the Plan; provided,
however, that such shares shall not become available for issuance
hereunder if either (i) the applicable shares are withheld or surrendered
following the termination of the Plan, or (ii) at the time the applicable shares
are withheld or surrendered, it would constitute a material revision of the Plan
subject to stockholder approval under any then-applicable rules of the national
securities exchange on which the Stock is listed.  4.  ADMINISTRATION.  The Plan shall be administered by the Committee referred to in
Section 5 hereof. Subject to the express provisions of the Plan, the Committee
shall have complete authority, in its discretion, to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of each Award and the respective Award agreements or
certificates (which need not be identical), to determine the Eligible
Individuals (as defined below) to whom and the times and the prices at which Awards shall be granted to them (each Eligible Individual to whom
an Award is granted hereunder shall be referred to as a Participant), the
periods during which each Award shall be exercisable, the number of shares of
the Class A Common Stock to be subject to each Award and whether such Award
shall be an incentive stock option, a non-incentive stock option, a Restricted
Stock Award or other equity-based Award and to make all other determinations
necessary or advisable for the administration of the Plan. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective Eligible Individuals, their past, present and
potential contributions to the success of the Company and the Subsidiaries and
such other factors as the Committee in its sole and absolute discretion shall
deem relevant.  The Committee's determination on the matters referred to in
this Section 4 and in its administration of the Plan shall be final, binding and
conclusive. Any dispute or disagreement which may arise under or as a result of
or with respect to any Award shall be determined by the Committee, in its sole
discretion, and any and all interpretations by the Committee of the terms of any
Award shall be final, binding and conclusive.  5.  COMMITTEE.  The Committee shall consist of two or more members of the Board.
 If and to the extent that the composition of the Board shall permit, all
of the members of the Committee shall be Non-Employee Directors within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the
Exchange Act), as amended, and all of the members of the Committee shall be
outside directors within the contemplation of Section 162(m)(4)(C)(i) of the
Code.  The Committee shall be appointed by the Board, which may at any time
and from time to time remove any members of the Committee, with or without
cause, appoint additional members to the Committee and fill vacancies, however
caused, in the  2     Committee. A majority of the members of the Committee shall
constitute a quorum.  All determinations of the Committee shall be made by
a majority of its members present at a meeting duly called and held. Any
decision or determination of the Committee reduced to writing and signed by all
of the members of the Committee shall be fully as effective as if it had been
made at a meeting duly called and held.  6.  ELIGIBILITY; NON-EMPLOYEE DIRECTORS' FORMULA
AWARDS.  A.  An Award may be granted on a discretionary basis only to
an employee or consultant of the Company or a Subsidiary or affiliate of the
Company, or to a Non-Employee Director of the Company (the Eligible
Individuals).  B.  (i)  Unless otherwise determined by the Board, at
the first meeting of the Board immediately following each annual meeting of the
shareholders of the Company, each Non-Employee Director will be automatically
granted, at his or her option, either: (1) Restricted Stock having a market
value of $50,000 as of the market close on the date of grant (a Non-Employee
Director's Restricted Stock Award), or (2) an Option having a market value of
$50,000 determined utilizing the Black Scholes, lattice or other stock option
valuation model (a Non-Employee Directors Stock Option Award).  (ii)  Unless otherwise
determined by the Board, when a Non-Employee Director first becomes a director,
whether at an annual meeting of shareholders or prior to the date of any annual
meeting of the Shareholders of the Company, he or she shall be automatically
granted, on the date he or she becomes a director, a Non-Employee Director's
Stock Option Award to purchase a number of shares of the Class A Common Stock
equal to the product of 5,000 options at the per share exercise price equal to
the fair market value of a share of the Class A Common Stock on the date of
grant.  (iii)  Unless otherwise
determined by the Board, each Non-Employee Director's Stock Option Award shall
have a term of ten years from the date of the granting thereof.  (iv)  Unless otherwise
determined by the Board, a Non-Employee Director's Restricted Stock Award
 or Non-Employee Directors Stock Option Award shall vest and become
exercisable (i) as to fifty percent (50%) of the shares underlying such
Non-Employee Directors Restricted Stock Award or Non-Employee Directors Stock
Option Award on and after the first anniversary of the date of the granting of
the Non-Employee Director's Formula Award and (ii) as to the remaining fifty
percent (50%) on and after the second anniversary of the date of the granting of
the Non-Employee Directors Restricted Stock Award or Non-Employee Directors
Stock Option Award.  (iv)  Notwithstanding
anything herein to the contrary, the Board may, at any time and from time to
time in its sole discretion, terminate or amend the automatic Award to
Non-Employee Directors set forth in this Section 6B, by increasing or decreasing
the number of shares of Class A Common Stock subject to the formula or
substituting an alternate formula or a different Award on different terms,
including different or no vesting conditions.  7.  EXERCISE PRICES.  A.  Except as set forth in Section 6B above and as limited
below, the exercise price for any Award shall be determined by the Committee, in
its sole discretion.  B.  The per share exercise price of any Option which is an
incentive stock option shall not be less than the fair market value of a share
of the Class A Common Stock on the date of grant; provided, however,
that, in the case of a Participant who owns (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of the
Capital Stock at the time an Option which is an incentive  3     stock option is granted to him, the per share exercise price shall
not be less than 110% of the fair market value of a share of the Class A Common
Stock on the date of grant.  C.  The per share exercise price of any Option which is a
non-incentive stock option (other than a Non-Employee Director's Formula Award)
shall not be less than 85% of the fair market value of a share of the Class A
Common Stock on the date of grant; provided, however, that the Committee
shall give due regard to Section 409A of the Code before granting Options with a
per share exercise price less than the fair market value of a share of the Class
A Common Stock on the date of grant.  D.  For all purposes of the Plan, the fair market value of a
share of the Class A Common Stock on any date shall be equal to (i) the closing
sales price of a share of the Class A Common Stock on the New York Stock
Exchange, or if the Class A Common Stock is no longer listed on the New York
Stock Exchange, the closing sales price on such other national stock exchange on
which the Class A Common Stock is then listed or quoted, on such date or (ii) if
there is no sale of the Class A Common Stock on such exchange or market on such
date, the average of the bid and asked prices on such exchange or market at the
close of the market on such date. If the Class A Common Stock is not listed or
quoted on any national exchange, the fair market value of the Class A Common
Stock shall mean the amount determined by the Committee to be the fair market
value based upon a good faith attempt to value the Class A Common Stock
accurately and in a manner consistent with Section 409A of the Code.  8.  OPTION TERM.  The term of any Option shall be determined by the Committee, in
its sole discretion, but shall not be in excess of ten years from the date of
the granting thereof; provided, however, that, in the case of a
Participant who owns (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of the Capital Stock at the time an
Option which is an incentive stock option is granted to him, the term with
respect to such Option shall not be in excess of five years from the date of the
granting thereof.  9.  LIMITATIONS ON AMOUNT OF OPTIONS GRANTED.  A.  The aggregate fair market value of the shares of the
Class A Common Stock for which any Participant may be granted incentive stock
options which are exercisable for the first time in any calendar year (whether
under the terms of the Plan or any other stock option plan of the Company) shall
not exceed $100,000.  B.  No Eligible Individual shall be granted Options or stock
appreciation rights hereunder covering more than 300,000 shares of the Class A
Common Stock during any fiscal year that the Plan is in effect.  10.  VESTING AND EXERCISE OF OPTIONS.  A.  Except as provided in Section 6B, each Option shall vest
and become exercisable as determined by the Committee and set forth in the Award
agreement on the date of grant.  B.  Except as otherwise set forth herein, an Option may be
exercised either in whole in part, at any time from time to time, from the
Option vesting date (but only with respect to the number of shares available for
exercise on such Option vesting date) until the end of the Option term or
earlier expiration or cancellation.  C.  An Option may be exercised only by a written notice of
intent to exercise such Option with respect to a specific number of shares of
the Class A Common Stock and payment to the Company of the amount of  4     the option price for the number of shares of the Class A Common
Stock so specified; provided, however, that all or any portion of such
payment may be made in kind by the delivery of shares of the Class A Common
Stock having a fair market value equal to the portion of the option price so
paid or by any other means approved by the Committee from time to time;
provided, further, however, that, subject to the requirements of
Regulation T (as in effect from time to time) promulgated under the Exchange
Act, the Committee may implement procedures to allow a broker chosen by a
Participant to make payment of all or any portion of the option price payable
upon the exercise of an Option and receive, on behalf of such Participant, all
or any portion of the shares of the Class A Common Stock issuable upon such
exercise. Notwithstanding anything herein to the contrary, the Company shall not
directly or indirectly extend or maintain credit, or arrange for the extension
of credit, in the form of a personal loan to or for any director or executive
officer of the Company through the Plan in violation of Section 402 of the
Sarbanes-Oxley Act of 2002.  D.  The Committee may for any reason, in its discretion,
accelerate the vesting and exercisability of any Option other than Non-Employee
Directors' Formula Award.  11.  TERMINATION OF EMPLOYMENT.  Unless otherwise determined by the Committee, in the event a
Participant leaves the employ of the Company and all Subsidiaries and affiliates
of the Company and ceases to serve as a consultant to the Company and all
Subsidiaries and affiliates of the Company and as a Non-Employee Director, as
applicable, whether voluntarily or otherwise, but other than by reason of his
death or retirement on or after his 65th birthday, each Option theretofore
granted to him which shall not have theretofore expired or otherwise been
canceled shall, to the extent not theretofore exercised, terminate forthwith;
provided, however, that in the event that any Participant's employment or
service with the Company and its Subsidiaries and affiliates is terminated by
the Company or a Subsidiary or affiliate without cause or on account of a
disability or if such Participant voluntarily resigns, such Participant may
exercise any Option that was vested at the time of such termination, but only to
the extent so vested, at any time during the thirty (30) calendar days
immediately following the date of such termination and thereafter any such
Option held by such Participant, to the extent not theretofore exercised, shall
terminate forthwith. In the event a Participant's employment with the Company
and all Subsidiaries and affiliates of the Company and service as a consultant
to the Company and all Subsidiaries and affiliates of the Company and as a
Non-Employee Director, as applicable, terminates by reason of his death or
retirement on or after his 65th birthday, each Option theretofore granted to him
which shall not have theretofore expired or otherwise been cancelled shall
become immediately exercisable in full and shall, to the extent not theretofore
exercised, terminate upon the earliest to occur of the expiration of three
months after the date of the qualification of a representative of his estate or
such retirement, the expiration of a period of one year after the date of his
death and the date specified in such Option.  12.  RESTRICTED STOCK.  A.  The Committee shall have the authority (1) to grant
Restricted Stock, (2) offer Restricted Stock for purchase pursuant to Options,
(3) to issue or transfer Restricted Stock to any Eligible Individual, and (4) to
establish terms, conditions and restrictions applicable to such Restricted
Stock, including the restricted period, which may differ with respect to each
grantee, the time or times at which Restricted Stock shall be granted or become
vested and the number of shares to be covered by each grant.  B.  The recipient of a Restricted Stock Award shall execute
and deliver to the Company an Award agreement with respect to the Restricted
Stock setting forth the restrictions applicable to such Restricted Stock. If the
Committee determines that the Restricted Stock shall be held in escrow by the
Company rather than delivered to the recipient pending the release of the
applicable restrictions, the recipient  5     additionally shall execute and deliver to the Company the
appropriate blank stock powers with respect to the Restricted Stock covered by
such agreements. If a recipient shall fail to execute a Restricted Stock Award
agreement and, if applicable, stock powers, the Award shall be null and void.
Subject to the restrictions set forth below, the recipient shall generally have
the rights and privileges of a stockholder as to such Restricted Stock,
including the right to vote such Restricted Stock, but not the right to receive
dividends, if any, on such shares. The Committee may determine whether a
Restricted Stock Award shall be entitled to receive dividends. If the Committee
determines that a Restricted Stock Award shall be entitled to dividends, any
such cash dividends and/or stock dividends, with respect to the Restricted Stock
may be either currently paid to the recipient or withheld by the Company for the
recipient's account, as determined by the Committee in its sole discretion.
Unless otherwise determined by the Committee no interest will accrue or be paid
on the amount of any cash dividends withheld.  Unless otherwise determined
by the Committee, cash dividends or stock dividends so withheld by the Committee
shall be subject to forfeiture to the same degree as the shares of Restricted
Stock to which they relate.  C.  Upon the Award of Restricted Stock, the Committee shall
cause a stock certificate registered in the name of the recipient to be issued
and, if it so determines, held in escrow by the Company. If the Company retains
the stock certificate, the Company shall notify the recipient that a stock
certificate registered in the name of the recipient is being held by it.  D.  Any Restricted Stock awarded hereunder shall be subject
to the following restrictions until the expiration of the restricted period, and
to such other terms and conditions as may be set forth in the applicable Award
agreement: (1) if an escrow arrangement is used, the recipient shall not be
entitled to delivery of the stock certificate; (2) the shares shall be subject
to the restrictions on transferability set forth in the Award agreement; (3) the
shares shall be subject to forfeiture to the extent provided below and the Award
agreement and, to the extent such shares are forfeited, the stock certificates
shall be returned to the Company, and all rights of the recipient to such shares
and as a shareholder shall terminate without further obligation on the part of
the Company.  E.  The Committee shall have the authority to remove any or
all of the restrictions on the Restricted Stock whenever it may determine that,
by reason of changes in applicable laws or other changes in circumstances
arising after the date of the Restricted Stock Award, such action is
appropriate.  F.  The restricted period of Restricted Stock shall commence
on the date of grant and shall expire from time to time as to that part of the
Restricted Stock indicated in a schedule established by the Committee and set
forth in a written Award agreement.  G.  Except to the extent determined by the Committee and
reflected in the underlying Award agreement, in the event a recipient terminates
employment with the Company and all Subsidiaries and affiliates of the Company
and ceases to serve as a consultant to the Company and all Subsidiaries and
affiliates of the Company and as a Non-Employee Director, as applicable, during
a restricted period, that portion of the Award with respect to which
restrictions have not expired (the Non-Vested Portion) shall be treated as
follows: (a) upon the voluntary resignation of a Restricted Stock recipient or
discharge by the Company or a Subsidiary or affiliate of the Company, in either
case, for reasons other than death or retirement on or after the recipient's
65th birthday, the Non-Vested Portion of the Award shall be completely
forfeited; and (b) upon termination of employment on account of death or
retirement on or after the recipient's 65th birthday, a pro-rata portion of the
Non-Vested Portion of the Award shall immediately become fully vested and paid
to the recipient or his beneficiary, as applicable, as soon as practicable
following such termination. The pro-rata portion of the Non-Vested Portion of
the Award that shall vest immediately upon such termination shall be a portion
that represents the amount of time the recipient was employed or providing
service from the date of grant of the Award through the date of such termination
as compared with the entire restricted period, as determined by the Committee.
 The Committee shall have the  6     authority to define the term disability and retirement for all
purposes under the Plan and/or to determine whether a recipient's employment or
service has terminated by reason of disability or retirement.  H.  Upon the expiration of the restricted period with respect
to any shares covered by a Restricted Stock Award, the transfer restrictions and
forfeiture provisions applicable to the Restricted Stock shall be of no further
force or effect with respect to shares of Restricted Stock which have not then
been forfeited. If an escrow arrangement is used, upon such expiration, the
Company shall deliver to the recipient, or his beneficiary, without charge, the
stock certificate evidencing the shares of Restricted Stock which have not then
been forfeited and with respect to which the restricted period has expired (to
the nearest full share) and any cash dividends or stock dividends credited to
the recipient's account with respect to such Restricted Stock and the interest
thereon, if any.  I.  Each certificate representing Restricted Stock awarded
under the Plan shall bear the following legend until the end of the restricted
period with respect to such Stock:  Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated as of ,
between Kenneth Cole Productions, Inc. and . A copy of such Agreement is on file
at the offices of Kenneth Cole Productions, Inc.  Stop transfer orders shall be entered with the Company's transfer
agent and registrar against the transfer of legended securities.  13.  PERFORMANCE-BASED AWARDS.  Performance-Based Awards under the Plan may be granted, in the
sole discretion of the Committee, in a manner constituting qualified
performance-based compensation within the meaning of Section 162(m) of the
Code. Such Awards shall be based upon one or more of the following factors:
 stock price, pre-tax earnings, earnings per share, net revenue, operating
income, return on assets, shareholder return, return on equity, growth in
assets, net sales, licensing revenue, cash flow, market share, relative
performance to a group of companies comparable to the Company, and/or strategic
business criteria consisting of one or more objectives based on the Company's
meeting specified goals relating to revenue, market penetration, business
expansion, costs or acquisitions or divestitures. With respect to
Performance-Based Awards, (i) the Committee shall establish in writing the
objective performance-based goals applicable to a given performance period no
later than 90 days after the commencement of such performance period (but in no
event after 25% of such period has elapsed) and (ii) no Performance-Based Awards
shall be payable to any recipient for a given performance period until the
Committee certifies in writing that the objective performance goals (and any
other material terms) applicable to such period have been satisfied. The maximum
number of shares of Class A Common Stock underlying (or that relate to) a
Performance-Based Award paid to or earned by any individual in any fiscal year
cannot exceed 300,000 shares. The material terms of Performance-Based Awards
described in this Section 13 must be disclosed to and approved by the
shareholders of the Company every five years, as provided in Treasury Regulation
1.162-27(e)(4)(vi).  14.  OTHER EQUITY-BASED AWARDS.  The Committee is authorized, subject to limitations under
applicable law, to grant to Eligible Individuals such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, the Class A Common Stock, as determined by
the Committee in its sole discretion, including, without limitation, restricted
stock units, stock appreciation rights, performance stock, performance stock
units unrestricted shares awarded purely as a bonus and not subject to any  7     restrictions or conditions, other rights convertible or
exchangeable into shares of Class A Common Stock and purchase rights for shares
of Class A Common Stock.  The Committee shall determine the terms and
conditions of such Awards at date of grant or thereafter. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 14 shall be purchased for such consideration, paid for at such times, by
such methods, and in such forms, including, without limitation, cash, shares of
Class A Common Stock, notes or other property, as the Committee shall determine.
Cash awards, as an element of or supplement to any other Award under the Plan,
shall also be authorized pursuant to this Section 14.  15.  TRANSFERABILITY.  Unless otherwise determined by the Committee, either at the time
of grant or subsequently, no Award shall be assignable or transferable except by
will and/or by the laws of descent and distribution and, during the life of any
Participant, each Award granted to him or her may be exercised only by him or
her.  16.  ADJUSTMENT OF NUMBER OF SHARES.  The aggregate number of shares of Class A Common Stock which may
be granted or purchased pursuant to Awards (as set forth in Section 3 hereof),
the number of shares of Class A Common Stock covered by each outstanding Award,
and the price per share thereof in each such Award shall be equitably and
proportionally adjusted or substituted, as determined by the Committee, as to
the number, price or kind of a share of Stock or other consideration subject to
such Awards (i) in the event of changes in the outstanding Stock or in the
capital structure of the Company by reason of stock dividends, stock splits,
reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the date of grant of any such Award; (ii) in
connection with any extraordinary dividend declared and paid in respect of
shares of Stock, whether payable in the form of cash, stock or any other form of
consideration; or(iii) in the event of any change in applicable laws or
any change in circumstances which results in or would result in any substantial
dilution or enlargement of the rights granted to, or available for, Participants
in the Plan.  No adjustment or substitution provided for in this Section 16
shall require the Company to sell or issue a fractional share under any Award
agreement or certificate. In the event of the dissolution or liquidation of the
Company, or a merger, reorganization or consolidation in which the Company is
not the surviving corporation, then except as otherwise provided in the second
sentence of this Section 16, each Award, to the extent not theretofore
exercised, shall terminate forthwith.  17.  SECURITIES REGULATION.  The obligation of the Company to make payment of Awards in shares
of Class A Common Stock or otherwise shall be subject to all applicable laws,
rules and regulations, and to such approvals by governmental agencies as may be
required. Notwithstanding any terms or conditions of any Award to the contrary,
the Company shall be under no obligation to offer to sell or to sell and shall
be prohibited from offering to sell or selling any shares of Class A Common
Stock pursuant to an Award unless such shares have been properly registered for
sale pursuant to the Securities Act of 1933 (the Securities Act) with the
Securities and Exchange Commission and any applicable state securities laws or
unless the Company has received the advice of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with. If the shares of Class A Common
Stock offered for sale or sold under the Plan are offered or sold pursuant to an
exemption from registration under the Securities Act or any applicable state
securities laws, the Company may restrict the transfer of such shares and may
legend the stock certificates representing such shares in such manner as it
deems advisable to ensure the availability of any such exemption.   8     18.  PURCHASE FOR INVESTMENT, WITHHOLDING AND
WAIVERS.  A.  Unless the shares to be issued upon the exercise of an
Award by a Participant shall be registered prior to the issuance thereof under
the Securities Act of 1933, as amended, such Participant will, as a condition of
the Company's obligation to issue such shares, be required to give a
representation in writing that he is acquiring such shares for his own account
as an investment and not with a view to, or for sale in connection with, the
distribution of any thereof. In the event of the death of a Participant, a
condition of exercising any Award shall be the delivery to the Company of such
tax waivers and other documents as the Committee shall determine.  B.  As a condition to the vesting, exercise and/or settlement
of any Award, the Committee may require that a Participant satisfy, through
deduction or withholding from any payment of any kind otherwise due to the
Participant, or through such other arrangements as are satisfactory to the
Committee, the minimum amount of all federal, state and local income and other
taxes of any kind required or permitted to be withheld in connection with such
vesting and/or exercise.  The Committee (or, in the case of a Non-Employee
Director's Formula Award, the Board), in its discretion, upon election by a
Participant (the Election) may permit shares of Class A Common Stock to be
used to satisfy tax withholding requirements and such shares shall be valued at
their fair market value as of the settlement date of the Award; provided,
however, that (i) the Election must be made on or prior to the settlement
date, (ii) the Election is subject to the approval of the Committee (or, in the
case of a Non-Employee Director's Formula Award, the Board), and (iii) the
aggregate fair market value of the number of shares of Class A Common Stock that
may be used to satisfy tax withholding requirements may not exceed the minimum
statutorily required withholding amount with respect to such Award.  The
Participant shall pay the Company in cash for any fractional share that would
otherwise be required to be delivered.  19.  NO SHAREHOLDER STATUS.  Neither any Participant nor his legal representatives, legatees or
distributees shall be or be deemed to be the holder of any share of the Class A
Common Stock covered by an Option unless and until a certificate for such share
has been issued. Upon payment of the purchase price thereof, a share issued upon
exercise of an Award shall be fully paid and non-assessable.  20.  NO RESTRICTIONS ON CORPORATE ACTS.  Neither the existence of the Plan nor any Award shall in any way
affect the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Class A Common Stock or the
rights thereof, or dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding whether of a similar character or otherwise.  21.  DECLINING MARKET PRICE.  In the event the fair market value of the Class A Common Stock
declines below the exercise price set forth in any Award, the Committee may, at
any time, adjust, reduce, cancel and regrant any unexercised Option or take any
similar action it deems to be for the benefit of the Participant in light of the
declining fair market value of the Class A Common Stock; provided,
however, that none of the foregoing actions may be taken without prior
approval of the Board.    9     22.  NO EMPLOYMENT RIGHT.  Neither the existence of the Plan nor the grant of any Award shall
require the Company or any Subsidiary to continue any Participant in the employ
or service of the Company or such Subsidiary.  23.  TERMINATION AND AMENDMENT OF THE PLAN.  The Board may at any time terminate the Plan or make such
modifications of the Plan as it shall deem advisable; provided, however,
that the Board may not without further approval of the holders of a majority of
the shares of the Capital Stock voting as a single class as provided in the
Company's Certificate of Incorporation present in person or by proxy at any
special or annual meeting of the shareholders, increase the number of shares as
to which Awards may be granted under the Plan (as adjusted in accordance with
the provisions of Section 16 hereof), or increase the number of shares as to
which Options may be granted under the Plan to any individual as provided in
Section 9B hereof. Except as otherwise provided in Section 16 hereof, no
termination or amendment of the Plan may, without the consent of the Participant
to whom any Award shall theretofore have been granted, adversely affect the
rights of such Participant under such Award.  24.  EXPIRATION OF THE PLAN.  The Plan shall expire and terminate on the business day preceding
the tenth anniversary of its adoption or at such earlier time as the Board may
determine. Awards may be granted under the Plan at any time and from time to
time prior to its expiration. Any Award outstanding under the Plan at the time
of the termination of the Plan shall remain in effect until such Award shall
have been exercised or shall have expired in accordance with its terms.  25.  GOVERNING LAW.  The Plan shall be governed by the laws of the State of New York
without reference to the principles of conflicts of laws thereof.  10