UNITED STATESSECURITIES 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 March 31, 2011 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. EmployerIdentification 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
                           
                           
                           May 4, 2011Class A Common Stock ($.01 par value)
                           
                           
                           10,258,858Class 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 March 31, 2011 and December 31, 2010
                           
                           
                           3Condensed Consolidated Statements of Operations for the three months
                                    ended March 31, 2011 and 2010
                           
                           
                           5Condensed Consolidated Statement of Changes in Shareholders' Equity
                                    for the three months ended March 31, 2011
                           
                           
                           6Condensed Consolidated Statements of Cash Flows for the three months
                                    ended March 31, 2011 and 2010
                           
                           
                           7Notes to Condensed Consolidated Financial Statements
                           
                           
                           8Item 2.
                           
                           
                           Management's Discussion and Analysis of Financial Condition and
                                    Results of Operations
                           
                           
                           15Item 3.
                           
                           
                           Quantitative and Qualitative Disclosures about Market Risk
                           
                           
                           18Item 4.
                           
                           
                           Controls and Procedures
                           
                           
                           19Part II.
                           
                           
                           OTHER INFORMATIONItem 1.
                           
                           
                           Legal Proceedings
                           
                           
                           19Item 1A.
                           
                           
                           Risk Factors
                           
                           
                           19Item 2.
                           
                           
                           Unregistered Sales of Equity Securities and Use of Proceeds
                           
                           
                           19Item 3.
                           
                           
                           Defaults Upon Senior Securities
                           
                           
                           19Item 5.
                           
                           
                           Other Information
                           
                           
                           19Item 6.
                           
                           
                           Exhibits
                           
                           
                           19Signatures
                           
                           
                           20
 2


Part I. FINANCIAL INFORMATIONItem 1. Financial Statements Kenneth Cole Productions, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(In thousands, except share and per share amounts)(Unaudited)  March 31, 2011
                           
                           
                           December 31,2010AssetsCurrent assets:Cash and cash equivalents
                           
                           $
                           39,286
                           
                           $
                           83,395Restricted cash
                           
                           
                           15,000
                           
                           
                           --Accounts receivable, net
                           
                           
                           61,654
                           
                           
                           35,779Inventories
                           
                           
                           42,354
                           
                           
                           36,539Prepaid expenses and other current assets
                           
                           
                           3,283
                           
                           
                           4,305Total current assets
                           
                           
                           161,577
                           
                           
                           160,018Property and equipment, at cost, less accumulated depreciation and amortization
                           
                           
                           47,621
                           
                           
                           48,862Other assets:Intangible assets, net
                           
                           
                           7,223
                           
                           
                           7,317Deferred taxes, net
                           
                           
                           365
                           
                           
                           528Investments and other
                           
                           
                           4,848
                           
                           
                           4,808Deferred compensation plans' assets
                           
                           
                           42,397
                           
                           
                           41,436Total other assets
                           
                           
                           54,833
                           
                           
                           54,089Total Assets
                           
                           $
                           264,031
                           
                           $
                           262,969 See accompanying notes to condensed consolidated financial statements.
 3


Kenneth Cole Productions, Inc. and SubsidiariesCondensed Consolidated Balance Sheets (continued)(In thousands, except share and per share amounts)(Unaudited)  March 31,2011
                           
                           
                           December 31,2010Liabilities and Shareholders' EquityCurrent liabilities:Accounts payable and accrued expenses
                           
                           $
                           65,538
                           
                           $
                           43,608Other current liabilities
                           
                           
                           9,742
                           
                           
                           13,055Deferred income
                           
                           
                           3,997
                           
                           
                           3,069Total current liabilities
                           
                           
                           79,277
                           
                           
                           59,732Accrued rent and other long-term liabilities
                           
                           
                           12,074
                           
                           
                           15,872Deferred compensation plans' liabilities
                           
                           
                           41,351
                           
                           
                           40,630Commitments 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;
                              16,096,388 and 16,070,348 issued as of March 31, 2011 and December
                              31, 2010, respectively
                           
                           
                           161
                           
                           
                           160Class B Convertible Common Stock, par value $.01, 9,000,000 shares
                              authorized; 8,010,497 issued and outstanding as of March 31, 2011 and
                              December 31, 2010, respectively
                           
                           
                           80
                           
                           
                           80Additional paid-in capital
                           
                           
                           112,336
                           
                           
                           110,847Accumulated other comprehensive loss
                           
                           
                           (284
                           )
                           
                           (592
                           )Retained earnings
                           
                           
                           143,957
                           
                           
                           161,161256,250
                           
                           
                           271,656Class A Common Stock in treasury, at cost, 5,855,550 shares as of
                              March 31, 2011 and December 31, 2010, respectively
                           
                           
                           (124,921
                           )
                           
                           (124,921
                           )Total shareholders' equity
                           
                           
                           131,329
                           
                           
                           146,735Total Liabilities and Shareholders' Equity
                           
                           $
                           264,031
                           
                           $
                           262,969 See accompanying notes to condensed consolidated financial statements.
 4


Kenneth Cole Productions, Inc. and SubsidiariesCondensed Consolidated Statements of Operations(In thousands, except share and per share amounts)(Unaudited)  Three Months Ended March 31,2011
                           
                           
                           2010Net sales
                           
                           $
                           107,696
                           
                           $
                           99,393Royalty revenue
                           
                           
                           9,777
                           
                           
                           10,119Net revenues
                           
                           
                           117,473
                           
                           
                           109,512Cost of goods sold
                           
                           
                           75,802
                           
                           
                           63,962Gross profit
                           
                           
                           41,671
                           
                           
                           45,550Selling, general and administrative expenses
                           
                           
                           46,305
                           
                           
                           44,580Store closing and severance costs
                           
                           
                           12,482
                           
                           
                           --Operating (loss)/income
                           
                           
                           (17,116
                           )
                           
                           970Interest and other income, net
                           
                           
                           47
                           
                           
                           967Impairment of investments
                           
                           
                           --
                           
                           
                           (20
                           )(Loss)/income before provision for income taxes
                           
                           
                           (17,069
                           )
                           
                           1,917Provision for income taxes
                           
                           
                           133
                           
                           
                           85Net (loss)/income
                           
                           $
                           (17,202
                           )
                           $
                           1,832(Loss)/earnings per share:Basic
                           
                           $
                           (0.94
                           )
                           $
                           0.10Diluted
                           
                           $
                           (0.94
                           )
                           $
                           0.10Shares used to compute (loss)/earnings per share:Basic
                           
                           
                           18,239,000
                           
                           
                           18,092,000Diluted
                           
                           
                           18,239,000
                           
                           
                           18,484,000 See accompanying notes to condensed consolidated financial statements.
 5


Kenneth Cole Productions, Inc. and SubsidiariesCondensed Consolidated Statement of Changes in Shareholders' Equity(In thousands, except share amounts)(Unaudited)   Class ACommon Stock
                           
                           
                           Class BCommon Stock
                           
                           
                           Additional
                           
                           
                           AccumulatedOther
                           
                           
                           
                           
                           
                           Treasury StockNumberof shares
                           
                           
                           Amount
                           
                           
                           Numberof shares
                           
                           
                           Amount
                           
                           
                           Paid-inCapital
                           
                           
                           Comprehensive Loss
                           
                           
                           RetainedEarnings
                           
                           
                           Number ofShares
                           
                           
                           Amount
                           
                           
                           TotalShareholders' equity December 31, 2010
                           
                           
                           16,070,348
                           
                           $
                           160
                           
                           
                           8,010,497
                           
                           $
                           80
                           
                           $
                           110,847
                           
                           $
                           (592
                           )
                           $
                           161,161
                           
                           
                           (5,855,550
                           )
                           $
                           (124,921
                           )
                           $
                           146,735Net loss
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           (17,202
                           )
                           
                           
                           
                           
                           
                           
                           
                           (17,202
                           )Translation adjustment for foreign currency
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           278
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           278Unrealized gain on available-for-sale securities
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           30
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           30Comprehensive loss
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           (16,894
                           )Stock-based compensation expense
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           1,311
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           1,311Exercise of stock options and related tax benefits
                           
                           
                           19,871
                           
                           
                           1
                           
                           
                           
                           
                           
                           
                           
                           
                           187
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           188Issuance of restricted stock
                           
                           
                           6,368Shares surrendered by employees to pay taxes on restricted stock
                           
                           
                           (2,657
                           )
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           (35
                           )
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           (35
                           )Issuance of Class A Common Stock for Employee Stock Purchase Plan
                           
                           
                           2,458
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           26
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           26Dividends associated with vesting of restricted stock
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           
                           (2
                           )
                           
                           
                           
                           
                           
                           
                           
                           (2
                           )Shareholders' equityMarch 31, 2011
                           
                           
                           16,096,388
                           
                           $
                           161
                           
                           
                           8,010,497
                           
                           $
                           80
                           
                           $
                           112,336
                           
                           $
                           (284
                           )
                           $
                           143,957
                           
                           
                           (5,855,550
                           )
                           $
                           (124,921
                           )
                           $
                           131,329 See accompanying notes to condensed consolidated financial statements.
 6


Kenneth Cole Productions, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(In thousands) (Unaudited)  Three Months EndedMarch 31,2011
                           
                           
                           2010Cash flows used in operating activitiesNet (loss)/income
                           
                           $
                           (17,202
                           )
                           $
                           1,832Adjustments to reconcile net (loss)/income to net cashused in operating activities:Depreciation and amortization
                           
                           
                           2,509
                           
                           
                           2,172Provision for doubtful accounts
                           
                           
                           87
                           
                           
                           (43
                           )Benefit from deferred taxes
                           
                           
                           (16
                           )
                           
                           (337
                           )Unrealized (gain)/loss from investments
                           
                           
                           (30
                           )
                           
                           101Writedown of investments
                           
                           
                           --
                           
                           
                           2Stock-based compensation expense
                           
                           
                           1,357
                           
                           
                           1,134Tax benefit from stock option exercises and restricted stock vested
                           
                           
                           (61
                           )
                           
                           (19
                           )Changes in operating assets and liabilities:Increase in accounts receivable
                           
                           
                           (25,962
                           )
                           
                           (13,363
                           )Increase in inventories
                           
                           
                           (5,815
                           )
                           
                           (6,166
                           )Decrease in prepaid expenses and other current assets
                           
                           
                           1,022
                           
                           
                           4,634Increase in other assets
                           
                           
                           (1,022
                           )
                           
                           (1,043
                           )Increase in accounts payable and accrued expenses
                           
                           
                           21,884
                           
                           
                           4,628(Decrease)/increase in deferred income and other current liabilities
                           
                           
                           (1,922
                           )
                           
                           3,094(Decrease)/increase in other long-term liabilities
                           
                           
                           (3,077
                           )
                           
                           286Net cash used in operating activities
                           
                           
                           (28,248
                           )
                           
                           (3,088
                           )Cash flows (used in)/provided by investing activitiesAcquisition of property and equipment
                           
                           
                           (1,032
                           )
                           
                           (129
                           )Deposit in restricted cash account
                           
                           
                           (15,000
                           )
                           
                           --Proceeds from sale of investments
                           
                           
                           --
                           
                           
                           1,055Purchase of intangible assets
                           
                           
                           --
                           
                           
                           (88
                           )Net cash (used in)/provided by investing activities
                           
                           
                           (16,032
                           )
                           
                           838Cash flows provided by financing activitiesShares surrendered by employees to pay taxes on restricted stock
                           
                           
                           (35
                           )
                           
                           (22
                           )Proceeds from exercise of stock options
                           
                           
                           188
                           
                           
                           --Proceeds from employee stock purchase plan
                           
                           
                           26
                           
                           
                           31Dividends associated with vesting of restricted stock
                           
                           
                           (2
                           )
                           
                           (1
                           )Net cash provided by financing activities
                           
                           
                           177
                           
                           
                           8Effect of exchange rate changes on cash
                           
                           
                           (6
                           )
                           
                           39Net decrease in cash
                           
                           
                           (44,109
                           )
                           
                           (2,203
                           )Cash and cash equivalents, beginning of period
                           
                           
                           83,395
                           
                           
                           68,505Cash and cash equivalents, end of period
                           
                           $
                           39,286
                           
                           $
                           66,302Supplemental disclosures of cash flow informationCash paid during the period for:Interest
                           
                           $
                           18
                           
                           $
                           5Income taxes paid/(refunded), net
                           
                           $
                           141
                           
                           $
                           (4,012
                           ) See accompanying notes to condensed consolidated financial statements.
 7


Kenneth Cole Productions, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements(Unaudited) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial
                  statements have been prepared by Kenneth Cole Productions, Inc. and
                  its subsidiaries (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, results of operations and cash flows for the
                  periods presented. All intercompany transactions have been eliminated. Operating results for the three months ended March 31, 2011 are not
                  necessarily indicative of the results that may be expected for the
                  year ended December 31, 2011. 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, 2010. The Company's Consolidated Balance Sheet at December 31, 2010, 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, 2010. 2. Restricted Cash The Company terminated its Asset-Based Lending Facility ("ABL")
                  effective March 31, 2011. Given its current cash position, barring
                  extraordinary developments the Company does not anticipate any need
                  for borrowing before December 31, 2011 when the ABL would have
                  expired by its terms. The Company expects to enter into a less
                  expensive long-term credit facility in the near future. Since the ABL
                  had provided a letter of credit arrangement, as a result of its
                  termination, the Company deposited $15.0 million into a restricted
                  cash account as collateral for a comparable amount of irrevocable
                  standby and open commercial letters of credit outstanding. As of
                  March 31, 2011, the Company had $3.0 million of standby and open
                  letters of credit outstanding. 3. 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. Stock options are granted with an exercise price equal to the market
                  value of a share of the Company's common stock on the date of grant.
                  Stock option grants expire within 10 years and generally vest on a
                  graded basis within two to four years from the date of grant.
                  Restricted stock unit awards generally vest on a graded basis over a
                  two to three year period or cliff vest after one or three years.
                  During the three months ended March 31, 2011 and 2010, the Company
                  granted 20,000 and 6,000 stock options, respectively. The Company
                  granted 18,393 shares of restricted stock during the three months
                  ended March 31, 2011. The Company did not grant shares of restricted
                  stock during the three months ended March 31, 2010. Stock options
                  outstanding and unvested restricted stock amounted to 2,940,333 and
                  205,546 shares, respectively, as of March 31, 2011.
 8


Kenneth Cole Productions, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements(Unaudited) 3. Stock-Based Compensation (continued) The following table summarizes the components of stock-based
                  compensation expense for the three months ended March 31, 2011 and
                  2010, which is recorded in Selling, general, and administrative
                  expenses in the Condensed Consolidated Statements of Operations
                  (dollars in thousands):  Three months endedMarch 31,2011
                           
                           
                           2010Stock options
                           
                           $
                           963
                           
                           $
                           353Restricted stock units and employee stock purchase plan
                           
                           
                           394
                           
                           
                           781Total stock-based compensation expense
                           
                           $
                           1,357
                           
                           $
                           1,134 The fair value of stock options was estimated using the Black-Scholes
                  option-pricing model. The following table summarizes the
                  weighted-average assumptions used to compute the fair value of stock
                  option grants for the three months ended March 31, 2011 and 2010:  Three months endedMarch 31,2011
                           
                           
                           2010Weighted-average volatility
                           
                           
                           61.6%
                           
                           
                           64.2%Risk-free interest rate
                           
                           
                           3.5%
                           
                           
                           3.7%Weighted-average dividend yield
                           
                           
                           0%
                           
                           
                           0%Expected term
                           
                           
                           3 to 5 years
                           
                           
                           3 years The fair value of restricted stock was calculated by multiplying the
                  market value of a share of the Company's common stock on the date of
                  grant by the number of shares granted and is amortized on a
                  straight-line basis over the vesting periods. As of March 31, 2011, approximately $3.6 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 1.8 years, compared
                  to approximately $4.7 million of unrecognized stock compensation
                  expense to be recognized over a weighted average period of 2.0 years
                  as of March 31, 2010.
 9


Kenneth Cole Productions, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements(Unaudited) 4. (Loss)/earnings Per Share Basic (loss)/earnings per share is calculated by dividing net
                  (loss)/income by weighted-average common shares outstanding. Diluted
                  (loss)/earnings per share is calculated similarly, except that it
                  includes the dilutive effect of the assumed exercise of equity based
                  awards 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 March 31, 2011 have been excluded from the
                  diluted per share calculation as the impact would be antidilutive.
                  Stock options and restricted stock outstanding for the three months
                  ended March 31, 2010 in an aggregate amount of 2,105,000 have been
                  excluded from the diluted per share calculation as the impact would
                  be antidilutive. The shares used to calculate basic and diluted
                  (loss)/earnings per share consists of the following:  Three months endedMarch 31,2011
                           
                           
                           2010Weighted-average common shares outstanding
                           
                           
                           18,239,000
                           
                           
                           18,092,000Effect of dilutive securities:Restricted stock and employee stock purchase plan
                           
                           
                           --
                           
                           
                           219,000Stock options
                           
                           
                           --
                           
                           
                           173,000Weighted-average common shares outstanding and common share equivalents
                           
                           
                           18,239,000
                           
                           
                           18,484,000 5. Investments The Company reviews its investments for other-than-temporary
                  impairment whenever the fair value of an investment is less than
                  carrying value and evidence indicates that an investment's carrying
                  value may not be recoverable within a reasonable period of time.  In
                  the Company's evaluation of its investments it also considers 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, no charge for an other-than-temporary impairment of
                  investments was required for the three months ended March 31, 2011.
 10


Kenneth Cole Productions, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements(Unaudited) 5. Investments (continued) The following table presents gross unrealized gains on, and estimated
                  fair value of, the Company's long-term investments as of March 31,
                  2011 and December 31, 2010 (in thousands):  March 31, 2011Historical
                           
                           
                           (1)
                           
                           
                           Estimated
                           
                           
                           Other than Temporary
                           
                           
                           Gross UnrealizedCost
                           
                           
                           Cost Basis
                           
                           
                           Fair Value
                           
                           
                           Impairment
                           
                           
                           Gains
                           
                           
                           LossesAuction-rate securities
                           
                           $
                           6,100
                           
                           $
                           2,424
                           
                           $
                           2,546
                           
                           
                           --
                           
                           $
                           122
                           
                           
                           --December 31, 2010Historical Cost
                           
                           
                           (1)Cost Basis
                           
                           
                           Estimated Fair Value
                           
                           
                           Other than Temporary Impairment
                           
                           
                           Gross UnrealizedGains
                           
                           
                           LossesAuction-rate securities
                           
                           $
                           6,100
                           
                           $
                           2,424
                           
                           $
                           2,516
                           
                           
                           --
                           
                           $
                           92
                           
                           
                           -- (1) The cost basis is historical cost less other-than-temporary
                  impairment charged to income. The Company had $1.5 million of non-credit other-than-temporary
                  impairments for auction-rate securities recorded in Accumulated other
                  comprehensive loss at March 31, 2011. 6. Fair Value Measurement The Company's financial assets, measured at fair value on a recurring
                  basis, were as follows (in thousands):  Fair Value atMarch 31, 2011
                           
                           
                           Fair Value atDecember 31, 2010
                           
                           
                           HierarchyDeferred compensation plans' assets
                           
                           $
                           37,321
                           
                           
                           36,473
                           
                           
                           Level 2Auction-rate securities
                           
                           $
                           2,546
                           
                           
                           2,516
                           
                           
                           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. The deferred compensation plans' assets are primarily
                  comprised of interests in limited partnerships that invest in a
                  variety of assets including publicly traded equity securities, debt
                  securities and privately-held companies. The general partners that
                  manage the limited partnerships determine the fair value of the
                  plan's investment by determining the net asset valuation in
                  accordance with applicable accounting standards. Certain of these
                  investments have short-term lockup provisions and redemption
                  restrictions which require advance notice for redemption. Management
                  does not believe that these short-term lockup provisions and
                  redemption restrictions affect the plan's ability to transact
                  redemptions at the net asset value. 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.
                  The fair value of the Company's auction-rate securities 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. Maturity dates for
                  these auction-rate securities range from 2033 to 2050.
 11


Kenneth Cole Productions, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements(Unaudited) 6. Fair Value Measurement (continued) The following table presents the reconciliation of the beginning and
                  ending fair value measurements of the Company's Level 3 assets,
                  auction-rate securities, measured at fair value using observable
                  inputs based on unobservable data in an inactive market for the three
                  months ended March 31, 2011 and 2010 (in thousands):  March 31, 2011
                           
                           
                           March 31, 2010Beginning balance
                           
                           $
                           2,516
                           
                           $
                           3,529Unrealized gain/(loss) recorded in Accumulated other comprehensive loss
                           
                           
                           30
                           
                           
                           (93
                           )Impairment charge recorded in Accumulated other comprehensive loss
                           
                           
                           --
                           
                           
                           (8
                           )Impairment charge included in Statement of Operations
                           
                           
                           --
                           
                           
                           (2
                           )Ending balance
                           
                           $
                           2,546
                           
                           $
                           3,426 Based on the Company's review of its investments, no charge for an
                  other-than-temporary impairment of investments was required for the
                  three months ended March 31, 2011. The Company recorded a $20,000
                  impairment charge on its auction-rate securities within Impairment of
                  investments in the Condensed Consolidated Statement of Operations
                  during the three months ended March 31, 2010. 7. Comprehensive (Loss)/income Comprehensive (loss)/income is comprised of net (loss)/income, the
                  effect of foreign currency translation and changes in unrealized
                  gains and losses on available-for-sale securities. Comprehensive loss
                  for the three months ended March 31, 2011 amounted to $16.9 million.
                  Comprehensive income for the three months ended March 31, 2010
                  amounted to $0.6 million.  8. Segment Information The Company designs and sources a broad range of fashion footwear,
                  handbags, accessories, and apparel and has three reportable segments:
                  Wholesale, Consumer Direct and Licensing. The Wholesale segment
                  markets footwear, handbags and men's apparel products for sale to
                  approximately 5,200 domestic department and specialty store
                  locations, the Company's Consumer Direct segment and international
                  retailers. 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 its e-commerce website (at website address www.kennethcole.com).
                  The Licensing segment, through third-party licensee agreements, has
                  evolved the Company from primarily a footwear resource to a diverse
                  global lifestyle brand competing effectively in approximately 30
                  apparel and accessories categories for men, women and children. The
                  Company maintains control over quality, brand image and distribution
                  of the licensees' products. The segment consists primarily of
                  royalties earned on domestic and international licensee sales to
                  third parties of products bearing the Company's trademarks and
                  trade names. The Company's reportable segments are business units that offer
                  products to overlapping consumers through different channels of
                  distribution. Each segment is managed separately, while results
                  across segments are reviewed by the executive management committee.
                  The Company evaluates performance of each of its segments and
                  allocates resources
 12


Kenneth Cole Productions, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements(Unaudited) 8. Segment Information (continued) based on profit or loss before store closing and severance costs,
                  stock-based compensation expense, writedown of available-for-sale
                  securities, impairment of intangible and long-lived assets,
                  unallocated corporate overhead and income taxes for each segment. Financial information of the Company's reportable segments is as
                  follows (in thousands):  Three Months EndedMarch 31, 2011ConsumerWholesale
                           
                           
                           Direct
                           
                           
                           Licensing
                           
                           
                           TotalsNet revenues
                           
                           $
                           74,508
                           
                           $
                           33,188
                           
                           $
                           9,777
                           
                           $
                           117,473Segment (loss)/income (1) (2)
                           
                           
                           (420
                           )
                           
                           (9,020
                           )
                           
                           7,846
                           
                           
                           (1,594
                           )Segment assets (3)
                           
                           
                           209,507
                           
                           
                           46,286
                           
                           
                           8,238
                           
                           
                           264,031  Three Months EndedMarch 31, 2010ConsumerWholesale
                           
                           
                           Direct
                           
                           
                           Licensing
                           
                           
                           TotalsNet revenues
                           
                           $
                           62,435
                           
                           $
                           36,958
                           
                           $
                           10,119
                           
                           $
                           109,512Segment income/(loss) (1) (2)
                           
                           
                           2,152
                           
                           
                           (5,056
                           )
                           
                           7,812
                           
                           
                           4,908Segment assets (3)
                           
                           
                           170,802
                           
                           
                           48,059
                           
                           
                           39,158
                           
                           
                           258,019 _________________(1
                           )
                           
                           Excludes store closing and severance costs, stock-based compensation
                              expense, writedown of available-for-sale securities, impairment of
                              intangible and long-lived assets, unallocated corporate overhead and
                              income taxes.(2
                           )
                           
                           The Wholesale segment includes primarily all of the Company's
                              allocated corporate overhead.(3
                           )
                           
                           The Wholesale segment includes corporate assets. The reconciliation of the Company's reportable segment (loss)/income
                  is as follows (in thousands):  Three Months EndedMarch 31, 2011
                           
                           
                           March 31, 2010(Loss)/IncomeTotal (loss)/income for reportable segments (1)
                           
                           $
                           (1,594
                           )
                           $
                           4,908Adjustment for store closing and severance costs, stock-based
                              compensation expense, writedown of available-for-sale securities,
                              impairment of intangible and long-lived assets and unallocated
                              corporate overhead
                           
                           
                           (15,475
                           )
                           
                           (2,991
                           )Total (loss)/income before provision for income taxes
                           
                           $
                           (17,069
                           )
                           $
                           1,917 _________________(1
                           )
                           
                           Excludes store closing and severance costs, stock-based compensation
                              expense, writedown of available-for-sale securities, impairment of
                              intangible and long-lived assets unallocated corporate overhead and
                              income taxes.
 13


Kenneth Cole Productions, Inc. and SubsidiariesNotes to Condensed Consolidated Financial Statements(Unaudited) 8. Segment Information (continued) Revenues from international customers were approximately 8.9% and
                  7.3% of the Company's consolidated net revenues for the three months
                  ended March 31, 2011 and 2010, respectively. 9. Income Taxes The Company's effective tax rate consists of primarily of state,
                  local and foreign jurisdiction taxes as the Company remains
                  substantially in a fully valued deferred tax position for federal
                  income tax purposes and is in a loss position for the three months
                  ended March 31, 2011. 10. Commitments and Contingencies During the three months ended March 31, 2011, the Company recorded $12.5 million
of net expenses comprised of $7.0 million of net store closing costs and $5.5 million of severance costs for certain executives. The expenses are included within Store closing and severance costs in the
Condensed Consolidated Statement of Operations. During the three months ended March 31, 2011 the Company paid all amounts related to the store closing costs. As of March 31, 2011, the Company had accrued severance
costs of $4.1 million which are expected to be paid through the third quarter of 2012. As of March 31, 2011 the Company had accrued store closing costs of $1.5 million related to 2010 store closings
which are expected to be paid through the third quarter of 2013. 11. Related Party Transaction The Company recorded expenses of approximately $0.3 million and $0.1
                  million for the three months ended March 31, 2011 and 2010,
                  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, Interim Chief Executive Officer and
                  Chief Creative Officer. 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.
 14


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 Kenneth Cole
                  Production, Inc.'s (the "Company") anticipated results or level of
                  business for 2011 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, 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,
                  openings and closings, changes in distribution centers and
                  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 Condensed 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. For a summary of
                  the Company's significant accounting policies, see the Company's
                  Consolidated Financial Statements included in the Company's Annual
                  Report on Form 10-K for the year ended December 31, 2010. Overview The Company 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 Le Tigre brand names, as well as footwear under the proprietary trademark Gentle Souls. 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 modern fashion conscious consumers
                  who seek accessible designer fashion that reflects a metropolitan
                  lifestyle. 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 5,200 domestic
                  department and specialty store locations, the Company's full-priced
                  retail stores, outlet stores, and its e-commerce website, as well as
                  internationally through its licensee partners and international
                  retailers. 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,
                  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.
 15


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, socks,
                  underwear, belts, business cases, small leather goods, sunglasses,
                  prescription eyewear, watches, jewelry, and fragrance. 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 and fragrance. In addition, the Company licenses luggage and
                  children's apparel. In October 2010, the Company announced that it
                  has made the strategic decision to terminate the licensing agreement
                  with its women's sportswear licensee effective June 1, 2011, and will
                  be bringing the business in-house starting with the Fall 2011 season. The Company recorded net revenues of $117.5 million for the three
                  months ended March 31, 2011. Diluted loss per share was $(0.94) for
                  the three months ended March 31, 2011 as compared to diluted earnings
                  per share of $0.10 for the three months ended March 31, 2010.
                  Included in the diluted loss per share for the three months ended
                  March 31, 2011 were expenses of $12.5 million for store closing and
                  severance costs. Cash, cash equivalents and restricted cash were
                  $54.3 million at March 31, 2011 versus $66.3 million at March 31,
                  2010 and the Company has no long-term debt. 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 months ended March 31, 2011 and March
                  31, 2010.  Three Months Ended March 31,2011
                           
                           
                           2010Net sales
                           
                           $
                           107,696
                           
                           
                           91.7
                           %
                           $
                           99,393
                           
                           
                           90.8
                           %Royalty revenue
                           
                           
                           9,777
                           
                           
                           8.3
                           
                           
                           10,119
                           
                           
                           9.2Net revenues
                           
                           
                           117,473
                           
                           
                           100.0
                           
                           
                           109,512
                           
                           
                           100.0Gross profit (1)
                           
                           
                           41,671
                           
                           
                           35.5
                           
                           
                           45,550
                           
                           
                           41.6Selling, general and administrative expenses
                           
                           
                           46,305
                           
                           
                           39.4
                           
                           
                           44,580
                           
                           
                           40.7Store closing and severance costs
                           
                           
                           12,482
                           
                           
                           10.6
                           
                           
                           --
                           
                           
                           --Operating (loss)/income
                           
                           
                           (17,116
                           )
                           
                           (14.5
                           )
                           
                           970
                           
                           
                           0.9Interest and other income, net
                           
                           
                           47
                           
                           
                           0.0
                           
                           
                           967
                           
                           
                           0.9Impairment of investments
                           
                           
                           --
                           
                           
                           --
                           
                           
                           (20
                           )
                           
                           0.0(Loss)/income before income taxes
                           
                           
                           (17,069
                           )
                           
                           (14.5
                           )
                           
                           1,917
                           
                           
                           1.8Income tax expense
                           
                           
                           133
                           
                           
                           (0.1
                           )
                           
                           85
                           
                           
                           0.1Net (loss)/income
                           
                           $
                           (17,202
                           )
                           
                           (14.6
                           )%
                           $
                           1,832
                           
                           
                           1.7
                           %_______________________(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.
 16


Three Months Ended March 31, 2011 Compared to Three Months Ended
March 31, 2010 REVENUES: Net revenues increased 7.3%, or $8.0 million, to $117.5
                  million for the three months ended March 31, 2011 from $109.5 million
                  for the three months ended March 31, 2010. Double-digit revenue
                  growth in the Wholesale segment was partially offset by decreases in
                  the Consumer Direct and Licensing segments. NET SALES: Wholesale net sales increased 19.3%, or $12.1 million, to
                  $74.5 million for the three months ended March 31, 2011 from $62.4
                  million for the three months ended March 31, 2010. The increase was
                  primarily attributable to additional sales of $13.5 million for
                  footwear and Reactionmen's apparel offset by decreases in the handbag business. Net sales in the Company's Consumer Direct segment decreased 10.2%,
                  or $3.8 million, to $33.2 million for the three months ended March
                  31, 2011 from $37.0 million for the three months ended March 31,
                  2010. Sales decreased primarily from the closing of stores over the
                  past twelve months which had net sales of $4.4 million for the three
                  months ended March 31, 2010 and the comparable store sales decrease
                  of 2.7%, or $0.8 million. The sales reduction was partially offset by
                  incremental sales from stores opened after March 31, 2010 that were
                  not included in comparable store sales. 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 two outlets during
                  the three months ended March 31, 2011. The Company closed seven
                  full-priced retail stores and one outlet during the three months
                  ended March 31, 2011 as compared to no store openings or closings
                  during the three months ended March 31, 2010. LICENSING REVENUE: Royalty revenue decreased 3.4%, or $0.3 million,
                  to $9.8 million for the three months ended March 31, 2011 from $10.1
                  million for the three months ended March 31, 2010. The decrease in
                  licensing revenues was primarily attributable to the termination of
                  the Le Tigre license agreement with JC Penney. The Company recorded no licensing
                  revenue for Le Tigre during the three months ended March 31, 2011 versus $0.9 million
                  during the three months ended March 31, 2010. This decrease was
                  partially offset by an increase in contractual royalty minimums.
                  Excluding Le Tigre,royalty revenue was up 6.5%. GROSS PROFIT: Consolidated gross profit, as a percentage of net
                  revenues, decreased to 35.5% for the three months ended March 31,
                  2011 from 41.6% for the three months ended March 31, 2010. The 610
                  basis point decrease resulted from decreases at both the Wholesale
                  and Consumer Direct segments due to increasing cost pressures in the
                  Wholesale segment on initial mark-ups and the aggressive markdowns in
                  Consumer Direct to clear inventory resulting from the Company's
                  decision to accelerate the closure of unproductive stores. In
                  addition, the decrease, as a percentage of net revenues, was due to
                  the revenue mix shifting to the Wholesale segment. For the next
                  twelve months, the Company believes the shift in sales mix to the
                  Wholesale segment will continue and accordingly the consolidated
                  gross profit, as a percentage of net revenues, will be less year over
                  year. The Consumer Direct segment, which operates at a higher gross
                  profit level than the Wholesale segment, had decreased revenues as a
                  percentage of net revenues to 28.3% for the three months ended March
                  31, 2011 compared to 33.8% for the three months ended March 31, 2010,
                  while the Wholesale segment revenues, as a percentage of net
                  revenues, increased to 63.4% for the three months ended March 31,
                  2011 from 57.0% for the three months ended March 31, 2010. The
                  revenues in the Licensing segment, which carries nominal cost of
                  goods sold, decreased, as a percentage of net revenues, to 8.3% for
                  the three months ended March 31, 2011 compared to 9.2% for the three
                  months ended March 31, 2010. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and
                  administrative ("SG&A") expenses, including warehousing and receiving
                  expenses, as a percentage of net revenues, decreased 130 basis points
                  to 39.4% for the three months ended March 31, 2011 as compared to
                  40.7% for the three months ended March 31, 2010.  For the next twelve months, the Company believes the shift in sales mix
to the Wholesale segment will continue and accordingly, the Consolidated SG&A expenses, as a percentage of net revenues, will decrease year over year. In addition, total
                  SG&A increased $1.7 million to $46.3 million for the three months
                  ended March 31, 2011 from $44.6 million for the three months ended
                  March 31, 2010. The increase in SG&A expenses was primarily
                  attributable to start up and operating costs for the women's and Reaction men's apparel businesses incurred during the three months ended March 31, 2011. STORE CLOSING AND SEVERANCE COSTS: The Company closed eight stores
                  during the three months ended March 31, 2011 and incurred
                  approximately $7.0 million in net costs for contract lease
                  terminations and other related costs to close the stores. In
                  addition, approximately $5.5 million of severance was recorded for
                  certain executives during the three months ended March 31, 2011. INTEREST AND OTHER INCOME, NET: Interest and other income, net
                  decreased $0.9 million to approximately $0.1 million for the three
                  months ended March 31, 2011 as compared to $1.0 million for the three
                  months ended March 31, 2010.  The decrease is primarily due to the
                  Company realizing a $0.8 million gain on the sale of a portion of the
                  Company's equity investments during the three months ended March 31,
                  2010. The Company sold all of its equity investments during the
                  remainder of 2010.
 17


INCOME TAXES: The Company's effective tax rate was 0.8% for the three
                  months ended March 31, 2011 compared to 4.4% for the three months
                  ended March 31, 2010. Income tax expense in each period is comprised
                  of state, local, and foreign jurisdiction taxes. NET (LOSS)/INCOME: As a result of the foregoing, the Company recorded
                  a net loss of $17.2 million or (14.6)% of net revenues for the three
                  months ended March 31, 2011 as compared to net income of $1.8
                  million, or 1.7% of net revenues for the three months ended March 31,
                  2010. Related Party Transaction Please refer to Footnote 11 for the Company's related party
                  transaction disclosure. Liquidity and Capital Resources As of March 31, 2011, the Company had $54.3 million in cash, cash
                  equivalents and restricted cash, which consist primarily of money
                  market funds. The Company uses cash from operations as the primary
                  source of financing its capital expenditures and seasonal
                  requirements. Cash needs 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 its retail
                  stores and the level of inventory and accounts receivable balances.
                  At March 31, 2011 and December 31, 2010, working capital was $82.3
                  million and $100.3 million, respectively. Cash used in operating activities was $28.2 million for the three
                  months ended March 31, 2011, compared to $3.1 million for the three
                  months ended March 31, 2010. The increase in cash used in operating
                  activities was primarily attributable to a decrease in net income and
                  an increase in receivables partially offset by an increase in
                  accounts payable and accrued expenses. Net cash used in investing activities totaled $16.0 million for the
                  three months ended March 31, 2011 compared to net cash provided by
                  investing activities of $0.8 million for the three months ended March
                  31, 2010. The decrease resulted primarily from the Company depositing
                  $15.0 million into a restricted cash account which serves as
                  collateral for irrevocable standby and open letters of credit. In
                  addition, the decrease was attributable to capital expenditure
                  additions of $0.9 million during the three months ended March 31,
                  2011 as compared to March 31, 2010 and the proceeds of $1.0 million
                  from the sale of a portion of an equity investment during the three
                  months ended March 31, 2010. Net cash provided by financing activities was $0.2 million for the
                  three months ended March 31, 2011. The increase was primarily
                  attributable to proceeds from the exercise of stock options during
                  the three months ended March 31, 2011. During the first quarter of the 2011 fiscal year, the Company had a
                  revolving senior secured asset based credit facility (the "Facility")
                  which provided the Company with borrowing availability of $60
                  million. The Company did not borrow under the Facility which was
                  terminated on March 31, 2011. Barring extraordinary developments, the
                  Company expects to satisfy its current cash requirements for 2011,
                  including requirements for its new stores, anticipated store closing
                  costs, expected enhancement of information systems and anticipated
                  current obligations, primarily with cash flow from operations and
                  cash on hand. As such, the Company does not anticipate any need for
                  borrowing before December 31, 2011 when the Facility would have
                  expired by its terms. The Company expects to enter into a less
                  expensive long-term credit facility in the near future. At March 31, 2011, the Company had $15.0 million of restricted cash,
                  all of which is classified as a current asset. The restricted cash
                  serves as collateral for irrevocable standby and open letters of
                  credit that provides financial assurance that the Company will
                  fulfill its obligations. The cash is held in custody by the issuing
                  bank and is restricted as to withdrawal or use. As of March 31, 2011,
                  the Company had $3.0 million of standby and open letters of credit.
                  The Company did not have any off-balance sheet arrangements as of
                  March 31, 2011. 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 auction-rate-securities that contain "A" through
                  "double C" rated debt obligations and a preferred share closed 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
 18


sources and uses of cash, the Company does not anticipate that the
                  lack of liquidity of 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 foreign currencies,
                  although greater than 95% of the transactions are in US dollars.
                  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 periodically utilizing foreign exchange contracts. The
                  Company does not enter into foreign currency transactions for trading
                  or speculative purposes. At March 31, 2011, the Company had no
                  forward exchange contracts outstanding. 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 Interim 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 (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
                  Interim 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. NoneItem 1A.
                           
                           
                           Risk Factors. There have been no material changes during the quarterly period
                              ended March 31, 2011 from the risk factors previously disclosed in
                              the Company's Annual Report on Form 10-K for the year ended December
                              31, 2010.Item 2.
                           
                           
                           Unregistered Sales of Equity Securities and Use of Proceeds. NoneItem 3.
                           
                           
                           Defaults Upon Senior Securities. NoneItem 5.
                           
                           
                           Other Information. NoneItem 6.
                           
                           
                           Exhibits.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.
 19


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.RegistrantMay 6, 2011
                           
                           
                           /s/ DAVID P. EDELMANDavid P. EdelmanChief Financial Officer
                              (Principal Financial and Accounting Officer)
 20