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

                                FORM 10-K
(Mark One)
X  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

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

For the transition period from___________to___________

                        Commission File No. 1-13082
                       KENNETH COLE PRODUCTIONS, INC.
               (Exact name of Registrant as specified in its charter)

      New York                                         13-3131650
      (State or Other Jurisdiction of                 (I.R.S. Employer
      Incorporation or Organization)                   Identification Number)

                    603 West 50th Street, New York, NY  10019
                     (Address of Principal Executive Offices)

                              (212) 265-1500
                       Registrant's telephone number

            Securities registered pursuant to Section 12(b) of the Act:
                 Class A common stock, par value $.01 per share

           Securities registered pursuant to Section 12 (g) of the Act:
                    None

    Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes ( ) No (X)

    Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ( ) No (X)

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

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

    Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer.
Large accelerated filer ( )   Accelerated filer (X)  Non-accelerated filer ( )

    Indicated by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Act).  Yes ( ) No (X)

     The aggregate market value of voting stock held by
nonaffiliates of the registrant as of the close of business on June 30, 2005:
$350,421,158

     Number of shares of Class A Common Stock, $.01 par value,
outstanding as of the close of business on
March 1, 2006: 12,119,108

      Number of shares of Class B Common Stock, $.01 par value,
outstanding as of the close of business on
March 1, 2006:  8,010,497

DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of Form 10-K is incorporated
herein by reference to the Registrant's definitive proxy statement
to be mailed to the shareholders of the Registrant by May 1, 2006.

<PAGE>
                       Kenneth Cole Productions, Inc.
                          TABLE OF CONTENTS
											        Page
                              PART I
        Item 1    Business                                                 2

        Item 1A   Risk Factors                                             17

        Item 1B   Unresolved Staff Comments                                21

        Item 2    Properties                                               21

        Item 3    Legal Proceedings                                        22


        Item 4    Submission of Matters to a Vote of Security Holders      22

                               PART II

        Item 5    Market for Registrant's Common Equity, Related Stockholder
		      Matters and Issuer of Purchases of Equity Security       23

        Item 6    Selected Financial Data	                                 25


        Item 7    Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                      26

        Item 7A   Quantitative and Qualitative Disclosures About           34
                  Market Risk


        Item 8    Financial Statements and Supplementary Data              34

        Item 9    Changes in and Disagreements With Accountants on         34
                  Accounting and Financial Disclosure

        Item 9A   Controls and Procedures                                  35

	  Item 9B   Other Information                                        35

                              PART 	III

        Item 10   Directors and Executive Officers of the Registrant       35

        Item 11   Executive Compensation                                   35

        Item 12   Security Ownership of Certain Beneficial Owners and      36
                  Management and Related Shareholder Matters

        Item 13   Certain Relationships and Related Transactions           36

        Item 14   Principal Accountant Fees and Services                   36

                              PART IV

        Item 15   Exhibits and Financial Statement Schedules               36

<PAGE>

Item 1.      Business

Important Factors Relating to Forward- Looking Statements

	The Private Securities Litigation Reform Act of 1995 (the
"Reform Act") and Section 21E of the Securities Exchange Act of
1934 provides a safe harbor for forward-looking statements made by
or on behalf of Kenneth Cole Productions, Inc. (the "Company").
The Company and its representatives may from time to time make
written or oral statements that are "forward-looking," including
statements contained in this report and other filings with the
Securities and Exchange Commission and in reports to the Company's
shareholders.  Forward-looking statements generally refer to future
plans and performance and are identified by the words "believe,"
"expect," "anticipate," "plan," "intend," "will," "estimate,"
"project" or similar expressions.  All statements that express
expectations and projections with respect to future matters, including,
but not limited to, the launching or prospective development of new
business initiatives, future licensee sales growth, gross margins,
store expansion and openings, changes in distribution centers,
implementation of management information systems, are forward-
looking statements within the meaning of the Reform Act.  These
statements are made on the basis of management's views and
assumptions, as of the time the statements are made, regarding
future events and business performance and are subject to certain
risks and uncertainties.  Should one or more of these risks or
uncertainties materialize or should underlying assumptions prove
incorrect, actual results may vary materially from those
anticipated, estimated or projected.

	 While the Company does communicate from time to time with
securities analysts, it is against company policy to disclose to
them any material non-public information.  Shareholders should not
assume that the Company agrees with any statement or report issued
by an analyst, regardless of the content of such statement or
report.  To the extent that reports issued by securities analysts
contain any projections, forecasts or opinions, they are not the
responsibility of the Company.

	There can be no assurance that management's expectations will
necessarily come to pass. A number of factors affecting the
Company's business and operations could cause actual results to
differ materially from those contemplated by the forward-looking
statements.  Those factors include, but are not limited to, changes
in domestic  economic conditions or in political, economic or other
conditions affecting foreign operations and sourcing, demand and
competition for the Company's products, risks associated with
uncertainty relating  to the Company's ability to implement its
growth strategies or its ability to successfully integrate acquired
business, risks arising out of litigation or trademark conflicts,
changes in customer or consumer preferences on fashion trends,
delays in anticipated store openings and changes in the Company's
relationship with its suppliers and other resources.  This list of
factors that may affect future performance and the accuracy of
forward-looking statements are illustrative, but by no means
exhaustive.  Accordingly, readers of this Annual Report should
consider these facts in evaluating the information and are
cautioned not to place undue reliance on the forward-looking
statements contained herein.  The Company undertakes no obligation
to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.

General

	Kenneth Cole Productions, Inc., incorporated in September 1982,
designs, sources and markets a broad range of fashion footwear and
handbags and, through license agreements, designs and markets
apparel and accessories under its Kenneth Cole New York, Kenneth
Cole Reaction, Unlisted, and Tribeca brand names.  In addition, the
Company, through a license agreement, has the rights to use the
Bongo trademark for footwear.  The Company's products are targeted
to appeal to fashion conscious consumers, reflecting a casual urban
perspective and a lifestyle uniquely associated with Kenneth Cole.
These products include core basics that generally remain in demand
from season to season and fashion products that are designed to
establish or capitalize on market trends. The combination of basic
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 more than 6,000 department and
specialty store locations, as well as through its Consumer Direct business,
which includes an expanding base of retail and outlet stores, consumer
catalogs and websites, including online e-commerce.  The Company believes
the diversity of its product offerings distinguishes the Company from
its competitors in terms of product classifications (men's, women's
and children's footwear, handbags, apparel and accessories), prices
(from ''better'' to ''moderate'') and styling. The Company believes
the diversity of its product mix provides balance to its overall
product sales and business planning and increases sales
opportunities to wholesale customers who do not carry the Company's
full range of products.

<PAGE>
	The popularity of the Kenneth Cole brand names 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, sportswear, neckwear, briefcases, portfolios, jewelry,
fragrance, belts, leather and fabric outerwear, sunglasses,
prescription eyewear, watches, fragrance, swimwear, luggage,
hosiery and small leather goods.  Women's product categories
currently being sold pursuant to license agreements include
sportswear, small leather goods, belts, scarves and wraps, hosiery,
leather and fabric outerwear, sunglasses, prescription eyewear,
watches, jewelry, fragrance, swimwear, and luggage.  In addition,
the Company licenses its home collection and boys' and girls'
apparel under the Kenneth Cole Reaction brand, which further
broadens the Kenneth Cole lifestyle collection.

Business Growth Strategies

	The Company's strategy is to continue to build upon the strength
of its lifestyle brand franchise, which is comprised of well-
differentiated and distinct brands: Kenneth Cole New York, Kenneth
Cole Reaction, Unlisted, and Tribeca. During 2005, the Company
discussed its brand elevation strategy to further enhance the
strength of its lifestyle brand franchise.  The Company began
elevating Kenneth Cole New York in quality, price and value, and
repositioning Kenneth Cole Reaction to introduce higher quality
levels through its product categories and deliver it as a full
contemporary lifestyle brand to the department store consumer. The
Company views its lifestyle brands as a vital and significant
strategic asset and the foundation for a sustainable competitive
advantage.  The Company believes that further segmentation and
development of the brands afford growth potential within each of
the Company's business segments.

	Wholesale. By strengthening and streamlining its distribution
channels, the Company continues to reinforce the segmentation of
its brands at wholesale, promoting even greater growth capability
for each of its brands in the future. This approach will facilitate
the broadening of product offerings, attract new customers and
further enable the Company to address a wider variety of customers'
needs, both domestically and internationally.  Building on its
distribution channels, the repositioning of its brands through
elevation of its products, and the addition of the Bongo brand to
its footwear business has given the Company the ability to reach
other distribution tiers and new customers.  By combining retail
and wholesale merchandising functions, the Company is in a better
position to respond quickly to market changes, thereby enabling
each wholesale division to deliver appropriate fashions in a more
timely and effective manner.  This approach has been effective in
maintaining the strength of the Kenneth Cole lifestyle brand
franchise.  The Company believes its strategic initiative to
reposition the Kenneth Cole New York brand as an accessible luxury
brand, and the repositioning of Kenneth Cole Reaction, will take
the Company to its next stage of development, which will place the
Company in the best position to benefit from the consolidation in
the retail environment, and to enable the Company's brands to reach
their potential.

	Consumer Direct. The Company's Consumer Direct segment, which
operates full price retail and outlet stores, as well as catalogs
and e-commerce, affords significant growth potential while
simultaneously complementing the Company's existing Wholesale and
Licensing businesses.  The Company believes that the sale of
footwear, handbags and licensed products through its consumer
direct channels of distribution increases consumer awareness of the
Company's brands, reinforces the Company's image and builds brand
equity.  The Company believes customers of our wholesale accounts
in cities with a Kenneth Cole retail presence have an enhanced
brand awareness compared to those in cities without a Kenneth Cole
retail presence.

	The Company continues to pursue opportunities to expand its
retail store operations.  As of December 31, 2005, the Company
operated 92 specialty retail and outlet stores as compared
with 87 stores as of December 31, 2004. The Company plans
to open or expand approximately 5 to 10 stores in 2006, expanding
square footage by approximately 5% to 10%.  This
anticipated expansion includes outlet stores, which provide
opportunities for the Company to sell excess and out-of-season
merchandise, as well as unique "made for outlet products."  To
accommodate the Company's diversity of product offerings, the
Company continues to open stores on an opportunistic basis and
expand smaller current locations where retail space is available.
The Company believes that its retail stores will generate increased
sales and profitability as the stores allow for a true cross-
section of both Company and licensee products, enabling the Company
to present the broad lifestyle offering that consumers want to see.
In 2005, the Company implemented a "Jewel Box" retail store model,
approximately 2000 square feet in size, to focus on its core
footwear and handbags categories, coupled with select key, high
fashion, high demand accessory products.  As it expands its retail
business, the Company expects to realize leverage in several
selling and administrative expense areas.

<PAGE>

	The Company believes the Kenneth Cole model provides
significant growth potential. The brand enjoys strong consumer
support as evidenced by expansion of the Company's licensee
product categories within the brand, a growing retail
presence and improving wholesale operations.  The Company continues
to analyze the Kenneth Cole Reaction brand model for further growth
potential in outlet stores, as well as within its licensing and
wholesale product categories as the brand is repositioned
throughout all of its distribution channels.

	The Company continues to invest in the enhancement,
visual presentation and development of its websites to
capitalize on the growth of its e-commerce and emerging
technologies. The Company believes that web-based transactions will
contribute to the Company's future, both as a source of consumer
information and as a generator of new revenue.  Among other things,
the websites are designed to create additional revenues through a
new distribution channel, build brand equity, fortify image,
increase consumer awareness, improve customer service, provide
entertainment and promote support for causes the Company believes
are important to its customers. The Company has strengths in its
existing capabilities in customer service, including telemarketing,
merchandising, catalog, fulfillment and e-commerce.

     In addition to seasonal image campaigns via traditional
advertising media, the Internet has enabled the Company and
its customers to communicate directly with each other.  The Company's
 use of its websites to capture and process this relevant
market data on its consumer base provides a greater understanding
 of its customers and market trends.  The Company believes this
 dynamic relationship is invaluable for building customer loyalty.
 Further, the Company's Internet presence through multiple websites
has enabled the creation of a substantial e-mail database by
which the Company's marketing and customer service departments regularly
interact with its existing and new consumers online.

     Licensing.  The growing strength of the Company's brands,
Kenneth Cole New York, Kenneth Cole Reaction, and Unlisted,
provides opportunities, through licensing agreements, to expand
into new product categories and broaden existing distribution
channels.  The Company believes its strategic licensing
relationships are essential to the growth of the Company both
domestically and abroad as a lifestyle branded franchise.  Many of
the existing licensee businesses are still relatively small in
their individual product classifications and the Company believes
they hold impressive growth potential.

      The Company chooses its licensing partners with care,
considering many factors, including the strength of their sourcing
and distribution abilities, thereby attempting to maintain the same
value and style that Kenneth Cole customers have come to expect.
The Company continues to grow its market share in both the men's
and women's apparel businesses and has started to penetrate new
price tiers with Kenneth Cole Reaction branded products.  The
Company believes that women's apparel will further define and
enhance the Company's brands, improving its ability to deliver the
product that the Company's customers seek.  As part of the
Company's brand repositioning strategy, the Company signed an
agreement in 2005 with Bernard Chaus, Inc. to distribute women's
Kenenth Cole Reaction apparel.  The Company also continues to
expand its Kenneth Cole Reaction categories through an agreement
with Syratech Corporation, a leading manufacturer and distributor
of home decor, for distribution of housewares under the Kenneth
Cole Reaction brand.  The Company's strategic partnership with its
fragrance licensee, Coty, Inc. ("Coty"), is designed to expand
consumer awareness through Coty's global marketing group and
provide an extension of brand awareness to the Company licensees
and partnerships internationally and domestically.  In 2005, the
Company added Kenneth Cole Reaction fragrance for women, as well as
Kenneth Cole Signature for men.  These fragrances replaced the
original Kenneth Cole fragrances allowing for fresh, new and
exciting products for market penetration, growth and brand
awareness. The Company is committed to strategically expanding its
product classifications internationally and to building growth
through brand awareness and diversity as it continues to
aggressively grow the watch and optical categories abroad, focusing
on certain specific international regions.  In 2005, the Company's Licensees
opened 12 new retail stores within international markets including
Israel, Dubai, South Korea, Thailand, Mexico, Central America and
the Dominican Republic.

      The Company's brands are currently licensed for a range of
products consistent with the Company's image (see "Licensing" in Item 1).

<PAGE>

Products

      The Company markets its products principally under its Kenneth
Cole New York, Kenneth Cole Reaction, Unlisted and Tribeca brand
names, along with its licensed brand for footwear, Bongo, each
targeted to appeal to different consumers. The Company believes
that the products marketed under the Kenneth Cole New York brand
names have developed into true aspirational brands, and while it
has similar designer cache as other international designer brands,
it has greater value credibility.

        Kenneth Cole New York

      Kenneth Cole New York products are designed for the fashion
conscious consumer and reflect the relaxed urban sophistication
that is the hallmark of the Kenneth Cole New York image. The
distinctive styling of this line has established Kenneth Cole
New York as a fashion authority for sophisticated men and women who
are seeking a value alternative to other designer brands.  As a
result of strong brand recognition and a reputation for style,
quality and value, the Company believes that Kenneth Cole New York
has become an important resource for better department and
specialty stores, and continues to provide significant growth
opportunities.  The Kenneth Cole New York product offering has
evolved from a very trendy line into one with broad appeal,
including both fashion-forward styling and core basics.  The
Company continues to leverage the strength of its name through
brand extensions, in-store shops and the licensing of many new
product categories.   Recently, the Company implemented a new
strategic initiative to reposition the Kenneth Cole New York brand
as an accessible luxury brand. The Company believes that the
repositioning of this brand will take the Company to its next stage
of development, which will place the Company in the best position
to benefit from the consolidation in the retail marketplace,
maximize its retail store concept and grow internationally.

     Kenneth Cole New York men's footwear, manufactured through
Italian and Chinese factories, is designed as contemporary,
comfortable leather fashion footwear and is sold to the bridge-
designer market at retail price points ranging from approximately
$175 to $395.  As versatile as it is sophisticated, Kenneth Cole
New York men's footwear may be worn to work, for special occasions
or on weekends with casual clothes.  In addition, the Company uses
the label "silver technology" in its line to denote enhanced
comfort combined with its fine leather shoe craftsmanship.  The
silver technology product features a micro-tech midsole, a
removable gel insole, and a fiberglass shank.

     Kenneth Cole New York women's footwear, primarily manufactured
through Italian and Brazilian factories, includes sophisticated and
elegant dress, casual and special occasion footwear that is sold to
the bridge-designer market at retail price points ranging from
approximately $185 to $400.  Women's footwear is constructed by
fine leather craftsmen to allow the customer high quality designer
styling with value for the fashion conscious woman at work or in
social gatherings.

      Kenneth Cole New York handbags are generally made
of quality-crafted leathers and sold to the bridge-designer
market at retail price points ranging from approximately
$200 to $500.  The seasonal line includes certain updated styles
that offer the customer high-fashion bags, which are accompanied by
tailored career bags for the sophisticated urban consumer.

      Kenneth Cole Reaction

       Kenneth Cole Reaction consists of a variety of product
classifications, which address the growing trend toward flexible
lifestyle dressing at affordable prices.  Kenneth Cole Reaction
includes a comfort-oriented casual line, as well as more dressy
styles.  Kenneth Cole Reaction women's footwear, primarily
manufactured in China, is designed for the workplace as well as for
outside the office, with an emphasis on comfort, versatility,
contemporary styling and value. In addition, the Company has added
"RXN comfort technology" which uses a pod system insole and gel
heel pad to enhance comfort, support and flexibility. It is
targeted to compete in the largest single category of footwear sold
in department stores, women's "better," and the majority of the
line retails primarily in the $60 to $100 price range.  Kenneth
Cole Reaction men's footwear, primarily manufactured in China,
combines fashionable and versatile styling with affordable pricing
and is positioned in the fastest growing classification in the
men's market as consumer preferences lean away from athletic
constructed footwear toward regular constructed footwear.  This
line retails approximately in the $90 to $150 price range.

<PAGE>

      Kenneth Cole Reaction handbags, primarily manufactured in China,
are designed to be multifunctional with a contemporary look and are
primarily made of leather and non-leather technical fabrications,
such as nylon, microfiber and canvas.  Kenneth Cole Reaction
handbags have been styled to appeal to the same customer
as the Kenneth Cole Reaction footwear line to meet the varying
needs of the Company's customers.  This line generally retails at
price points ranging from approximately $60 to $160.

      Kenneth Cole Reaction children's footwear, primarily
manufactured in China, includes dress and casual footwear sold at
price points ranging from $35 to $55 and is targeted to boys and
girls ages 6 to 12, who the Company believes are making more of
their own fashion choices than ever before.  The Company believes
that children's footwear is a natural extension of its footwear
business and that its use of styles based upon successful
performers in its existing men's and women's styles, greatly
enhances the likelihood of product performance.  The success of
children's footwear led the Company to introduce Kenneth Cole
Reaction toddler footwear in 2003.  This has improved its retail
presence and has further penetrated the children's Kenneth Cole
Reaction brand in the marketplace.

      Unlisted

      Unlisted products are designed and targeted to the younger,
trendier consumer market, the country's largest consumer base of
fashion merchandise. The Unlisted brand was developed to expand the
Company's sales into a younger, more moderately priced business and
includes men's and women's casual and dress shoes each season.

      Unlisted footwear provides the young consumer with a wide
selection of footwear with contemporary styling and quality at
affordable prices.  Unlisted women's footwear includes not only
fashion styles, but also evening styles, basic pumps and loafers
that generally retail at price points ranging from $35 to $50 with
approximately 60 styles per season.  Unlisted men's footwear
continues brand penetration through additional door expansion,
continuing its strong growth, capitalizing on the large youth
consumer base.  The line includes casual and dress assortments with
a variety of fashion styles to compliment the selection of
approximately 50 styles per season.  Unlisted men's footwear
appeals to a broader young men's market with shoes that range at
retail price points from $50 to $80.

      Bongo

      Bongo products are designed for the junior consumer market to be
sold through mid-tier department and specialty stores.  The brand
brings fashion and style at reasonable price points to the junior
market and includes children's and women's casual and dress shoes
each season.

      Currently, Bongo footwear includes only women's and children's
footwear lines. The women's footwear line has a wide variety of
styles for casual, weekend, and special evening events including
pumps, boots, and loafers, among others.  The price points for the
women's line range from $35 to $50 with approximately 40 styles per
season. Children's price points range from $30 to $40.  The brand
provides a market that the Company was not previously penetrating
with its branded products.


        Tribeca

        The Company introduced Tribeca footwear for women products in
the second half of 2004. This brand was created for the young,
trendier shopper in the department store channel of distribution.
The lines include dress and casual styles leaning more toward the
casual customer's expectations.  The price points range from $50 to
$70.


<PAGE>

Business Segments

	The Company manages its business through three segments:
Wholesale, Consumer Direct and Licensing.  During the periods
presented below, the percentage of net revenues contributed by the
Company's business segments were as follows:

<TABLE>
<CAPTION>
                                                          Year Ended
                                                          December 31,
                                                   2005       2004	 2003
                                  <S>              <C>        <C>         <C>
                                Wholesale		    55%        54%	   54%
				        Consumer Direct     37         38          38
					  Licensing		     8          8	          8
                                                    ---	   ---        ---
                                Total               100%       100%       100%

</TABLE>

Wholesale Operations

     The Company strives to provide affordable fashion
footwear, handbags and accessories with consistent marketing
and management support to its wholesale customers. The Company
provides this support by producing strong image-driven advertising,
offering creative quality products and maintaining adequate
inventory levels of new products as well as products included
in the Company's open stock program. The Company employs a
sales force, as well as corporate account specialists, to
sell its products and to manage its relationships with its
wholesale customers, whose duties include analyzing and monitoring
their selling information.  The Company has previously increased
the size of its corporate account specialists staff, as it believes
its investment in account specialists is essential to the
maintenance and growth of its wholesale businesses.

      The Company's products are distributed to more than 1,750
wholesale accounts for sale in approximately 6,000 store locations
in the United States. The Company markets its branded products to
major department stores and chains, such as Dillard Department
Stores, Inc., Federated Department Stores (including Macy's,
Bloomingdales, and Burdines) and upscale specialty retailers,
including Saks Fifth Avenue and Nordstrom, Inc.  In addition, the
Company sells out-of-season branded products and overruns through
the Company's outlet stores and to off-price retailers. The Company
also sells its products, directly or through distributors or
licensees, to customers in various international markets including
Canada, Australia, Western Europe, parts of Asia, the Middle East,
Latin America and parts of South America and the Caribbean through
leasing agreements.

      The Company markets its product lines and introduces new styles
at separate industry-wide footwear and handbag tradeshows that
occur several times throughout the year in New York, Las Vegas and
at various regional shows. These trade shows also afford the
Company the opportunity to assess preliminary demand for its
products. After each show, the Company's sales force and corporate
account specialists visit customers to review the Company's product
lines and to secure purchase commitments. The Company's products
are also displayed at showrooms in New York.

      Private Label

      The Company also designs, develops and sources private label
footwear and handbags for selected retailers. These private label
customers include major retailers that do not purchase the
Company's brands.  The Company's private label business requires
minimal overhead and capital because the Company does not typically
incur any costs related to importing, shipping or warehousing of
inventory, all of which are usually borne by the private label
customer.

      Canada

      The Company assumed the Canadian footwear operations in 2003 and
handbag operations in 2004 after its respective license agreements
ended.  The operations are managed from its New York City
headquarters with a sales staff and distribution center in Canada.

<PAGE>

      The Company markets its branded products in Canada to
independent specialty retailers and large department stores,
including Sears Canada, Browns, Townshoe, The Bay, Sterling and
Friedmans.  The branded products include Kenneth Cole New York,
Kenneth Cole Reaction, and Unlisted men's and women's footwear, as
well as Kenneth Cole New York handbags and Kenneth Cole Reaction
children's footwear and handbags.  In 2005, the Company began
Canadian distribution of the Tribeca and Bongo footwear brands.

Consumer Direct Operations

Retail Operations

    The Company continues to pursue opportunities to enhance and
expand its retail operations.  At December 31, 2005, the Company
operated 53 specialty Kenneth Cole New York retail stores and 39
outlet stores under the Kenneth Cole New York name.

     The Company believes its specialty retail stores develop
consumer recognition of its brand names, provide a showcase for its
branded products marketed by the Company and its licensees, and
enhance the Company's overall profitability. The Company believes
that these stores complement its wholesale business by building
brand awareness.  The customer is presented with the Company's core
shoe and handbag business with selected key accessory styles. In
addition, Kenneth Cole specialty retail stores enable the Company
to reach consumers who prefer the environment of a specialty store.
Approximately 10% of the Company's specialty retail store products
are sourced exclusively for such stores to differentiate the
product mix of its stores from that of its wholesale customers.
The Company recently developed a smaller store format known as the
"Jewel Box" model which the Company believes may be a more
profitable store format.  The Company opened 5 specialty retail
stores and closed 3 stores in 2005, and plans to open 5 to 7 new
specialty retail stores in 2006.

      The Company's outlet stores enable it to sell a portion
of its excess wholesale, retail and catalog inventory in a manner
that it believes does not have an adverse impact on its wholesale
customers and the Company's retail operations.  The Company generally
does not typically make a style available in its outlet
stores or to off-price retailers until wholesale customers
have taken their first markdown on that style.
In addition, the Company sources "Made for Outlet" product similar
to its exclusive sourcing for retail stores and, thus,
differentiates outlet from both retail store and wholesale
customers.  The Company opened 3 outlet stores in 2005.

      The success of the Company's new and existing
stores will depend on various factors, including the political
instability in certain countries in which the Company has
a presence, the possibility of additional terrorist attacks,
general economic and business conditions affecting consumer
spending, the acceptance by consumers of the Company's retail
concepts, the ability of the Company to successfully manage
expansion, the ability of the Company to hire and train personnel,
the availability of desirable locations, the negotiation of
acceptable lease terms for new locations and the expansion of the
Company's management information systems to support the growth of
its retail operations, including the implementation of SAP (see
Management Information Systems).  The Company believes that its
retail stores further enhance its image and represent an
opportunity for revenue and earnings growth.

     Catalog, Website and Customer Service

     The Company produces consumer catalogs and mailers that feature
a variety of Kenneth Cole New York and Kenneth Cole Reaction
branded products. The catalog order-taking process is performed in
house and the fulfillment is performed by a third-party
distribution center in New Jersey.

     The Company maintains websites to provide information regarding
the Company and its products, as well as to conduct online
business.  The Company's websites www.kennethcole.com and
www.kennethcolereaction.com are regularly enhanced to enable
consumers to purchase directly from the Company online.  The
Company plans to continue to invest in the Internet and emerging
technologies and believes that based on its existing merchandising,
fulfillment and marketing capabilities, it is well positioned to
deliver an online commerce solution with nonpareil customer
service.  The Company also maintains two toll-free telephone
numbers (1-800-KEN-COLE and 1-800-UNLISTED), which provide customer
service and answer product-related questions.

       The Company currently has a corporate gift program, whereby
corporate customers are sold Kenneth Cole items for award and
recognition programs.  Orders are drop-shipped from the Company's
licensees or its warehouse.  The Company believes this is another
avenue of distribution to expand its various brands to enhance
customer awareness and strengthen market position.

<PAGE>

Licensing

      Domestic Licensing

      The Company views its licensing agreements as a vehicle to serve
its customers better by extending its product offerings thereby
allowing more consumers to meet their fashion accessory needs
without compromising on price, value or style.  The Company
considers entering into licensing and distribution agreements with
respect to certain products if such agreements provide more
effective sourcing, marketing and distribution of such products
than could be achieved internally.  The Company continues to pursue
opportunities in new product categories that it believes to be
complementary to its existing product lines.

      Licensees range from small to medium size manufacturers to
companies that are among the industry leaders in their respective
product categories.  The Company selects licensees that it believes
can produce and service quality fashion products consistent with
the Kenneth Cole New York, Kenneth Cole Reaction and Unlisted brand
images. The Company communicates its design ideas and coordinates
all marketing efforts with its licensees. The Company generally
grants licenses for three to five year terms with renewal options,
limits licensees to certain territorial rights, and retains the
right to terminate the licenses if certain specified sales levels
are not attained. Each license provides the Company with the right
to review, inspect and approve all product designs and quality and
approve any use of its trademarks in packaging, advertising and
marketing.

      The Company continues to elevate the quality, style and
price of the Kenneth Cole New York brand through tailored
clothing, watches, dress shirts, sportswear and outerwear.
This is an important step in further defining Kenneth Cole New York
as an accessible premier luxury lifestyle brand.  The Company continues
to grow the Kenneth Cole Reaction brand across expanding products and
markets as it entered into agreements to introduce a
home collection, as well as women's sportswear, and reposition the
brand throughout the Company's distribution channels.  The Company
plans to continue to draw upon Kenneth Cole's creative strength and
the Company's marketing resources to continue to build brand
definition.


The following table summarizes the Company's product categories
under its licensing agreements:


                               Kenneth Cole    Kenneth Cole      Unlisted
Product Category               New York        Reaction

Men's Tailored Clothing        X               X                  X
Men's Sportswear               X
Men's Neckwear                 X               X
Men's Dress Shirts             X               X
Men's Casual Pants             X               X
Men's Leather & Fabric
Outerwear                      X               X
Men's Small Leather Goods                      X                  X
Men's Belts                    X               X                  X
Women's Sportswear             X               X
Women's Small Leather Goods                    X                  X
Women's Leather &
Fabric Outerwear               X               X
Women's Scarves & Wraps        X               X
Men's/Women's Jewelry          X               X                  X
Men's/Women's Swimwear         X               X                  X
Men's/Women's Watches          X               X                  X
Men's/Women's Optical Frames   X               X
Men's/Women's
Luggage/Briefcases             X               X
Men's/Women's Sunglasses       X               X                  X
Men's/Women's Fragrances       X               X                  X
Children's Apparel                             X
Home Collection                                X

<PAGE>

      All of the Company's licensees are required to contribute to the
Company a percentage of their net sales of licensed products,
subject to minimum amounts, for the ongoing marketing of the
Kenneth Cole brands.

      International Licensing

      The Company sells its products through distributors and
licensees to wholesale customers and direct retailers in
international markets including Canada, Australia, parts of Europe,
the Middle East, parts of Asia, Central America, parts of South
America, and the Caribbean Islands.  The Company also continues to
grow its international presence through broader wholesale
distribution of watches, fragrance and sun and prescription
eyewear.

      The Company's continued focus on the Asian market included
opening and expanding shop-in-shops in South Korea through its
licensee, Cheil Industries, and shop-in-shops and freestanding
stores in the Philippines through the Company's Philippine
licensee, Store Specialists, Inc. (Rustan's Department Store).  The
Company also maintains agreements for the wholesale distribution of
handbags, women's small leather goods, mens sportswear, and men's
and women's footwear in Australia.  In addition, Apparel LLC, the
Company's Gulf Region licensee, opened freestanding stores in the
United Arab Emirates and one store in Kuwait during 2004.  The
Company anticipates expansion in the Israeli market in 2006, and
recently signed an agreement for distribution in Thailand.

      In North America, the Company, directly and through licensing
arrangements, continues to sell and market its products in Canada.
The majority of product classifications available domestically are
also available in Canada.  Currently, the Company operates in
Canada through two licensees and the use of shop-in-shops, while
its footwear and handbag licensee businesses were taken in-house
and are managed from its New York City headquarters through its
Wholesale segment.  The Latin American licensee agreement covers
Latin America, South America and the Caribbean, with the exception
of Brazil, Argentina and Uruguay.  Currently, the Company's
licensee operates 22 freestanding stores and 20 shop-in-shops in
this region.

       In Europe, the Company's licensee operates a store in London and
sells footwear, luggage, small leather goods, and handbags to
department stores within the United Kingdom.  The Company also
sells footwear through footwear agents in France, the Benelux
countries, Greece, Spain and Portugal.  The Company continues to
explore opportunities in this market as well as other new markets
throughout the globe.

       The Company realizes the critical role that licensees have on
the strategic plan to reposition Kenneth Cole as an accessible
luxury brand, and on the growth and development of Kenneth Cole and
its diffusion brands; and therefore, the Company assumes
significant care to strategically align itself with viable business
partners around the world.  The Company is optimistic about the
expansion of its international licensing programs as a means of
developing a truly global brand.  The Company currently generates
approximately 2.0% of its total revenues internationally, and
believes it can ultimately achieve a level of 20%.

Design

      Kenneth D. Cole, Chairman and Chief Executive Officer, founded
the Company in 1982 and its success to date is largely attributable
to his design talent, creativity and marketing abilities.  Mr. Cole
selects designers to join a design team to work with him in the
creation and development of new product styles.  Members of each
design team collaborate with Mr. Cole to create designs that they
believe fit the Company's image, reflect current or approaching
trends and can be manufactured cost-effectively.

      The Company's design teams constantly monitor fashion trends and
search for new inspirations.  Members of the various teams travel

extensively to assess fashion trends in Europe, the United States
and Asia and work closely with retailers to monitor consumer
preferences. The process of designing and introducing a new product
takes approximately two to four months. Once the initial design is
complete, a prototype is developed, reviewed and refined prior to
commencement of production.

      In order to reduce the impact of changes in fashion trends on
the Company's product sales and to increase the profitability of
the Company's products, the Company continuously seeks to develop
new core basic product styles that remain fashionable from season
to season without significant changes in design or styling.  Since
these core basic products are seasonless, retailers' inventories of
core basic products tend to be maintained throughout the year and
reordered as necessary, primarily through electronic data
interchange.

<PAGE>

Sourcing

       The Company does not own or operate any manufacturing
facilities.  Instead, it sources its branded and private label
products directly or indirectly through independently-owned
manufacturers in Italy, Spain, Brazil, China and Korea, among other
locations. The Company maintains an office in Florence, Italy and
generally has long-standing relationships with several independent
buying agents to monitor the production, quality and timely
distribution of the Company's products from its manufacturers.  In
addition, as part of its global sourcing strategy, the Company
opened an office in China in 2005 as part of its plan to expand
production in that region.  The Company sources each of its product
lines separately based on the individual design, styling and
quality specifications of such products.

      The Company sources each of its product lines separately,
based on the individual design, styling and quality
specifications of such products.  The Company primarily sources
its products directly or indirectly through manufacturers
in Italy, Spain, Brazil and China. However, approximately 46% and
42% of total handbag purchases came from two manufacturers in China
during the years ended December 31, 2005 and 2004, respectively.
Approximately 21% of Kenneth Cole New York and Kenneth Cole
Reaction men's footwear purchases were from one manufacturer in
China during the year ended December 31, 2005, and approximately
37% of those purchases were from one manufacturer in Italy
utilizing many different factories during the year ended December
31, 2004.  Also, approximately 32% of Kenneth Cole New York ladies'
footwear was purchased from one Brazilian manufacturer during the
year ended December 31, 2005, while 33% of those purchases were
from one Italian manufacturer during the year ended December 31,
2004.  Furthermore, approximately 44% of Kenneth Cole Reaction
ladies' footwear purchases were sourced through one Chinese
manufacturer during the year ended December 31, 2005, and 58% were
purchased from one Italian manufacturer during the year ended
December 31, 2004. The Company believes it has alternative
manufacturing sources available to meet its current and future
production requirements in the event the Company is required to
change current manufacturers or current manufacturers are
unavailable to fulfill the Company's production needs.  Many of
these manufacturers, however, subcontract a portion of such
purchases to ensure the consistent and timely delivery of quality
products.  The Company is a significant customer of several of
these manufacturers and has established long-standing relationships
with them.  While the Company believes it has alternative
manufacturing sources available to meet its current and future
production requirements, there can be no assurance that, in the
event the Company is required to change its current manufacturers,
alternative suppliers will be available on terms comparable to the
Company's existing arrangements.

     In advance of the Fall and Spring selling seasons, the Company
works with its manufacturers to develop product prototypes for
industry trade shows. During this process, the Company works with
the manufacturers to determine production costs, materials, break-
even quantities and component requirements for new styles. Based on
indications from the trade shows and initial purchasing commitments
from wholesalers, the Company places production orders with the
manufacturers. In addition, the Company has a program, "test and
react", whereby prototypes are rushed to its specialty retail
stores immediately after completion to determine initial consumer
reaction.  Successful styles, consumer acceptance and demand are
used to adjust factory production and line development prior to
initial season shipping.  As a result of the need to maintain in-
stock inventory positions, the Company places manufacturing orders
for open stock and certain fashion products prior to receiving firm
commitments from its customers. Once an order has been placed, the
manufacturing and delivery time ranges from three weeks to four
months depending on whether the product is new or is currently in
production. Throughout the production process, the Company monitors
product quality through inspections at both the factories and upon
receipt at its warehouses. To reduce the risk of overstocking, the
Company monitors sell-through data on a weekly basis and seeks
input on product demand from wholesale customers to adjust
production as needed.

Advertising and Marketing

      The Company believes that advertising to promote and enhance its
brands is an integral part of its long-term growth strategy. The
Company believes that its advertising campaigns, which have brought
it national recognition for their timely focus on current events
and social issues, have resulted in increased sales and consumer
awareness of its branded products. The Company's advertising
appears in magazines such as Vogue, Elle, Harper's Bazaar, GQ, and
InStyle, newspapers, and outdoor and media. The majority of the
Company's licensees are required to contribute to the Company a
percentage of their net sales of licensed products, subject to
minimums, for the advertising and promotion of the image of the
Company's brands. In addition, the Company believes personal
appearances by Kenneth D. Cole further enhance the Company's brand
awareness.
<PAGE>

       The Company utilizes its in-house staff for marketing,
advertising and public relations efforts enabling the Company to
maintain the integrity of its brands.  The Company occasionally
will use advertising firms outside the United States to assist
with coordination of an international advertising effort;
however, all creative campaigns are designed by the Company's
in-house staff.

      In order to continue to strengthen brand awareness of its
products and increase sales, the Company is actively involved in
development, marketing and merchandising programs for its
customers. As part of this effort, the Company utilizes cooperative
advertising programs, sales promotions and produces trade show
sales tools and consumer catalogs which feature a variety of
branded products marketed by the Company and its licensees.  As a
result of these internal productions, the Company believes that
there is a singular focus, strong synergy and consistency in all of
the Company's communications.

      An additional aspect of the Company's marketing efforts is the
creation and placement of branded enhancements in key department
and specialty store locations.  These focus areas create an
environment that is consistent with the Company's image and enables
the retailer to display and stock a greater volume of the Company's
products per square foot of retail space.  These enhancements are
achieved through the placement of fixturing, point of purchase
displays and graphics.  The Company believes that these in-store
enhancements encourage longer-term commitment by retailers to the
Company's products and heighten consumer brand awareness.

Distribution

     To facilitate distribution, the Company's products are
inspected, bar coded, packed and shipped from manufacturers by
ocean or air to the Company's distribution facilities located in
the United States of America and Canada. The Company utilizes
fully-integrated information systems and bar code technology to
facilitate the receipt, processing and distribution of product
through third-party warehouse distribution centers.  The products
are then shipped to the Company's wholesale and direct customers
either in predetermined sizes, in case packs or under its open
stock program. The Company's open stock program allows its
wholesale customers to reorder, typically via electronic data
interchange ("EDI"), core basic styles in a range of colors and
sizes as well as many fashion styles, for immediate shipment. While
the open stock program requires an increased investment in
inventories, the Company believes this program is an important
service for its wholesale customers by allowing them to manage
inventory levels more effectively.  The Company expects that
affording customers improved flexibility in ordering specific stock
keeping units ("SKUs") in smaller quantities will ultimately reduce
the incidence of markdowns and allowances.

      The Company has capitalized on its centralized distribution
facilities to provide additional support to its retail store
operations on shipments of footwear and handbag products as well as
direct shipments to its catalog and Internet customers.  The
Company's EDI program is also used to re-supply its retail store on
a variety of products, thereby enhancing its service to the
Company's retail operations through improved inventory management
and customer response.  To facilitate distribution, the Company has
third-party public warehouses located on both the East and West
Coasts of the United States, as well as in Canada to accommodate
merchandise imported from Asia, Europe and South America.

Management Information Systems

	The Company believes that sophisticated information systems are
essential to the Company's ability to maintain its competitive
position and to support continued growth. The Company's management
information systems were designed to provide, among other things,
comprehensive order processing, production, accounting and
management information for the sourcing, importing, distribution
and marketing aspects of the Company's business.  The Company
continues to update and enhance its distribution and financial
systems with newer technology that offers greater functionality and
reporting capabilities.  The Company also utilizes an EDI system
that provides a computer link between the Company and many of its
wholesale customers, as well as its retail operations that enable
the Company to receive on-line orders and to accumulate sales
information on its products shipped to its wholesale customers,
retail stores, catalog and internet customers.  The Company's EDI
system also improves the efficiency of responding to customer needs
and allows both the customer and the Company to monitor purchases,
shipments and invoicing. In its retail stores, the Company also
uses point-of-sale registers to capture sales data, track
inventories and generate EDI replenishment orders.

<PAGE>
      The Company regularly evaluates the adequacy of its management
information systems and upgrades such systems to support its
growth. In 2006, the Company signed a software license agreement
with SAP America, Inc. ("SAP") to implement an integrated business
platform, using SAP software products, across the Company's retail
and outlet stores.  The estimated expenditures related to this
implementation are expected to be approximately $8 million over the
term of the contract.  However, any failure by the Company to
continue to upgrade its management information systems necessary to
support growth or expansion, which could arise either with its
internal systems or systems of its third parties, could have a
material adverse effect on the Company's financial condition and
its results of operations (See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations").

Trademarks

      The Company, through its wholly-owned subsidiary, Kenneth Cole
Productions (LIC), Inc., owns federal registrations for its
principal trademarks Kenneth Cole, Kenneth Cole New York, Kenneth
Cole Reaction, Reaction, Kenneth Cole Collection, Tribeca and
Unlisted as well as several other ancillary and derivative
trademarks.  Each of the federal registrations is currently in full
force and effect and is not the subject of any legal proceedings.
In addition, the Company has several federal applications pending
in the United States Patent and Trademark office for trademarks and
service marks.  Moreover, the Company continues to expand its
current international registrations in numerous countries
throughout the world.  The Company regards its trademarks and other
proprietary rights as valuable assets in the marketing and
distribution of its products, and fully intends to maintain, renew
and protect the registrations, as well as vigorously defend all of
its trademarks against infringements.

Competition

      Competition in the footwear and handbags industries is intense
and these product classifications are subject to rapidly changing
consumer demands.  The Company competes with numerous designers,
brands and manufacturers of footwear, handbags, apparel and
accessories, some of which may be larger, have achieved greater
recognition for their brand names, have captured greater market
share and/or have substantially greater financial, distribution,
marketing and other resources than the Company.  The Company also
competes for the limited shelf-space available for the display of
its products to consumers, and the Company's licensed apparel and
accessories also compete with a substantial number of designer and
non-designer brands.  Moreover, the general availability of
contract manufacturing capacity allows access by new market
entrants. The Company believes the success of its business depends
on its ability to stimulate and respond to changing consumer
preferences by producing innovative and attractive products, brands
and marketing, while remaining competitive in quality and price.

Foreign Operations

      The Company's business is subject to the risks of doing business
abroad, such as fluctuations in currency exchange rates, local
market conditions, labor unrest, political instability, actions of
a public enemy, military or other government intervention,
priorities, restrictions or allocations and the imposition of
additional regulations relating to imports, including quotas,
duties or taxes and other charges on imports.  There can be no
assurance that these factors will not have a material adverse
effect on the Company's operations in the future.

      In order to reduce the risk of exchange rate fluctuations, the
Company routinely enters into forward exchange contracts to protect
the future purchase price of inventory denominated in Euro. These
Euro forward exchange contracts are used to reduce the Company's
exposure to changes in foreign exchange rates and are not held for
the purpose of trading or speculation (see Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations").


Import Restrictions

      Although most of the goods sourced by the Company are not
currently subject to quotas, countries in which the Company's
products are manufactured may, from time to time, impose new or
adjust prevailing quotas or other restrictions on exported
products.  In addition, the United States may impose new duties,
tariffs and other restrictions on imported products, any of which
could have a material adverse effect on the Company's operations
and its ability to import its products at current or increased
quantity levels. In accordance with the Harmonized Tariff Schedule,
a fixed duty structure in effect for the United States, the Company
pays import duties on its products.  The majority of its products
have import duties that range from approximately 6% to 37.5%,
depending on the category and the principal component of the
product. Other restrictions on the importation of footwear and
other products are periodically considered by the United States
government and no assurance can be given that tariffs or duties on
the Company's goods may not be raised, resulting in higher costs to
the Company, or that import quotas restricting such goods may not
be imposed or made more restrictive.

<PAGE>

Seasonality

      The Company's products are marketed primarily for Fall
and Spring seasons, with slightly higher volume of wholesale
products sold during the first and third quarters.  The Company's
retail business follows the general seasonal trends that
are characteristic within the retail industry: sales and earnings
are highest in the fourth quarter and weakest in the first quarter.
Because the timing of wholesale shipments of products for any
season may vary from year to year, the results for any one
quarter may not be indicative of the results for the full
year.

Customers

      The Company's department store customers include major United
States retailers, several of which are under common ownership.  In
2005 and 2004, the Company had no customer or group under common
ownership account for more than 10% of sales. The Company's ten
largest customers represented 39.2% and 36.6% of the Company's net
sales for the years ended December 31, 2005 and 2004, respectively.
While the Company believes that purchasing decisions have generally
been made independently by each division within a department store
group, there is a trend among department store groups toward
centralized purchasing decisions of their divisions.

Backlog

      The Company had unfilled wholesale customer orders of $81.3
million and $68.5 million at March 9, 2006 and March 9, 2005,
respectively. The Company's backlog at a particular time is
affected by a number of factors, including seasonality, timing of
market weeks and wholesale customer purchases of its core basic
products through the Company's open stock program. Accordingly, a
comparison of backlog from period to period may not be indicative
of eventual shipments.


Employees

      At December 31, 2005, the Company had approximately 1,800
employees, none of whom are covered under a collective bargaining
agreement.  The Company considers its relationship with its employees
to be satisfactory.  The Company had a collective bargaining agreement,
which expired in April 2004, at which time it outsourced its
distribution operation and closed its New Jersey distribution
center. Prior to that, the Company utilized a local affiliate of
the International Leather Goods, Plastics, Handbags and Novelty
Workers' Union, Local 1, Division of Local 342-50 United Food and
Commercial Workers Union. In connection with this transition in
2004, the Company incurred approximately $1.1 million in aggregate
costs, including severance, the write-off of unamortized leasehold
improvements and moving costs during 2004. These costs were
expensed as incurred in accordance with SFAS No. 146 "Accounting
for Costs Associated with Exit or Disposal Activity" within the
Selling, General and Administrative expenses caption on the face of
the Consolidated Statement of Income.


Directors and Executive Officers

Name                       Age        Present Position

Kenneth D. Cole             51      Chief Executive Officer, Chairman
                                    of the Board of Directors
Joel Newman                 64      Chief Operating Officer,
                                    joined February 2006
David P. Edelman            44      Chief Financial Officer
Michael F. Colosi	          40      Corporate Vice President and
                                    General Counsel and Secretary
Michael DeVirgilio          37      Executive Vice President,
                                    Business Development
Richard S. Olicker          48      Executive Vice President,
                                    Wholesale
Doug Jakubowski             42      Senior Vice President, Reaction Brand
Harry Kubetz                52      Senior Vice President, Operations
Carol Sharpe                51      Senior Vice President, Consumer Direct
Henrik Madsen               39      Senior Vice President,
                                    International Operations

<PAGE>

Lori Wagner                 41	Senior Vice President, Marketing
Linda Nash Merker           49      Senior Vice President, Human Resources
Martin E. Franklin          40      Director
Robert C. Grayson           61      Director
Denis F. Kelly              56      Director
Philip B. Miller            67      Director
Philip R. Peller            66      Director

      Kenneth D. Cole has served as the Company's Chief Executive
Officer and Chairman of the Board since its inception in 1982 and
was also President until February 2002.  Mr. Cole was a founder,
and from 1976 through 1982, a senior executive of El Greco, Inc., a
shoe manufacturing and design company which manufactured Candies
women's shoes. Mr. Cole is the Chairman of the Board of Directors
of the American Foundation for AIDS Research (''AmFAR''). In
addition, he is on the Board of Trustees of the Sundance Institute
and the Council of Fashion Designers of America.  Mr. Cole is also
a Director and President of nearly all of the wholly-owned
subsidiaries of the Company.

      Joel Newman joined the Company as Chief Operating Officer in
February 2006.  Prior to joining the Company, he held the positions
of Chief Operating Officer of Tommy Hilfiger U.S.A., Inc., a
subsidiary of Tommy Hilfiger Corporation, Inc., and Executive Vice
President of Finance and Operations of Tommy Hilfiger Corporation,
Inc., its parent company.  Prior to joining Tommy Hilfiger U.S.A.,
Inc., Mr. Newman held various senior operations and financial
positions with major companies in the apparel wholesale and retail
industries.

      David P. Edelman was appointed as the Chief Financial Officer in
July 2004.  He joined the Company in January 1995 and served as the
Company's Senior Vice President of Finance since April 2000.
Before joining the Company, Mr. Edelman was Chief Financial Officer
of a women's suit wholesaler, and he was employed 10 years as a CPA
with Ernst & Young in various specialty groups including E&Y's
National Consulting Office and its Retail and Apparel Audit Group.

      Michael F. Colosi has served as Corporate Vice President and
General Counsel for the Company since July 2000 and as Corporate
Secretary since July 2004.  Previously, Mr. Colosi was the
Associate General Counsel and Assistant Secretary for The Warnaco
Group, Inc. from 1996 to 2000.  After clerking for Judge J. Edward
Lumbard of the U.S. Court of Appeals for the Second Circuit, he was
engaged in the private practice of law from 1992 to 1996.

      Michael DeVirgilio has served as Executive Vice President of
Business Development since January 2006.  Mr. DeVirgilio previously
served as Senior Vice President of Licensing from May 2005.  Prior
to that, he served as Corporate Vice President of Licensing and
Design Services from March 2002 to May 2005. From 1999 to 2001, Mr.
DeVirgilio served as Divisional Vice President of Licensing.  Mr.
DeVirgilio joined the Company as Director of Licensing in 1997.
Prior to joining the Company, Mr. DeVirgilio was Director of
Merchandising for the Joseph & Feiss Company (a Division of Hugo
Boss, USA).

      Richard S. Olicker joined the Company as President of the
Wholesale Division and Executive Vice President of the Corporation
in January 2006.  Mr. Olicker previously served Steven Madden, Ltd.
where he held the position of President since 2001 and was
responsible for seven independently operating wholesale footwear
divisions, including Steve Madden, Stevies, l.e.i., and Candie's.
Mr. Olicker also had visibility of the operation of the retail,
licensing, Internet and international divisions. Prior to this, Mr.
Olicker co-founded Aerogroup International, Inc. (Aerosoles), the
footwear import and marketing firm, and previously also served as
General Counsel and Licensing Business Director at El Greco Inc. -
Candie's.

      Doug Jakubowski joined the Company as Senior Vice President of
Kenneth Cole Reaction in July 2005.  Prior to joining the Company,
Mr.  Jakubowski served as President of Perry Ellis Menswear from
2003 to 2005.  From 1997 to 2003, he served as Executive Vice
President of Merchandising and Design for Perry Ellis Sportswear.
Prior to joining Perry Ellis, Mr. Jakubowski held the positions of
Vice President of Sales and Marketing at International News, and
Director of Marketing and Sales at Koral Industries.

      Harry Kubetz has served as Senior Vice President of Operations
since joining the Company in April 1996.  Mr. Kubetz was President
of "No Fear" Footwear, Inc. from 1994 until 1996.  From 1992 until
1994, Mr. Kubetz was Executive Vice President of Asco General
Supplies, a wholly owned subsidiary of Pentland, PLC.

<PAGE>

      Carol Sharpe joined the Company as Senior Vice President,
Consumer Direct in July 2004.  Ms. Sharpe was President of Retail
at Donna Karan, Inc. from October 2002 to June 2004.  From October
1989 to May 2002, Ms. Sharpe was at J. Crew where she held numerous
positions, the last of which was Executive Vice President of
Merchandising.  Prior to that, she held the position of Divisional
Merchandiser for Bloomingdale's, Chestnut Hill.

      Henrik Madsen joined the Company as Senior Vice President and
General Manager of International Operations in January 2006.  Prior
to joining the Company, Mr. Madsen served as Chief Executive
Officer and President of Kasper Europe Ltd., a subsidiary of Jones
Apparel Group.  Mr. Madsen has over 14 years of experience in the
international fashion industry.

      Lori Wagner has served as Senior Vice President of Marketing
since August 2001.  Prior to joining the Company, Ms. Wagner spent
10 years at J. Crew Group in various visual and creative management
marketing roles, the last of which was Senior Vice President Brand
Creative.

      Linda Nash Merker joined the Company as Senior Vice President of
Human Resources in May of 2004.  Previously, she served as Senior
Vice President of Human Resources at Perry Ellis from January 2002
to November 2003, and Senior Vice President of Human Resources at
Loehmann's from 1994 until 2000.  While at Macy's East from 1987
until 1994, Ms. Merker also held various positions, the last of
which was Vice President of Human Resources - Merchandise
Recruitment and Development.

      Martin E. Franklin has served as the Chairman and Chief
Executive Officer of Jarden Corporation since September 2001,
Director of FindSVP, Inc. since March 2003, and Director of Apollo
Management, L.P. since April 2004.  In addition, Mr. Franklin is a
principal and executive officer of a number of private investment
entities. Prior to this, Mr. Franklin served as Executive Chairman
of Bolle Inc. from July 1997 to February 2000.  He also held the
position of Chairman and CEO of Lumen Technologies, Inc. (formerly
BEC Group, Inc.)  from  May  1996 to  December  1998,  and  its
predecessor,  Benson Eyecare Corporation, from October 1992 to May
1996.  Mr. Franklin is currently a member of the Board of Directors
of the Jewish Theological Seminary of America and One Family Fund,
and other various charitable organizations.

      Robert C. Grayson is a partner in Berglass-Grayson, a management
consulting and executive search firm.  From 1992 to 1996, Mr.
Grayson served initially as an outside consultant to Tommy Hilfiger
Corp., a wholesaler and retailer of men's sportswear and boyswear,
and later accepted titles of Chairman of Tommy Hilfiger Retail,
Inc. and Vice Chairman of Tommy Hilfiger Corp.  From 1970 to 1992,
Mr. Grayson served in various capacities for Limited Inc.,
including President and CEO of Lerner New York from 1985 to 1992,
and President and CEO of Limited Stores from 1982 to 1985.  He also
serves as a director of Ann Taylor Corporation, Lillian August
Inc., Urban Brands, and Know Fat.

      Denis F. Kelly is a Managing Partner of Scura, Rise & Partners,
LLC.  From July 1993 to December 2000, Mr. Kelly was the head of
the Mergers and Acquisitions Department at Prudential Securities
Incorporated.  From 1991 to 1993, Mr. Kelly was President of
Denbrook Capital Corp., a merchant-banking firm.  Mr. Kelly was at
Merrill Lynch from 1980 to 1991, where he served as Managing
Director, Mergers & Acquisitions from 1984 to 1986, and then as a
Managing Director, Merchant Banking, from 1986 to 1991.  Mr. Kelly
is a director of MSC Industrial Direct, Inc.

      Philip B. Miller is the principal of Philip B. Miller
Associates, a consulting firm.  Mr. Miller served as Chairman and
Chief Executive Officer at Saks Fifth Avenue from 1993 to January
2000 and continued as Chairman until July 2001.  Mr. Miller was
formerly Chairman and Chief Executive Officer at Marshall Fields,
joining that company in 1983 from Neiman Marcus, where he had been
President since 1977.  Prior to that, he served as Vice Chairman at
Lord & Taylor and as Vice President and Merchandise Manager at
Bloomingdales.  Mr. Miller serves on the Board of Directors at Puig
USA, St. John, DSW, and Tri-Artisan Partners.  In addition, Mr.
Miller also serves on the Board of Directors of the New York
Botanical Gardens.

      Philip R. Peller was employed by Arthur Andersen LLP for 39
years.  Prior to his retirement from Arthur Andersen in 1999, he
served as Managing Partner of Practice Protection and Partner
Matters for Andersen Worldwide SC, the   coordinating entity for
the activities of Arthur Andersen and Andersen Consulting, from
1996 to 1999.   Prior to  that  appointment,  Mr. Peller served  as
the  Managing Director  -  Quality,  Risk  Management  and
Professional Competence  for  the worldwide audit practice.   Mr.
Peller joined Arthur Andersen in 1960 and was promoted to Audit
Partner in 1970.   Mr. Peller is a Certified Public Accountant.
Mr. Peller is currently a member of the Board of Directors and
Chair of the Audit Committee of MSC Industrial Direct Co., Inc. and
serves as a consultant to other companies.

<PAGE>



Available Information

      The Company files its annual, quarterly and current reports and
other information with the Securities and Exchange Commission.  The
Certifications required under Section 302 of the Sarbanes-Oxley Act
of 2002 are filed as exhibits to the annual and quarterly reports
on Form 10-K and Form 10-Q, respectively.  In addition, the Company
has provided the annual certification to the New York Stock
Exchange.  The Company's annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments
to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, are
available free of charge in the "Investor" section under the
subheading of "About Us" on the Company's website
www.kennethcole.com.  These reports, and any amendments to these
reports, are made available on our website as soon as reasonably
practicable after such reports are filed with or furnished to the
Securities and Exchange Commission.  The public may read and copy
any materials filed by the Company with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, NW, Washington, DC 20549.  The
public may also obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.  In addition,
the SEC maintains an Internet site that contains reports, proxy and
information statements and other information regarding the Company,
which is available at http://www.sec.gov.

      In addition, the Company's website, www.kennethcole.com, will
include, free of charge, items related to corporate governance
matters, including our Corporate Governance Guidelines, charters of
various committees of our Board of Directors and our Code of
Business Conduct and Ethics applicable to our employees, officers
and directors. A printed copy of our Corporate Governance
Guidelines and our Code of Business Conduct and Ethics is available
without charge by sending a written request to:  Investor
Relations, Kenneth Cole Productions, Inc., 400 Plaza Drive,
Secaucus, NJ  07094.


Item 1A. Risk Factors

The Company operates in a changing environment that involves
numerous known risks and uncertainties that could materially
adversely affect our operations. The risks described below
highlight some of the factors that have affected and in the future
could affect our operations. Additional risks we do not yet know or
that we currently think are immaterial may also affect our business
operations.  If any of the events or circumstances described below
actually occurs, our business, financial condition or results of
operations could be materially adversely impacted.

We may not be able to respond to changing fashion and consumer
demands in a timely manner.

The footwear, apparel and accessory industries are subject to
changing consumer demands and fashion trends.  The Company believes
that its success depends in large part upon its ability to identify
and interpret fashion trends and to anticipate and respond to such
trends in a timely manner.  The Company has generally been
successful in this regard but there can be no assurance that the
Company will be able to continue to meet changing consumer demands
or to develop successful styles in the future.  If the Company
misjudges the market for a particular product or product line, it
may result in an increased inventory of unsold and outdated
finished goods, which may have an adverse effect on the Company's
financial condition and results of operations.  In addition, any
failure by the Company to identify or respond to changing demands
and trends could, in the long term, adversely affect consumer
acceptance of the Company's brand names, which may have an adverse
effect on the Company's business and prospects.

The Company intends to market additional lines of footwear, apparel
and fashion accessories in the future.  As is typical with new
products, demand and market acceptance for any new products
introduce by the Company will be subject to uncertainty.  Achieving
market acceptance for each of these products may require
substantial marketing efforts and the expenditure of significant
funds to create customer demand.  There can be no assurance that
the Company's marketing effort will successfully generate sales or
that the Company will have the funds necessary to undertake such an
effort.

<PAGE>


Our sales are influenced by general economic cycles.

Footwear, apparel and accessories are cyclical industries dependent
upon the overall level of consumer spending. Our customers
anticipate and respond to adverse changes in economic conditions
and uncertainty by reducing inventories and canceling orders. As a
result, any substantial deterioration in general economic
conditions, increases in energy costs or interest rates, acts of
nature or political events that diminish consumer spending and
confidence in any of the regions in which we compete,  could reduce
our sales and adversely affect our business and financial
condition.

The footwear, apparel and accessory industries are highly
competitive.  Any increased competition could result in reduced
sales or margins.

Competition in the footwear, apparel and accessory industries is
intense.  The Company's products compete with other branded
products within their product categories as well as with private
label products sold by retailers, including some of the Company's
customers.  In varying degrees, depending on the product category
involved, the Company competes on the basis of style, price,
quality, comfort and brand prestige and recognition, among other
considerations.  The Company also competes with numerous
manufacturers, importers and distributors of footwear, apparel and
accessories for the limited shelf-space available for the display
of such product to the consumer.  Moreover, the general
availability of contract manufacturing capacity allows ease of
access by new market entrants.  Some of the Company's competitors
are larger, have achieved greater recognition for their brand
names, have captured greater market share and/or have substantially
greater financial, distribution, marketing and other resources than
the Company.

The loss of any of our largest customers could have a material
adverse effect on our financial results.

Although currently no customer comprises more than ten percent of
our customer base, should one of our larger customers be negatively
impacted, it could adversely affect our business. In recent years
the retail industry has experienced consolidation and other
ownership changes.

In the future, retailers may have financial problems or
consolidate, undergo restructurings or reorganizations, or realign
their affiliations, any of which could further increase the
concentration of our customers. The loss of any of our largest
customers, or the bankruptcy or material financial difficulty of
any customer, could have a material adverse effect on our business.
We do not have long-term contracts with any of our customers, and
sales to customers generally occur on an order-by-order basis. As a
result, customers can terminate their relationships with us at any
time or under certain circumstances cancel or delay orders which
could reduce our sales and adversely affect our business condition.

The success of our business depends on our ability to attract and
retain key employees.

The Company is heavily dependent on its current executive officers
and management. The loss of any of our executive officers or
management, including but not limited to, Kenneth Cole, or the
inability to attract and retain qualified personnel could delay the
development and introduction of new products, harm our ability to
sell products, damage the image of our brands and/or prevent us
from executing our business strategy.

Imposition of quotas and fluctuations in exchange rates could
increase our costs and impact our ability to source goods.

The Company's business is subject to risks of doing business
abroad, including, but not limited to, fluctuations in exchange
rates and the imposition of additional regulations relating to
imports, including quotas, duties, taxes and other charges on
imports.

In order to reduce the risk of exchange rate fluctuations, the
Company often enters into forward exchange contracts to protect the
purchase price under its agreements with its manufacturers or
purchases products in United States dollars.  The Company cannot
fully anticipate all of its currency needs and, therefore, cannot
fully protect against the effect of such fluctuations.

<PAGE>

Although the majority of the goods sold by the Company are not
currently subject to quotas, countries in which the Company's
products are manufactured may, from time to time, impose new or
adjust prevailing quotas or other restrictions on exported products
and the United States may impose new duties, tariffs and other
restrictions on imported products, any of which could adversely
affect the Company's operations and its ability to import its
products at the Company's current or increase quantity levels.
Other restrictions on the importation of footwear and the Company's
other products are periodically considered by the United States
Congress and no assurances can be given that tariffs or duties on
the Company's goods may not be raised.  If tariffs are raised in the
future, they will result in higher costs to the Company, and if
import quotas are imposed or made more restrictive, the Company may
not be able to source its goods at historical factories or at
similar prices.

The voting shares of the Company's stock are concentrated in one
majority shareholder.

Currently, Kenneth D. Cole owns approximately 87% of the voting
power and approximately 42% of the outstanding common stock of
the Company.  As a result, Mr. Cole has the ability to control
(i) the election of all of the Company's directors other than the
directors who will be elected by the holders of Class A Common
Stock, voting separately as a class, and (ii) the results of all
other shareholder votes.  Mr. Cole's interests may differ from the
interests of the other stockholders.

War and acts of terrorism could affect our ability to procure, sell
and deliver product.

In the event of war or acts of terrorism or the escalation of
existing hostilities, or if any are threatened, our ability to
procure our products from our manufacturers for sale to our
customers may be negatively affected. We import a substantial
portion of our products from other countries. If it becomes
difficult or impossible to import our products into the countries
in which we sell our products, our sales and profit margins may be
adversely affected. Additionally, war, military responses to future
international conflicts and possible future terrorist attacks may
lead to a downturn in the U.S. and/or international economies,
which could have a material adverse effect on our results of
operations.

Our business is subject to risks associated with sourcing outside
the United States.

Substantially all of our apparel products are produced by
independent manufacturers. We face the risk that these third-party
manufacturers with whom we contract to produce our products may not
produce and deliver our products on a timely basis, or at all. We
cannot be certain that we will not experience operational
difficulties with our manufacturers, such as reductions in the
availability of production capacity, errors in complying with
product specifications, insufficient quality control, and failures
to meet production deadlines or increases in manufacturing costs.
The failure of any manufacturer to perform to our expectations
could result in supply shortages for certain products and harm our
business.

In addition, our foreign manufactures may be adversely effected by
addition factors such as: political instability in countries where
contractors and suppliers are located; imposition of regulations
and quotas relating to imports; imposition of duties, taxes and
other charges on imports; significant fluctuation of the value of
the dollar against foreign currencies; and restrictions on the
transfer of funds to or from foreign countries.

The capacity of our manufacturers to manufacture our products also
is dependent, in part, upon the availability of raw materials. Our
manufacturers may experience shortages of raw materials, which
could result in delays in deliveries of our products by our
manufacturers or in increased costs to us. Any shortage of raw
materials or inability of a manufacturer to manufacture or ship our
products in a timely manner, or at all, could impair our ability to
ship orders of our products in a cost-efficient, timely manner and
could cause us to miss the delivery requirements of our customers.
As a result, we could experience cancellations of orders, refusals
to accept deliveries or reductions in our prices and margins, any
of which could harm our financial performance and results of
operations.

We rely on licensees for revenues, supply of products and
compliance with Company standards.

We license our trademarks to third parties for manufacturing,
marketing, distribution and sale of various products and intend to
expand our licensing programs. While we enter into comprehensive
licensing agreements with our licensees covering product design,
product quality, sourcing, manufacturing, marketing and other
requirements, our licensees may not comply fully with those
agreements. Non-compliance could include marketing products under
our brand names that do not meet our quality and other
requirements or engaging in manufacturing practices that do not
meet our supplier code of conduct. These activities could harm our
brand equity, our reputation and our business.

<PAGE>

In addition, our results could be affected by the results of our
licensees or distributors.  The financial difficulties of any of
our partners or their failure to produce and deliver acceptable
product could have an adverse impact on our business in the future.
In the event of a business failure of any such partner or of the
breakdown of our relationship with any domestic or foreign partner,
there is no guarantee that the Company could replace such business.

Failure to anticipate and maintain proper inventory levels could
have an adverse financial effect on our business.

We maintain an inventory of selected products that we anticipate
will be in high demand.  We may be unable to sell the products we
have ordered in advance from manufacturers or that we have in our
inventory.  Inventory levels in excess of customer demand may
result in inventory write-downs or the sale of excess inventory at
discounted or closeout prices.  These events could significantly
harm our operating results and impair the image of our brands.
Conversely, if we underestimate consumer demand for our products or
if manufacturers fail to supply quality products in a timely
manner, we may experience inventory shortages, which may result in
unfilled orders, negatively impact customer relationships, diminish
brand loyalty and result in lost revenues.

We rely on third parties for distribution and warehousing.

We rely on warehousing and distribution facilities in California
and New Jersey. Any disruption at either of these facilities due to fire,
earthquake, flood, terrorist attack or any other natural or manmade cause,
including operational or financial hardship of the provider, could damage a
portion of our inventory or impair our ability to use our warehousing and
distribution facilities. In addition, we will be transitioning
the facilities in California during the first quarter of 2006, and
although we are working closely with both current and former providers,
we may incur slight delays in product shipments as a result of the
transition. Any of these occurrences could impair our ability to
adequately supply our customers and negatively impact our operating results.

Outcomes of litigation or changes in regulatory control
could impact our financial condition.

From time to time, we may be a party to lawsuits and regulatory
actions relating to our business. Due to the inherent uncertainties
of litigation and regulatory proceedings, we cannot accurately
predict the ultimate outcome of any such proceedings. An
unfavorable outcome could have a material adverse impact on our
business, financial condition and results of operations. In
addition, regardless of the outcome of any litigation or regulatory
proceedings, such proceedings could result in substantial costs and
may require that we devote substantial resources to defend the
Company. Further, changes in government regulations both in the
United States and in the countries in which we operate could have
adverse affects on our business and subject us to additional
regulatory actions.

The loss or infringement of our trademarks and other
proprietary rights could have a material adverse effect on
our operations.

We believe that our trademarks and other proprietary rights are
important to our success and competitive position. Accordingly, we
devote substantial resources to the establishment and protection of
our trademarks on a worldwide basis. There can be no assurances
that such actions taken to establish and protect our trademarks and
other proprietary rights will be adequate to prevent imitation of
our products by others or to prevent others from seeking to block
sales of our products as violative of their trademarks and
proprietary rights. Moreover, there can be no assurances that
others will not assert rights in, or ownership of, our trademarks
and other proprietary rights or that we will be able to
successfully resolve such conflicts. In addition, the laws of
certain foreign countries may not protect proprietary rights to the
same extent as do the laws of the United States. Any litigation
regarding our trademarks could be time consuming and costly, and
the loss of such trademarks and other proprietary rights, or the
loss of the exclusive use of such trademarks and other proprietary
rights, could have a material adverse effect on our operations.

Implementation of management information systems may impact
our financial results.

In 2006 and over the next few years we plan to implement SAP
information management software in our retail operations. The
implementation of such software could be delayed and we may
encounter computer and operational complications in connection with
such implementation that could have a material adverse effect on
our business, financial condition or results of operations.
Difficulties migrating existing systems to the new software could
impact our ability to design, produce and ship our products on a
timely basis.

<PAGE>

Seasonality of our business and the timing of new store openings
could result in fluctuations in our financial performance.

Our business is subject to seasonal fluctuations. Historically,
fourth quarter's sales are typically higher due to holiday
business. Therefore, results of operations for any single quarter
are not necessarily indicative of the results that may be achieved
for a full fiscal year. Quarterly results have been, and in the
future will continue to be, significantly impacted by the timing
of new store openings and their respective pre-opening costs.

Adverse publicity could negatively affect public perception of the
brand.

Our results could be substantially affected by adverse publicity
resulting from our products or our advertising.

Our expectations of growth anticipate new store openings which are
subject to many factors beyond our control.

Future growth in sales and profits in our Consumer Direct division
will depend to some extent on our ability to increase the number of
our stores. The lease negotiation and development timeframes vary
from location to location and can be subject to unforeseen delays.
The number and timing of new stores actually opened during any
given period, and their associated contribution to operating week
growth for the period, will depend on a number of factors
including, but not limited, to: (1) the identification and
availability of suitable locations and leases; (2) the availability
of suitable financing to us and our landlords; (3) the timing of
the delivery of the leased premises to us from our landlords in
order to commence build-out construction activities; (4) the
ability of us and our landlords to obtain all necessary
governmental licenses and permits to construct and operate our
restaurants on a timely basis; (5) our ability to manage the
construction and development costs of new restaurants, and the
availability and/or cost of raw materials; (6) the rectification of
any unforeseen engineering or environmental problems with the
leased premises;  (7)  adverse weather during the construction
period; and (8) the hiring and training of qualified operating
personnel in the local market. Any of the above factors could have
a material adverse impact on our financial condition.


Item 1B.     Unresolved Staff Comments

             None.


Item 2.      Properties

        The Company currently occupies 119,500 square feet at its
worldwide corporate headquarters, located at 603 West 50th Street,
New York, New York.  In April 2004, the Company entered into an
agreement to purchase this office building for $24 million.  The
closing date is scheduled for approximately May 2006.  The specific
timing will be determined by both parties, based on the ability of
the current landlord to satisfy certain terms and conditions.  The
Company also holds a lease for its former executive offices and
showrooms, which expires in December 2006, and is currently under a
subtenant lease agreement, which also expires in December 2006.

       In 2004, the Company entered into a new 10-year lease for 51,000
square feet of office space in Secaucus, New Jersey for its
administrative offices and completed the move in June 2004.  The
former distribution facility was moved to a third-party public
warehouse and distribution center in New Jersey.  In addition to
these two leases, the Company also leases a 23,500 square foot
facility in Secaucus used for outlet store space as well as an
additional distribution warehousing facility. The Company also has
a technical and administrative office in Florence, Italy, and  the
Company opened a similar office in China in 2005.  The Company does
not own or operate any manufacturing facilities.

       As of December 31, 2005, the Company leased space for all of its
53 specialty retail stores (aggregating approximately 243,000
square feet) and 39 outlet stores (aggregating approximately
200,000 square feet).  Generally, the leases provide for an initial
term of five to ten years and certain leases provide for renewal
options permitting the Company to extend the term thereafter.

<PAGE>


Item 3.     Legal Proceedings

      In April 2005, a purported class action lawsuit was filed
against the Company in the Superior Court of California for the
County of San Diego.  The individual plaintiff is a floor
supervisor in one of the Company's retail stores who purports to
bring suit on behalf of him and other similarly situated current
and former floor supervisors.  Among other claims, the plaintiff
alleges that he and other floor supervisors worked hours for which
they were entitled to receive, but did not receive, overtime
compensation under California law.  The lawsuit seeks damages,
penalties, restitution, equitable relief, interest and attorneys'
fees and costs.  The Company denies the allegations in the
complaint and plans to defend the action vigorously. The Company does not
believe the outcome will have a material adverse effect on its business
operations.

       In September 2004, a purported class action lawsuit was filed
against the Company in the Superior Court of California for the
County of Los Angeles.  The individual plaintiffs are current or
former store managers or assistant managers who purport to bring
suit on behalf of themselves and other similarly situated store
managers and assistant managers.  Among other claims, the
plaintiffs allege that they worked hours for which they were
entitled to receive, but did not receive, overtime compensation
under California law.  The lawsuit sought damages, penalties,
restitution, reclassification and attorneys' fees and costs.  The
Company reached an agreement in principle to settle the matter, and
in January 2006, the parties filed a fully executed Stipulation of
Class Settlement and Release.  In addition, the Court signed and
entered an order granting preliminary approval to the settlement.
The settlement provides for a maximum settlement of $900,000,
including all payments to class members, incentive awards,
attorney's fees and administration costs.  While there is still
uncertainty relating to the ultimate settlement amount, the Company
believes that its reserves as of December 31, 2005 are adequate.

        The Company is, from time to time, a party to other litigation
that arises in the normal course of its business operations.  The
Company is not presently a party to any other litigation that it
believes might have a material adverse effect on its business
operations.

Item 4.    Submission of Matters to a Vote of Security Holders

            None.

<PAGE>

PART II


Item 5.     Market for Registrant's Common Equity, Related
Shareholder Matters, and Issuer Purchases of Equity Securities

       The Company's Class A Common Stock is listed and traded (trading
symbol: KCP) on the New York Stock Exchange ("NYSE").  On March 1,
2006 the closing sale price for the Class A Common Stock was
$27.48.  The following table sets forth the high and low closing
sale prices for the Class A Common Stock for each quarterly period
for 2005 and 2004, as reported on the NYSE Composite Tape:


<TABLE>
<CAPTION>
      2005:                                High	      Low
<S>                                       <C>         <C>
First Quarter                             31.30	      25.90
Second Quarter                            32.32	      28.09
Third Quarter                             35.29	      26.30
Fourth Quarter                            29.60	      23.81

</TABLE>
<TABLE>
<CAPTION>

       2004:                              High		Low
<S>                                       <C>         <C>
First Quarter					36.62		29.15
Second Quarter					36.91		31.64
Third Quarter					34.60		26.98
Fourth Quarter					31.03		25.30

</TABLE>

      The number of shareholders of record of the Company's Class A
Common Stock on March 1, 2006 was 64.

      There were 7 holders of record of the Company's Class B Common
Stock on March 1, 2006.  There is no established public trading
market for the Company's Class B Common Stock.

Dividend Policy

      The payment of any future dividends will be at the discretion of
the Company's Board of Directors and will depend, among other
things, upon, future earnings, operations, capital requirements,
proposed tax legislation, the financial condition of the Company
and general business conditions.

      The Company established a quarterly dividend policy in 2003 and
made the following dividend payments to shareholders on record as
of the close of business on the dates noted during the fiscal years
ended December 31, 2005 and December 31, 2004:

            $0.18 per share   November 23, 2005
            $0.16 per share   August 25, 2005
            $0.16 per share   May 24, 2005
            $0.16 per share   March 9, 2005
            $0.14 per share   November 24, 2004
            $0.14 per share   August 24, 2004
            $0.12 per share   May 24, 2004
            $0.12 per share   March 9, 2004

      On March 1, 2006, the Board of Directors declared a quarterly
cash dividend of $0.18 per share, payable on March 30, 2006, to
shareholders of record at the close of business on March 9, 2006.

<PAGE>


        The Company had the following securities authorized for
issuance under equity compensation plans as of December 31, 2005:

Plan Category       Number of        Weighted-average   Number of securities
                    securities to    exercise price     remaining available
                    be issued upon   of outstanding     for future issuance
                    exercise of      options, warrants, under equity
                    outstanding      and rights         compensation plans
                    options,                            (excluding securities
                    warrants, and                       reflected in
                    rights                              column (a))

                     (a)             (b)                (c)


Equity              2,600,717        $23.64              1,486,855
compensation
plans approved
by security
holders


Equity              N/A              N/A                 N/A
compensation
plans not
approved by
security
holders

<PAGE>




Item 6.     Selected Financial Data

      The following selected financial data has been derived from the
consolidated financial statements of the Company and should be read
in conjunction with the consolidated financial statements and notes
thereto that appear elsewhere in this Annual Report and in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" set forth in Item 7.  (Amounts, except for
per share amounts, are in thousands.)

<TABLE>
<CAPTION>

                        2005       2004       2003       2002       2001

Income Statement Data:
<S>                   <C>       <C>        <C>        <C>       <C>
Net sales              $474,060  $473,438   $430,101   $404,336  $365,809
Royalty revenue          43,983    42,763     38,252     28,713    22,116
Net revenue             518,043   516,201    468,353    433,049   387,925

Cost of goods sold      283,727   284,817    258,457    235,255   217,221
Gross profit (2)	      234,316   231,384    209,896    197,794   170,704
Selling and general
administrative
expenses (1)            188,953   174,519    157,824    152,618   145,919
Impairment of long-
lived assets              --          448      1,153      4,446         --
Operating income	       45,363    56,417     50,919     40,730     24,785
Interest and other
income, net               4,151     1,411        825      1,102      2,135
Income before
provision for income
taxes                    49,514    57,828     51,744     41,832     26,920
Provision for income
Taxes                    15,988    21,976     19,145     15,687     10,304
Net income	             33,526    35,852     32,599     26,145     16,616
Earnings per share:
Basic                     $1.69     $1.79      $1.66      $1.33       $.83
Diluted                   $1.65     $1.74      $1.59      $1.27       $.80
Weighted average
shares outstanding:
Basic                    19,888    20,050     19,609     19,643     19,992
Diluted                  20,318    20,652     20,486     20,590     20,745
Cash dividends per share  $0.66     $0.52      $0.17         --         --

</TABLE>

<TABLE>
<CAPTION>
                         2005      2004        2003       2002       2001
Balance Sheet Data:
<S>                  <C>        <C>         <C>        <C>          <C>
Working capital	    $187,106   $173,007    $154,161   $124,103     $96,709
Cash                    63,747     80,014     111,102     91,549      68,966
Marketable
Securities              66,400     40,000        --         --          --
Inventory               45,465     47,166      44,851     43,724      30,753

Total assets           340,671    304,587     273,841    240,317     201,889
Total debt, including
current maturities       3,000         --          --        171         383
Total shareholders'
equity                 244,660    216,528     196,334    164,902     140,894

</TABLE>


(1)   Includes warehousing and receiving expenses.
(2)   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.


<PAGE>






Item 7.     Management's Discussion and Analysis of Financial
Condition and Results of Operations

     The following discussion and analysis should be read in
conjunction with the consolidated financial statements and the
notes thereto that appear elsewhere in this Annual Report.

Overview

     Kenneth Cole Productions, Inc., designs, sources and markets a
broad range of fashion footwear and handbags and, through license
agreements, designs and markets apparel and accessories under its
Kenneth Cole New York, Kenneth Cole Reaction, Unlisted, Bongo,
and Tribeca brand names.  The Company's products are targeted to
appeal to fashion conscious consumers, reflecting a casual urban
perspective and a contemporary lifestyle uniquely associated with
Kenneth Cole.

     The Company markets its products
to more than 6,000 department and specialty store locations, as
well as through its Consumer Direct business, which includes an
expanding base of retail and outlet stores, consumer catalogs and
interactive websites, including online e-commerce.

     The popularity of the Kenneth Cole brand names among consumers
has enabled the Company to expand its product offerings and
channels of distribution through licensing agreements and offers
through these agreements a lifestyle collection of men's product
categories including tailored clothing, dress shirts, dress pants,
sportswear, neckwear, briefcases, portfolios, jewelry, fragrance,
belts, leather and fabric outerwear, swimwear, sunglasses,
prescription eyewear, watches, fragrance, swimwear, luggage,
hosiery and small leather goods.  Women's product categories
currently being sold pursuant to license agreements include
sportswear, small leather goods, belts, scarves and wraps, hosiery,
leather and fabric outerwear, sunglasses, prescription eyewear,
watches, jewelry, fragrance, swimwear, and luggage.  In addition,
the Company licenses boys' and girls' apparel, as well as
housewares, under the Kenneth Cole Reaction brand.

	The Company recorded record revenues of $518.0 million for the
year ended December 31, 2005.  Diluted earnings per share
decreased 5.2% to $1.65 from $1.74 year over year.  The Company's
revenues for the year have improved over the prior year,
primarily due to new product selection at retail, and continued
success in a wide variety of licensed product classifications.
The Company's Balance Sheet remains strong with $130.1 million in
cash and marketable securities.  Additionally, the Company
expects to continue its quarterly cash dividend, currently set at
$0.18.  The Company continued its new strategic initiative to
reposition the Kenneth Cole New York brand as an accessible
luxury brand. The Company believes that the repositioning of this
brand will take the Company to its next stage of development,
which will place the Company in the best position to benefit from
the consolidation in the retail marketplace, maximize its own
retail store concept and grow internationally.  While this will
enable the Company's brands to reach their potential, it will
take time to fully transition the brand and realize the full
financial benefits. As such, the Company continues to focus on
designing and delivering high quality, fashionable products,
creating efficient and compelling retail environments, and
maintaining close partnerships with its licensees to ensure brand
quality and distribution integrity.

Critical Accounting Policies and Estimates

General

       The Company's management's discussion and analysis of
its financial condition and results of operations are
based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting
principles generally accepted in the United States.  The
preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities.  On an on-going basis, the
Company evaluates its estimates, including those related to product
returns, bad debts, inventories, income taxes, financing
operations, contingencies and litigation.  The Company bases its
estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily
apparent from other sources.  Actual results may differ from these
estimates under different assumptions or conditions.

<PAGE>

     The Company believes the following critical accounting policies
affect its more significant judgments and estimates used in the
preparation of its consolidated financial statements.

Inventory

     The Company writes down its inventory for estimated obsolescence
equal to the difference between the cost of inventory and
the estimated market value based upon assumptions about future
demand and market conditions.  If actual market conditions are
less favorable than those projected by management,
additional inventory write-downs may be required.

Sales Returns and Allowances

     The Company's ability to collect
factor chargebacks for deductions taken by its customers for
returns, discounts, and allowances as well as potential future
customer deductions is significant to its operations.  The Company
reserves against known chargebacks as well as potential future
customer deductions based on a combination of historical activity
and current market conditions.  Actual results may differ from
these estimates under different assumptions or conditions, which
may have a significant impact on the Company's results.

Allowance for Doubtful Accounts

     The Company maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its customers to
make required payments, as well as royalties and advertising
revenues from its licensing partners.  These customers include non-
factored accounts and credit card receivables from third party
service providers.  If the financial conditions of these customers
were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.

Income Taxes

     The Company's income taxes are routinely under audit by federal,
state, or local authorities.  These audits include questioning
of the timing and amount of deductions and the allocation
of income among various tax jurisdictions.  Based on its
annual evaluations of tax positions, the Company believes
it has appropriately accrued for probable exposures.  To
the extent the Company is required to pay amounts in excess
of recorded income tax liabilities, the Company's effective
tax rate in a given financial statement period could be materially
impacted.

Litigation

      The Company is periodically involved in various
legal actions arising in the normal course of business.
Management is required to assess the probability of any
adverse judgements as well as the potential range of any losses.
Management determines the required accruals after a careful review
of the facts of each significant legal action.  The Company's
accruals may change in the future due to new developments in these
matters.

Contingencies

      In the ordinary course of business, the Company is
involved in and subject to compliance and regulatory reviews
and audits by numerous authorities, agencies and other governmental
agents and entities from various jurisdictions.  The Company is
required to assess the likelihood of any adverse outcomes of these
matters.  A determination of the amount of reserves required, if
any, for these reviews is made after careful analysis of each
individual issue.  The reserves may change in the future due to
new developments or final resolution in each matter, which may
have a significant impact on the Company's results.










New Accounting and Tax Pronouncements

      In 2004, Internal Revenue Code Section 965 was enacted, as
part of the American Jobs Creation Act. This is a temporary
provision that allows U.S. companies to repatriate earnings from
their foreign subsidiaries at a reduced tax rate provided that
specified conditions and restrictions are satisfied.  In addition,
FASB Staff Position FAS 109-2 was issued to provide accounting and
disclosure guidance relating to the repatriation provision.  In
2005, the Company's Board of Directors approved and adopted a
repatriation plan and, as such, the Company repatriated $12.5
million of unremitted foreign earnings, which resulted in a tax
benefit of approximately $3.0 million for the year ended December
31, 2005, as a result of the Company providing for taxes for the
foreign earnings at the prior statutory rate.

<PAGE>

    In November 2004, the FASB issued Statement of Financial
Accounting Standards No. 151, "Inventory Costs - An Amendment of
ARB No. 43, Chapter 4" ("SFAS 151").  SFAS 151 amends the guidance
in ARB No. 43, Chapter 4, "Inventory Pricing", to clarify the
accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage). SFAS 151 is
effective for fiscal years beginning after June 15, 2005 and, as
such, the Company adopted SFAS 151 on January 1, 2006.   The
adoption of SFAS 151 did not have a material impact on the
Company's consolidated results of operations, financial position,
or cash flows.

    In December 2004, the FASB issued Statement of Financial
Accounting Standards No. 123R, "Share-based Payments" ("SFAS 123R")
which supersedes APB Opinion No. 25. SFAS 123R requires all share-
based payments, including grants of employee stock options, to be
recognized in the financial statements based on their fair values.
Under SFAS 123R, public companies will be required to measure the
cost of services received in exchange for stock options and similar
awards based on the grant-date fair value of the award and
recognize this cost in the income statement over the period during
which an award recipient is required to provide service in exchange
for the award. The pro forma disclosures previously permitted under
SFAS 123 no longer will be an alternative to financial statement
recognition. Under SFAS 123R, the Company must determine the
appropriate fair value model to be used for valuing share-based
payments, the amortization method for compensation cost and the
transition method to be used at the date of adoption. The
transition methods include modified prospective and retroactive
adoption options. The Company adopted SFAS 123R on January 1, 2006
using the modified prospective method. Under this method, the
Company will recognize compensation cost, on a prospective basis,
for the portion of outstanding awards for which the requisite
service has not yet been rendered as of January 1, 2006, based upon
the grant-date fair value of those awards calculated under SFAS 123
for pro forma disclosure purposes. Earnings and diluted earnings
per share are expected to decrease by approximately $5.4 million
and $0.16, respectively, as a result of share-based grants in 2006, and
those grants as of December 31, 2005 for which compensation expense
has not been recognized under SFAS 123.

    Also in December 2004, the FASB issued SFAS No. 153, Exchanges
of Nonmonetary Assets-An Amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions ("SFAS 153"). SFAS 153
eliminates the exception from fair value measurement for
nonmonetary exchanges of similar productive assets in
paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary
Transactions, and replaces it with an exception for exchanges that
do not have commercial substance. SFAS 153 specifies that a
nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a
result of the exchange. The adoption of SFAS 153 on January 1,
2006, did not have a material impact on the Company's consolidated
results of operations or financial condition.

    In May 2005, the FASB issued SFAS No. 154, "Accounting Changes
and Error Corrections," ("SFAS 154"), a replacement of Accounting
Principles Board Opinion (APB) No. 20, Accounting Changes, and FASB
Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements." This Statement requires retrospective application to
prior periods' financial statements of a change in accounting
principle. It applies both to voluntary changes and to changes
required by an accounting pronouncement if the pronouncement does
not include specific transition provisions. APB 20 previously
required that most voluntary changes in accounting principles be
recognized by recording the cumulative effect of a change in
accounting principle. SFAS 154 is effective for fiscal years
beginning after December 15, 2005. The Company adopted this
statement on January 1, 2006, and does not anticipate that it will
have a material effect on the Company's consolidated results of
operations, financial position, or cash flows.

     In March 2005, the Financial Accounting Standards Board issued
FASB Interpretation No. 47, "Accounting for Conditional Asset
Retirement Obligations ("FIN 47").  FIN 47 is an interpretation of
Statement of Financial Accounting Standards No. 143, "Accounting
for Asset Retirement Obligations" ("SFAS 143"), and clarifies the
term conditional asset retirement obligation as used in SFAS 143,
which refers to a legal obligation to perform an asset retirement
activity in which the timing and/or method of settlement are
conditional on a future event that may or may not be within the
control of the entity.  Accordingly, the Company is required to
identify any conditional asset retirement obligations it may have
with respect to its long-lived assets, and recognize a liability
for the fair value of any conditional asset retirement obligations,
if the fair value of the liability can be reasonably estimated.
FIN 47 is effective for the fiscal year ending December 31, 2005.
As such, the Company adopted FIN 47 in 2005, which did not impact
the Company's results of operations, financial position, or cash
flows.

<PAGE>




Results of Operations

	The following table sets forth certain operating data of the
Company as a percentage of net revenues for the periods indicated
below:

<TABLE>
<CAPTION>
                                   2005        2004       2003
<S>                               <C>         <C>        <C>
Net sales                          91.5%       91.7%      91.8%
Royalty revenue                     8.5         8.3        8.2
                                    ---         ---        ---
Net revenues                      100.0       100.0      100.0
Cost of goods sold                 54.8        55.2       55.2
                                    ---         ---        ---
Gross profit (1)                   45.2        44.8       44.8
Selling, general and
administrative expenses            36.5        33.8       33.7
Impairment of long-lived assets     0.0         0.1        0.2
Operating income                    8.7        10.9       10.9
Income before provision for
income taxes                        9.6        11.2       11.1
Provision for income taxes          3.1         4.3        4.1
                                    ---         ---        ---
Net income                          6.5%        6.9%       7.0%

</TABLE>

(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.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

      Net revenues increased $1.8 million, or 0.4%, to $518.0 million
in 2005 from $516.2 million in 2004.  This increase was due to
revenue increases in the Company's Wholesale and Licensing business
segments, partially offset by decreases in the Company's Consumer
Direct business.

      Wholesale net sales (excluding sales to the Consumer Direct
business segment) increased $4.6 million, or 1.6%, to $284.0
million in 2005 from $279.4 million in 2004.  The increase was
primarily attributable to a 23.9% increase in Kenneth Cole Reaction
ladies' and children's footwear, and an approximate 9.0% growth
across its handbags businesses, as compared to December 31, 2004.
This growth was offset by decreases of 15.8% in Kenneth Cole New
York men's and women's footwear, and 11.7% in Unlisted footwear
categories.   In 2005, the Company accelerated its strategic
initiative to reposition the Kenneth Cole New York brand as an
accessible luxury brand and reduce the number of doors it was
willing to distribute to. The Company believes that this transition
is necessary to improve the Company's Wholesale net sales.
The Company will continue to focus on improving product offerings,
advertising campaigns, marketing efforts, website, catalogs and
growing retail presence, combined with the marketing efforts of its
licensees, which it believes will be significant factors in
strengthening and defining all of its distinct brands, including
Kenneth Cole Reaction, Tribeca, and Bongo across all product
classifications, thereby increasing consumer demand for these
brands in the future.

      Net sales in the Company's Consumer Direct segment decreased
$3.9 million, or 2.0%, to $190.1 million in 2005 from $194.0
million in 2004.  The decrease was primarily due to a decrease in
retail store sales of $5.4 million, or 2.9%, as compared to year
ended December 31, 2004.  Comparable store sales decreased by $13.2
million, or 7.5%, offset by an increase of $7.8 million of new
store sales in 2005 plus the portion of 2005 sales for stores not
open for all of 2004.  In addition, the retail store sales decline
was offset by Catalog/Internet and Gift Program sales, which
increased by 21.5% for the year ended December 31, 2005.  The
Company believes the decrease in net sales in the Consumer Direct
segment is primarily due to the Company's repositioning of the
Kenneth Cole New York brand in its retail stores, which was
accelerated in 2005.  The Company believes well-executed Kenneth
Cole New York products will be embraced by its customers, as
illustrated by the success of the Kenneth Cole New York handbags
business. However, some of the other products were not as well
executed, and did not provide the consumer with the Company's
highest standard of price and value, and were not well received.
The Company is focusing on the design, price and value of its
Kenneth Cole New York products for 2006.  In an effort to maintain,
solidify, and build positive sales results, the Company will
continue to analyze inventory, focus on products and further
scrutinize consumer trends, as well as concentrate on quality,
style and price to continue customer acceptance of its brand
repositioning strategy.

<PAGE>

      Royalty revenue increased $1.2 million, or 2.8%, to $44.0
million in 2005 from $42.8 million in 2004.  The increase was
primarily from incremental minimum royalties from the Company's
existing licensees, sales increases from fragrance and children's
apparel, and its European licensee, offset by a reduction in
minimum royalties from the transition of the women's sportswear
licensee. Brand repositioning has slowed growth in 2005, as a
result of the Company's strategic plan. However, the Company
believes consumers look toward brands they know and feel are
compatible with their lifestyles; therefore the synergies from its
efforts to reinforce its brand identities through greater marketing
efforts, by itself and its licensees across all product categories,
will continue to strengthen and define its brands to improve name
recognition allowing growth in sales both domestically and
internationally throughout 2006.

       Consolidated gross profit increased to 45.2% in 2005, as a
percentage of net revenues, compared to 44.8% in 2004.  The
increase was primarily a result of an improvement in Consumer
Direct margins and the change in mix of the Company's net revenues
from its Wholesale, Consumer Direct and Licensing segments.  The
Consumer Direct segment's revenues decreased as a percentage of net
revenues, to 36.7%, for the year ended December 31, 2005, from
37.6% for the year ended December 31, 2004, while the revenues in
the Wholesale segment, which operates at a lower gross profit
percentage as compared to the Consumer Direct segment, increased as
a percentage of net revenues to 54.8% for the year ended December
31, 2005, compared to 54.1% for the year ended December 31, 2004.
The revenues in the Licensing segment, which carries no cost of
goods sold, increased as a percentage of revenue to 8.5% from the
year ended December 31, 2005 compared to 8.3% for the year ended
December 31, 2004.  Consumer Direct segment margins increased from
higher price points on better quality products, as part of the
Company's strategic initiative to reposition Kenneth Cole New York
as an accessible luxury brand.

      Selling, general and administrative expenses, including
warehousing and receiving expenses ("SG&A"), increased $14.5
million, or 8.3%, to $189.0 million (or 36.5% of net revenues) in
2005 from $174.5 million (or 33.8% of net revenues) in 2004, which
includes severance costs of approximately $0.8 million in 2005.
SG&A, as a percentage of net revenues, increased primarily due to
investments in people and systems, increases in fixed costs from
new and expanding retail stores, and the Company's loss of leverage
on its comparable stores' sales base.  Included within SG&A for the
year ended December 31, 2004 was a one-time cost of $1.1 million
associated with the closing and transition of the Company's east
cost distribution center to a third-party service provider.

      The Company did not record asset impairment charges for the
year ended December 31, 2005, as compared to the year ended
December 31, 2004, in which the Company recorded approximately $0.5
million for the write-down of stores' leasehold improvements,
furniture, and fixtures in the Company's Florida Mall store,
located in Orlando, Florida and the Lexington Avenue store located
in New York City.

      Interest and other income increased to $4.2 million for the year
ended December 31, 2005 from $1.4 million in 2004. The increase was
primarily due to a $1.2 million gain on the sale of marketable
securities during the year ended December 31, 2005 and an average
higher rate of return on investments.

      The Company's effective tax rate decreased to 32.3% for the year
ended December 31, 2005 from 38.0% for the year ended December 31,
2004, as a result of a temporary provision that allows U.S.
companies to repatriate earnings from their foreign subsidiaries at
a reduced tax. The Company repatriated approximately $12.5 million
of prior years' foreign earnings, which resulted in approximately
$3.0 million in tax savings for the year ended December 31, 2005.

      As a result of the foregoing, net income decreased by $2.4
million, or 6.7%, to $33.5 million (6.5% of net revenue), for the
year ended December 31, 2005, from $35.9 million (6.9% of net
revenue).

<PAGE>

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
      Net revenues increased $47.8 million, or 10.2%, to $516.2
million in 2004 from $468.4 million in 2003.  This increase was due
to revenue increases in each of the Company's business segments:
Wholesale, Consumer Direct and Licensing.

      Wholesale net sales (excluding sales to the Consumer Direct
business segment) increased $24.8 million, or 9.7%, to $279.4
million in 2004 from $254.6 million in 2003.  This increase was
attributable to improved sales across the Company's footwear
brands:  Kenneth Cole New York, Kenneth Cole Reaction, Bongo
licensed footwear and the handbag businesses.  This growth was
offset by a 15.6% decline in Unlisted footwear.  The Company
believes that selling products under these trademark names, among
others, to multiple demographics through several distribution
channels has improved the Company's wholesale net sales.  In
addition, the improvement of sell-thrus at retail from customer
acceptance also contributed to the increase, as well as the
Company's initiatives in repositioning its handbag businesses.  The
Company will continue to focus on improving product offerings,
advertising campaigns, marketing efforts, website, catalogs and
growing retail presence, combined with the marketing efforts of its
licensees, which it believes will be significant factors to
strengthen and define its distinct brands, Kenneth Cole New York,
Kenneth Cole Reaction, Unlisted and Bongo across all product
classifications, thereby increasing consumer demand for the
Company's brands in the future.  In addition, the Company believes
that the launch of Tribeca will also contribute to the Company's
growth.

      Net sales in the Company's Consumer Direct segment increased
$18.4 million, or 10.5%, to $194.0 million in 2004 from $175.6
million in 2003.  Of the total increase, $10.7 million was
attributable to new store sales in 2004 plus that portion of 2004
sales for stores not open for all of 2003, as well as an increase
of $4.6 million or 2.8% in comparable store sales.  The remaining
sales increase of $3.1 million was primarily derived from the
Company's Corporate Gift Program.  The Company believes the
increase in net sales in the Consumer Direct segment is due in part
to the economic strengthening generally seen throughout the retail
and apparel industry and direct merchandising initiatives at its
outlets.  In an effort to maintain, solidify, and build on the
positive sales results, the Company will continue to analyze
inventory, focus on products and further scrutinize consumer
trends.

      Royalty revenue increased $4.6 million, or 12.0%, to $42.8
million in 2004 from $38.2 million in 2003.  The increase was
primarily from incremental minimum royalties from the Company's
existing licensees, most significantly women's apparel and
fragrance, and from the Company's new men's casual pants licensee.
This was offset by a decrease in royalties from the men's
sportswear licensee.  The Company believes consumers look toward
brands they know and feel are compatible with their lifestyles.
Therefore, the synergies from its efforts to reinforce its brand
identities through greater marketing efforts, by itself and its
licensees across all product categories, will continue to
strengthen and define the Company's brands to improve name
recognition allowing growth in sales both domestically and
internationally through license partners.

      Consolidated gross profit remained at 44.8%, as a percentage of
net revenues, in 2004 and 2003.  This was primarily a result of an
increase in the percentage of revenue and higher margins
contributed by the Consumer Direct segment, offset by decreased
margins within the Wholesale segment.  The Consumer Direct segment
increased as a percentage of net revenues, to 37.6%, for the year
ended December 31, 2004, from 37.5% for the year ended December 31,
2003, while the wholesale segment, which operates at a lower gross
profit percentage, decreased as a percentage of net revenues to
54.1% for the year ended December 31, 2004, compared to 54.3% for
the year ended December 31, 2003.  Consumer Direct segment margins
increased from merchandising initiatives at its outlet stores, new
assortments, which focus on wear-now products that limit
vulnerability of the mix of products without compromising fashion
and excitement, and a reduction of point of sale promotions.
Wholesale segment margins were lower from the impact the Euro had
on the US dollar, which reduced initial mark-ups in the segment
during the first half of 2004.

      SG&A increased $16.7 million, or 10.6%, to $174.5 million (or
33.8% of net revenues) in 2004 from $157.8 million (or 33.7% of net
revenues) in 2003.   SG&A increased slightly as a percentage of net
revenues, primarily due to professional fees from the
implementation and compliance with the Sarbanes-Oxley Act of 2002
and higher labor costs in the Company's Wholesale and Licensing
business segments.

<PAGE>
       The Company recorded asset impairment charges of approximately
$0.5 million and $1.2 million for the years ended December 31, 2004
and 2003, respectively, for the Company's Florida Mall store,
located in Orlando, Florida and the Lexington Avenue store located
in New York City.  This asset impairment charge equaled 0.1% of net
revenues for the year ended December 31, 2004 and 0.2% of net
revenues for the year ended December 31, 2003, and is included as a
separate item in the Consolidated Statement of Income, within
operating income.  The impairment related to the write-down of the
stores' leasehold improvements, furniture, and fixtures.

      Interest and other income increased to $1.4 million for the year
ended December 31, 2004 from $0.8 million in 2003.  The increase is
the result of higher average cash balances.  In addition, average
short-term interest rates have increased throughout 2004 improving
investment rates of returns.

      The Company's effective tax rate increased to 38.0% for the year
ended December 31, 2004 from 37.0% for the year ended December 31,
2003.  The increase was a result of changes in tax laws from state
and local jurisdictions to which the Company's earnings are
subject.

      As a result of the foregoing, net income increased $3.3 million,
or 10.0%, to $35.9 million (6.9% of net revenue), which includes an
asset impairment charge of $0.5 million for the year ended December
31, 2004, from $32.6 million (7.0% of net revenue), which included
an asset impairment charge of $1.2 million, for the year ended
December 31, 2003.


Liquidity and Capital Resources

       The Company's cash requirements are generated primarily from
working capital needs, retail expansion, enhanced technology, and
other corporate activities.  The Company primarily relies upon
internally generated cash flows from operations to finance its
operations and growth; however, it also has the ability to borrow
up to $25.0 million under its line of credit.  Cash flows may vary
from time to time as a result of seasonal requirements of
inventory, the timing of the delivery of merchandise to customers
and the level of accounts receivable and payable balances.  At
December 31, 2005, working capital was $187.1 million compared to
$173.0 million at December 31, 2004.

      Net cash provided by operating activities was $33.9 million for
the year ended December 31, 2005 compared to $37.9 million for the
year ended December 31, 2004.  This decrease was primarily
attributable to decrease in net income offset by the benefit for
deferred taxes from the dividend repatriation resulting from the
American Jobs Creations Act, as well as the timing of receivables
and payables from operations.

      Net cash used in investing activities decreased to $45.0
million for the year ended December 31, 2005 compared to $50.0
million for the year ended December 31, 2004.  This was
primarily due to the sale of marketable securities, in which the
Company received $16.8 million in proceeds, which was offset by
the purchase of $41.0 million of marketable securities in 2005
versus $40.0 million of purchases in 2004.  Capital expenditures
were approximately $13.9 million and $10.1 million for 2005 and
2004, respectively.  Expenditures on furniture, fixtures, and
leasehold improvements for new retail store openings and
expansions were $8.3 million and $6.9 million in 2005 and 2004,
respectively.  The remaining expenditures were primarily for
leasehold improvements for the renovation of the Company's
corporate headquarters and administrative offices and
information system enhancements.  In addition, $6 million was
used to purchase six million shares of Bernard Chaus, Inc., in
connection with the Company's licensing agreement and strategic
relationship with Bernard Chaus, Inc.

      Net cash used in financing activities was $5.1 million for
the year ended December 31, 2005 compared to $19.0 million for
the year ended December 31, 2004.  The decrease is primarily
attributable to the Company's repurchase of 500,000 of its
treasury shares for $13.9 million in 2004.  This was offset by
cash dividend payments to Class A and B Common Stock
shareholders of $13.1 million in 2005 compared to $10.5 million
in 2004. The Company also received proceeds of $4.7 million for
stock option exercises in 2005 compared to $5.2 million in 2004.
In addition, the Company entered into a short-term loan
agreement related to the Company's repatriation plan and
received $3.0 million in proceeds.

      The Company currently sells substantially all of its accounts
receivable to two factors without recourse. In circumstances where
a customer's account cannot be factored without recourse, the
Company may take other measures to reduce its credit exposure,
which could include requiring the customer to pay in advance, or to
provide a letter of credit covering the sales price of the
merchandise ordered.

<PAGE>

      The Company's material obligations under contractual agreements,
primarily commitments for future payments under operating lease
agreements as of December 31, 2005 are summarized as follows:

<TABLE>
                         Payments Due by Period

              Total          1 year      2-3 years     4-5 years   After 5
                             or less                               years
<S>        <C>           <C>           <C>          <C>          <C>

Operating
Leases and
Other
Obligations $215,487,000  $27,713,000   $54,161,000  $48,990,000  $84,623,000
Purchase
Obligations   61,238,000   61,238,000
Building
Purchase
Commitment    24,000,000   24,000,000
Short-term
Borrowings     3,000,000    3,000,000
             -----------  -----------  ------------  -----------  -----------
Total
Contractual
Obligations  $303,725,000 $115,951,000  $54,161,000  $48,990,000  $84,623,000

</TABLE>

      During 2006, the Company anticipates opening or expanding
approximately 5 to 10 retail and outlet stores.  These new and
expanded stores will require approximately $9.5 million in
aggregate capital expenditures and initial inventory requirements.
The Company also anticipates that it will require increased capital
expenditures to support its information systems over its historical
spend.  The Company signed an agreement with SAP to implement an
integrated business platform across the Company's retail and
outlet stores in 2006.  The estimated expenditures related
to the implementation are expected to be approximately $8.0 million.

      The Company currently has a line of credit, as amended, under
which up to $25.0 million is available to finance working capital
requirements and letters of credit to finance the Company's
inventory purchases. Borrowings available under the line of credit
are determined by a specified percentage of eligible accounts
receivable and inventories and bear interest at (i) the higher of
The Bank of New York's prime lending rate or the Federal Funds rate
plus 0.5% at the date of borrowing or (ii) a negotiated rate. In
connection with the line of credit, the Company has agreed to
eliminate all the outstanding borrowings under the facility for at
least 30 consecutive days during each calendar year.  In addition,
borrowings under the line of credit are secured by certain
receivables of the Company.  The Company had no outstanding
advances during 2005 and 2004 under this line of credit; however
amounts available under the line were reduced to $18.3 million by
$6.7 million standby letters of credit at December 31, 2005.

      In 2005, in connection with the Company's tax repatriation plan,
one of the Company's foreign subsidiaries entered into a promissory note
with a financial institution, which provided the foreign subsidiary with
$3,000,000. The note is due in September 2006. Interest is payable monthly
at an annual rate equal to the greater of the prime rate in effect on
such date or the Federal Funds Rate in effect on such date plus
0.50%.  The agreement contains a number of customary covenants and
events of default.  Upon the occurrence of an event of default, all
borrowings and accrued interest shall become immediately due and
payable.  In addition, the Company entered into a Cash Collateral
Pledge Agreement, for $3,000,000, with a financial institution,
which serves as collateral on the loan to the foreign subsidiary.

	In 2004, the Company entered into an agreement to purchase the
office building that it is currently leasing for its corporate
headquarters in New York City providing approximately 119,500
square feet of office space for approximately $24 million.  The
closing date is scheduled for approximately May 2006, the specific
timing to be determined by the parties, based on the ability of the
current landlord to satisfy certain terms and conditions.  The
Company has incurred approximately $18.2 million as of December 31,
2005 in capital improvements and furniture expenditures in
connection with this purchase.

	Also in 2004, the Company entered into a 10-year lease for its
administrative offices located in New Jersey, for which it incurred
approximately $0.2 million and $1.0 million in capital improvements
and expenditures during 2005 and 2004, respectively.

	The Company believes that it will be able to satisfy its current
expected cash requirements for 2006, including requirements for its
retail expansion, corporate and administrative office build-outs,
the purchase of the New York City corporate headquarters, enhanced
information systems and the payments of its quarterly cash
dividend, primarily with cash flow from operations and cash on
hand.

<PAGE>



Exchange Rates

      The Company routinely enters into forward exchange contracts for
its future purchases of inventory denominated in foreign
currencies, primarily the Euro.  At December 31, 2005, forward
exchange contracts with a notional value totaling $7.0 million were
outstanding with settlement dates ranging from January 2006 through
May 2006.  Gains and losses on forward exchange contracts that are
used for hedges are accounted for on the balance sheet as inventory
and an adjustment to equity, and are subsequently accounted for as
part of the purchase price of the inventory upon execution of the
contract.  At December 31, 2005, the unrealized loss on these
outstanding forward contracts is approximately $184,000, net of
taxes, which is included in Accumulated Other Comprehensive Income
in the Statement of Changes in Shareholders' Equity and a decrease to
inventory, which is the underlying exposure on the consolidated
balance sheet.  The Company expects to continue to routinely enter into
additional foreign exchange contracts throughout the year.  While
the Company believes that its current procedures with respect to
the reduction of risk associated with currency exchange rate
fluctuations are adequate, there can be no assurance that such
fluctuations will not have a material adverse effect on the results
of operations of the Company in the future.

      Inventory from contract manufacturers in the Far East and Brazil
are purchased in United States dollars and the recent fluctuations
of many of these currencies against the United States dollar has
not had any material adverse impact on the Company.  However,
future purchase prices for the Company's products may be impacted
by fluctuations in the exchange rate between the United States
dollar and the local currencies of the contract manufacturer, which
may affect the Company's cost of goods in the future.  The Company
does not believe the potential effects of such fluctuations would
have a material adverse effect on the Company.

Effects of Inflation

      The Company does not believe that the relatively low rates of
inflation experienced over the last few years in the United States,
where it primarily competes, have had a significant effect on
revenues or profitability.


Item 7A.      Quantitative and Qualitative Disclosures about Market Risk

      The Company does not believe it has a material exposure to
market risk.  The Company is primarily exposed to currency exchange
rate risks with respect to its inventory transactions denominated
in Euro.  Business activities in various currencies expose the
Company to the risk that the eventual net dollar cash flows from
transactions with foreign suppliers denominated in foreign
currencies may be adversely affected by changes in currency rates.
The Company manages these risks by utilizing foreign exchange
contracts.  The Company does not enter into foreign currency
transactions for speculative purposes.

      At December 31, 2005, the Company had forward exchange contracts
totaling with notional values $7.0 million, which resulted in an
unrealized loss of approximately $184,000, net of taxes.  The
Company's earnings may also be affected by changes in short-term
interest rates as a result of borrowings under its line of credit
facility.  A two or less percentage point increase in interest
rates affecting the Company's credit facility would not have had a
material effect on the Company's 2005 and 2004 net income.


Item 8.      Financial Statements and Supplementary Data

      See page F-1 for an index to the consolidated financial
statements, the Report of Management and the Reports of the
Registered Public Accounting Firm submitted as part of this Annual
Report.


Item 9.      Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure

      None.

<PAGE>

Item 9A.      Controls and Procedures

Evaluation of Disclosure Controls and Procedures

       As of December 31, 2005 the Company's Chief Executive Officer
and Chief Financial Officer, carried out an evaluation of the
effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-
15(e) of the Securities Exchange Act of 1934, as amended) and have
concluded that the Company's disclosure controls and procedures
were effective and designed to ensure that material information
relating to the Company and the Company's consolidated subsidiaries
would be made known to them by others within those entities to
allow timely decisions regarding required disclosures.

Management's Report on Internal Control over Financial Reporting

      The Company's management is responsible for establishing and
maintaining adequate internal control over financial reporting, as
such term is defined in Rules 13a-15(f) and 15d-15(f) of the
Securities Exchange Act of 1934, as amended.  Under the supervision
and with the participation of Management, including the Chief
Executive Officer and Chief Financial Officer, the Company
conducted an evaluation of the effectiveness of our internal
control over financial reporting as of December 31, 2005 based on
the framework in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).  Based on that evaluation, management concluded
that the Company's internal control over financial reporting was
effective as of December 31, 2005.

      Management's assessment of the effectiveness of our internal
control over financial reporting as of December 31, 2005 has been
audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in their report which is included
herein.

Changes in Internal Control over Financial Reporting

      There were no changes in the Company's internal controls over
financial reporting during our last fiscal quarter that has
materially affected, or is reasonably likely to materially affect
the Company's internal control over financial reporting.

Item 9B.      Other Information

       None.

                              PART III

Item 10.     Directors and Executive Officers of the Registrant

      Except for the information regarding directors and executive
officers of the registrant, which is included in Part I, the
information required by this item will be contained in the
Company's Proxy Statement for its Annual Shareholders Meeting to be
held May 23, 2006 to be filed with the Securities and Exchange
Commission within 120 days after December 31, 2005 and is
incorporated herein by reference in response to this item.


Item 11.      Executive Compensation

      The information required by this item will be contained in the
Company's Proxy Statement for its Annual Shareholders Meeting to be
held May 23, 2006 to be filed with the Securities and Exchange
Commission within 120 days after December 31, 2005 and is
incorporated herein by reference in response to this item.

<PAGE>

Item 12.      Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters

      The information required by this item will be contained in the
Company's Proxy Statement for its Annual Shareholders Meeting to be
held May 23, 2006 to be filed with the Securities and Exchange
Commission within 120 days after December 31, 2005 and is
incorporated herein by reference in response to this item.


Item 13.      Certain Relationships and Related Transactions

      The information required by this item will be contained in the
Company's Proxy Statement for its Annual Shareholders Meeting to be
held May 23, 2006 to be filed with the Securities and Exchange
Commission within 120 days after December 31, 2005, and is
incorporated herein by reference in response to this item.

Item 14.      Principal Accountant Fees and Services

      The information required by this item will be contained in the
Company's Proxy Statement for its Annual Shareholders Meeting to be
held May 23, 2006 to be filed with the Securities and Exchange
Commission within 120 days after December 31, 2005 and is
incorporated herein by reference in response to this item.


                                PART IV

Item 15.      Exhibits and Financial Statement Schedules

(a)     (1) See page F-1 for an index to the consolidated financial
statements submitted as part of this Annual Report.

       (2) Schedule II - Valuation and Qualifying Accounts

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

        (3) The following exhibits are included in this report:


     Exhibit
       No.                                        Description

      3.01 	-Restated Certificate of Incorporation of Kenneth Cole
Productions, Inc.; Certificate of Merger of Cole Fifth
Avenue, Inc. into Kenneth Cole Productions, Inc.; Certificate
of Merger of Cole Productions, Inc. into Kenneth Cole
Productions, Inc.; Certificate of Merger of Cole Sunset, Inc.
into Kenneth Cole Productions, Inc.; Certificate of Merger of
Cole Union Street, Inc. into Kenneth Cole Productions, Inc.;
Certificate of Merger of Cole West, Inc. into Kenneth Cole
Productions, Inc.; Certificate of Merger of Kenneth Cole
Woodbury, Inc. into Kenneth Cole Productions, Inc.;
Certificate of Merger of Kenneth Cole Leather Goods, Inc.
into Kenneth Cole Productions, Inc.; Certificate of Merger of
Unlisted into Kenneth Cole Productions, Inc. (Incorporated by
reference to Exhibit 3.01 to the Company's Registration
Statement on Form S-1, Registration No. 33-77636).
      3.02 	-By-laws. (Incorporated by reference to Exhibit 3.02 to the
Company's Registration Statement on Form S-1, Registration
No. 33-77636).
      4.01 	-Specimen of Class A Common Stock Certificate. (Incorporated
by reference to Exhibit 4.01 to the Company's Registration
Statement on Form S-1, Registration No. 33-77636).
      10.01 -Tax Matters Agreement, dated as of June 1, 1994, among
Kenneth Cole Productions, Inc., Kenneth D. Cole, Paul Blum
and Stanley A. Mayer. (Incorporated by reference to Exhibit
10.01 to the Company's Registration Statement on Form S-1,
Registration No. 33-77636).

<PAGE>

      10.02	-Term Loan Agreement, dated as of May 26, 1994, by and among
Kenneth Cole Productions, Inc., Kenneth
Cole Leather Goods, Inc., Unlisted, Inc., Cole West, Inc.,
Kenneth Cole Financial Services, Inc., Kenneth Cole Woodbury,
Inc., Cole Fifth Avenue, Inc., Cole Union Street, Inc. and
The Bank of New York; Promissory Notes, dated May 26, 1994,
issued by each of Kenneth Cole Leather Goods, Inc., Unlisted,
Inc., Cole West, Inc., Kenneth Cole Financial Services, Inc.,
Kenneth Cole Woodbury, Inc., Cole Fifth Avenue, Inc., Cole
Union Street, Inc. to The Bank of New York; Shareholder
Guaranty by and between Kenneth D. Cole and The Bank of New
York, dated as of May 26, 1994; Subordination Agreement by
and among Kenneth D. Cole, Kenneth Cole Productions, Inc.,
Kenneth Cole Leather Goods, Inc., Unlisted, Inc., Cole West,
Inc., Kenneth Cole Financial Services, Inc., Kenneth Cole
Woodbury, Inc., Cole Fifth Avenue, Inc., Cole Union Street,
Inc. and The Bank of New York, dated as of April 13, 1994;
Reinvestment Agreement by and among Kenneth D. Cole, Kenneth
Cole Productions, Inc., Unlisted, Inc., Cole West, Inc.,
Kenneth Cole Financial Services, Inc., Kenneth Cole Woodbury,
Inc., Cole Fifth Avenue, Inc., Cole Union Street, Inc. and
The Bank of New York, dated as of May 26, 1994; Amendment No.
1 to the Term Loan Agreement and the Reinvestment Agreement
by and among Kenneth D. Cole, Kenneth Cole Productions, Inc.,
Cole West, Inc., Kenneth Cole Woodbury, Inc., Cole Fifth
Avenue, Inc., Cole Union Street, Inc., Kenneth Cole Financial
Services, Inc. and The Bank of New York, dated as of May 31,
1994. (Incorporated by reference to Exhibit 10.02 to the
Company's Registration Statement on Form S-1, Registration
No. 33-77636).
      10.03	-Line of Credit Letter, dated January 13, 1994, from The Bank
of New York to Kenneth Cole Productions, Inc., Kenneth Cole
Leather Goods, Inc. and Unlisted, Inc.; $7,500,000 Promissory
Note, dated February 1, 1994 by Kenneth Cole Productions,
Inc., Kenneth Cole Leather Goods, Inc. and Unlisted, Inc.
issued to The Bank of New York; Letter Agreement, dated
December 16, 1993, between The Bank of New York and Kenneth
Cole Productions, Inc., Unlisted, Inc., Kenneth Cole Leather
Goods, Inc., Cole Productions, Inc., Cole West, Inc., Kenneth
Cole Financial Services, Inc., Cole Woodbury, Inc., Cole
Sunset, Inc. and Cole Fifth Avenue, Inc.; General Guarantees,
dated December 16, 1993, in favor of The Bank of New York by
Kenneth Cole Leather Goods, Inc. for Unlisted, Inc., by
Kenneth Cole Leather Goods, Inc. for Kenneth Cole
Productions, Inc., by Unlisted, Inc. for Kenneth Cole
Productions, Inc., by Unlisted, Inc. for Kenneth Cole Leather
Goods, Inc., by Kenneth Cole Productions, Inc. for Kenneth
Cole Leather Goods, Inc., and by Kenneth Cole Productions,
Inc. for Unlisted, Inc.; General Loan and Security
Agreements, dated December 16, 1993, between The Bank of New
York and each of Kenneth Cole Productions, Inc., Kenneth Cole
Leather Goods, Inc. and Unlisted, Inc.; and Personal
Guarantees of Mr. Kenneth D. Cole, dated December 16, 1993,
in favor of The Bank of New York for Kenneth Cole
Productions, Inc., Unlisted, Inc. and Kenneth Cole Leather
Goods, Inc. (Incorporated by reference to Exhibit 10.03 to
the Company's Registration Statement on Form S-1,
Registration No. 33-77636).
			Line of Credit Letter, dated December 9, 1994 from The Bank
of New York to Kenneth Cole Productions, Inc.; $7,500
Promissory Note, dated December 15, 1994 by Kenneth Cole
Productions, Inc. issued to The Bank of New York; Letter of
Termination of Personal Guarantees of Mr. Kenneth D. Cole,
dated December 8, 1994, in favor of The Bank of New York for
Kenneth Cole Productions, Inc., Unlisted, Inc. and Kenneth
Cole Leather Goods, Inc. (Incorporated by reference to
Exhibit 10.03 to the Company's 1994 Form 10-K).
      10.03A -$10,000 Promissory Note, dated July 31, 1995 by Kenneth Cole
Productions, Inc. issued to The Bank of New York. (Previously
filed as Exhibit 10.03A to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference).
      *10.04 -Kenneth Cole Productions, Inc. 1994 Stock Option Plan.
(Incorporated by reference to Exhibit 10.04 to the Company's
Registration Statement on Form S-1, Registration No. 33-
77636).
      *10.05 -Employment Agreement, dated as of April 30, 1994, between
Kenneth Cole Productions, Inc. and Kenneth D. Cole.
(Incorporated by reference to Exhibit 10.05 to the Company's
Registration Statement on Form S-1, Registration No. 33-
77636).
      *10.06 -Employment Agreement, dated as of April 30, 1994, between
Kenneth Cole Productions, Inc. and Paul Blum. (Incorporated
by reference to Exhibit 10.06 to the Company's Registration
Statement on Form S-1, Registration No. 33-77636).
      *10.07 -Employment Agreement, dated as of April 30, 1994,
between Kenneth Cole Productions, Inc. and Stanley A. Mayer;
Stock Option Agreement dated as of March 31, 1994 between
Kenneth Cole Productions, Inc. and Stanley A. Mayer.
(Incorporated by reference to Exhibit 10.07 to the Company's
Registration Statement on Form S-1, Registration No. 33-
77636).

<PAGE>

Stock Option Agreement dated as of June 1, 1994, between
Kenneth Cole Productions, Inc. and Stanley A. Mayer; Stock
Option Agreement dated as of July 7, 1994, between Kenneth
Cole Productions, Inc. and Stanley A. Mayer (Incorporated by
reference to Exhibit 10.07 to the Company's 1994 Form 10-K).
      10.08	-Collective Bargaining Agreement by and between the New York
Industrial Council of the National Fashion Accessories
Association, Inc. and Leather Goods, Plastics, Handbags and
Novelty Workers' Union, Local 1, dated as of April 25, 1987;
Memorandum of Agreement by and between the New York
Industrial Council of the National Fashion Accessories
Association, Inc. and Leather Goods, Plastics, Handbags and
Novelty Workers' Union, Local 1, Division of Local 342-50
United Food and Commercial Workers Union, dated as of June
16, 1993. (Incorporated by reference to Exhibit 10.08 to the
Company's Registration Statement on Form S-1, Registration
No. 33-77636).
      10.09	-Memorandum of Agreement between the New York Industrial
Council of the National Fashion Accessories Association Inc.
and Local 1 Leather Goods, Plastics, Handbags, and Novelty
Workers Union, Division of Local 342-50 United Food and
Commercial Workers Union (Previously filed as Exhibit 10.1 to
the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996 and incorporated herein
by reference).
      *10.10 -Employment Agreement between Kenneth Cole Productions,
Inc., and Paul Blum. (Previously filed as Exhibit 10.6 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1996 and incorporated herein by
reference).
      10.11	-Sublease Agreement, dated June 17, 1996, between Kenneth Cole
Productions, Inc. and Liz Claiborne Accessories, Inc.
(Incorporated by reference to Exhibit 10.11 to the Company's
1996 Form 10-K).
      *10.12 -Amended and Restated Kenneth Cole Productions, Inc. 1994
Stock Option Plan (Previously filed as an Exhibit to the
Registrant's Proxy Statement filed on April 22, 1997 and
incorporated herein by reference).
      *10.13 -Employment Agreement between Kenneth Cole Productions,
Inc. and Susan Hudson (Previously filed as an Exhibit to the
Company's 1997 Form 10-K).
       10.14 -Lease Agreement, dated December 17, 1998, between
Kenneth Cole Productions, Inc. and SAAR Company, LLC.
(Previously filed as Exhibit 10.14 to the Registrants Annual
Report on Form 10-K for the year ended December 31, 1998 and
incorporated by reference).
      10.15 -Common Stock Purchase Agreement, dated July 20, 1999,
between Liz Claiborne, Inc. and Kenneth Cole Productions,
Inc.  (Previously filed as Exhibit 10.01 to the Registrants
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999).
      10.16 -Registration Rights Agreement, dated July 20, 1999,
between Liz Claiborne, Inc. and Kenneth Cole Productions,
Inc.  (Previously filed as Exhibit 10.02 to the Registrants
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999).
      10.17 -License Agreement, dated July 20, 1999, by and between
L.C.K.L., LLC and K.C.P.L., Inc.  (Portions of this exhibit
have been omitted pursuant to a request for confidential
treatment and been filed separately with the Securities and
Exchange Commission.  Such portions are designated by a "*".
(Previously filed as Exhibit 10.03 to the Registrants
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999).
      10.18 -Amended and Restated Employment Agreement, dated as of
September 1, 2000, between Kenneth Cole Productions, Inc. and
Paul Blum (Previously filed as Exhibit 10.10 to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1996 and incorporated herein by
reference).
      10.19 -Kenneth Cole Productions, Inc. Employee Stock Purchase
Plan (Incorporated by reference to the Company's Registration
Statement on Form S-8 Registration No. 33-31868, filed on
March 7, 2000.)
      10.20 -Kenneth Cole Productions, Inc. 2004 Stock Incentive Plan
(Incorporated by reference to the Company's Registration
Statement on Form S-8 Registration No. 333-119101, filed on
September 17, 2004.)
      10.21	-Kenneth Cole Productions, Inc. 2004 Stock Incentive Plan
(Incorporated by reference to the Company's Registration
Statement on Form S-8 Registration No. 333-131724 filed on
February 10, 2006.)
<PAGE>
      10.22	-Stock Purchase Agreement between Kenneth Cole Productions,
Inc. and Bernard Chaus, Inc. dated June 13, 2005 (Previously
filed as Exhibit 10.21 to the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2005
and incorporated herein by reference.)
      10.23 -Termination Agreement between Kenneth Cole Productions, Inc.
and Susan Q. Hudson dated October 5, 2005 (Previously filed
as Exhibit 10.22 to the Registrant's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2005 and
incorporated herein by reference).
      10.24 -Employment Agreement between Kenneth Cole Productions, Inc.
and Richard S. Olicker dated January 3, 2006 (Previously
filed as Exhibit 10.1 to the Registrant's Current Report on
Form 8-K filed on January 10, 2006.)
      10.25	-Employment Agreement between Kenneth Cole Productions, Inc.
and Joel Newman dated February 13, 2006 (Previously filed as
Exhibit 10.1 to the Registrant's Current Report on Form 8-K,
filed on February 16, 2006.)
      +21.01 -List of Subsidiaries.
      +23.01 -Consent of Independent Registered Public Accounting Firm.
      +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
____________________________
*      Management contract or compensatory plan or arrangement
required to be identified pursuant to Item 14(a) of this
report.
+      Filed herewith.

(b)    See Item 15(a) (3) above for a listing of the exhibits included
as a part of this report.

(c)    See Items 15(a)(1) and 15(a)(2) above.

<PAGE>



       Kenneth Cole Productions, Inc. and Subsidiaries

         Index to Consolidated Financial Statements




                                                                 Page

Reports of Independent Registered Public Accounting Firm         F-2

Consolidated Balance Sheets as of December 31, 2005 and 2004     F-5

Consolidated Statements of Income for the years ended
December 31, 2005, 2004 and 2003                                 F-7

Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 2005, 2004 and 2003             F-8

Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003                                 F-9

Notes to Consolidated Financial Statements                      F-10


<PAGE>

Report of Independent Registered Public Accounting Firm


To The Board of Directors and Shareholders of Kenneth Cole
Productions, Inc.

      We have audited the accompanying consolidated balance sheets of
Kenneth Cole Productions, Inc. and subsidiaries (the "Company") as
of December 31, 2005 and 2004, and the related consolidated
statements of income, cash flows and changes in shareholders'
equity for each of the three years in the period ended December 31,
2005.  Our audits also included the financial statement schedule
listed in the Index at Item 15(a).  These financial statements and
schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements and schedule based on our audits.

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


      In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Kenneth Cole Productions, Inc. and
subsidiaries at December 31, 2005 and 2004, and the consolidated

results of their operations and their cash flows for each of the
three years in the period ended December 31, 2005, in conformity
with U.S. generally accepted accounting principles.  Also, in our
opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth
therein.

      We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of Kenneth Cole Productions, Inc. and subsidiaries
internal control over financial reporting as of December 31,
2005, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated
March 9, 2006 expressed an unqualified opinion thereon.


    /s/ Ernst & Young LLP


New York, New York
March 9, 2006

<PAGE>

    Report of Independent Registered Public Accounting Firm

To The Board of Directors and Shareholders of Kenneth Cole
Productions, Inc.


      We have audited management's assessment, included in the
accompanying Management's Report on Internal Control over
Financial Reporting appearing in Item 9A, that Kenneth Cole
Productions, Inc. and subsidiaries (the "Company") maintained
effective internal control over financial reporting as of
December 31, 2005, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO
criteria). The Company's management is responsible for
maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control
over financial reporting. Our responsibility is to express an
opinion on management's assessment and an opinion on the
effectiveness of the company's internal control over financial
reporting based on our audit.

      We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control
over financial reporting, evaluating management's assessment,
testing and evaluating the design and operating effectiveness of
internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

      A company's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use,
or disposition of the company's assets that could have a material
effect on the financial statements.

      Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.  Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

      In our opinion, management's assessment that Kenneth Cole
Productions, Inc. and subsidiaries maintained effective internal
control over financial reporting as of December 31, 2005 is fairly
stated, in all material respects, based on the COSO criteria.
Also, in our opinion, Kenneth Cole Productions, Inc. and
subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2005,
based on the COSO criteria.

<PAGE>

      We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Kenneth Cole Productions, Inc. and
subsidiaries as of December 31, 2005 and 2004, and the related
consolidated statements of income, cash flows and changes in
shareholders' equity for each of the three years in the period
ended December 31, 2005 and our report dated March 9, 2006
expressed an unqualified opinion thereon.



    /s/ Ernst & Young LLP


New York, New York
March 9, 2006


<PAGE>






<TABLE>
              Kenneth Cole Productions, Inc. and Subsidiaries

                 Consolidated Balance Sheets
<CAPTION>

                                                   December 31,
                                               2005              2004
<S>                                        <C>               <C>
Assets
Current assets:
Cash and cash equivalents                   $63,747,000       $80,014,000
Marketable securities                        66,400,000        40,000,000
Due from factors                             33,975,000        34,936,000
Accounts receivable, less allowance for
doubtful accounts of $298,000 and
$302,000, respectively                       18,691,000        16,978,000
Inventories                                  45,465,000        47,166,000
Prepaid expenses and other current assets     6,059,000         2,664,000
Deferred taxes, net                           3,340,000         3,136,000
                                           ------------       ------------
Total current assets                        237,677,000       224,894,000
                                           ------------       ------------

Property and equipment-at cost, less
accumulated depreciation and amortization    42,975,000         38,510,000

Other assets:
Deferred taxes, net                          14,832,000          9,625,000
Deposits and sundry                          16,776,000          8,826,000
Deferred compensation plans assets           28,411,000         22,732,000
                                           ------------       ------------
Total other assets                           60,019,000         41,183,000
                                           ------------       ------------
Total Assets                               $340,671,000       $304,587,000
                                           ============       ============
</TABLE>


      See accompanying notes to consolidated financial statements.

<PAGE>

<TABLE>

               Kenneth Cole Productions, Inc. and Subsidiaries

                  Consolidated Balance Sheets (continued)

<CAPTION>
                                                     December 31,
                                                  2005          2004
<S>                                        <C>                <C>
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable                            $31,129,000        $35,767,000
Accrued expenses and other current
liabilities                                   8,775,000          8,947,000
Short-term borrowings                         3,000,000
Deferred income                               3,835,000          2,920,000
Income taxes payable                          3,832,000          4,253,000
                                            -----------        -----------
Total current liabilities                    50,571,000         51,887,000

Accrued rent and other long term
liabilities                                  17,029,000         13,440,000
Deferred compensation plans liabilities      28,411,000         22,732,000

Commitments and contingencies

Shareholders' Equity:

Series A Convertible Preferred Stock,
par value $1.00, 1,000,000 shares
authorized, none outstanding
Class A Common Stock, par value $.01,
20,000,000 shares authorized;
15,573,961 and 15,054,845 issued as
of December 31, 2005 and 2004,
respectively                                    156,000            150,000
Class B Convertible Common Stock, par
value $.01, 9,000,000 shares
authorized; 8,010,497 and 8,055,497
issued and outstanding as of
December 31, 2005 and 2004,
Respectively                                     80,000             81,000
Additional paid-in capital                   89,351,000         78,417,000
Deferred Compensation                        (3,397,000)
Accumulated other comprehensive income        1,257,000          1,053,000
Retained Earnings                           237,369,000        216,983,000
                                            -----------        -----------
                                            324,816,000        296,684,000
Class A Common Stock in treasury, at
cost, 3,388,400 shares as of December 31,
2005 and 2004                               (80,156,000)       (80,156,000)
                                            -----------        -----------
Total Shareholders' Equity                  244,660,000        216,528,000
                                            -----------        -----------
Total Liabilities and Shareholders' Equity $340,671,000       $304,587,000
                                           ============       ============
</TABLE>
            See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>


               Kenneth Cole Productions, Inc. and Subsidiaries
                 Consolidated Statements of Income
<CAPTION>



                                                 Year ended December 31,

                                       2005            2004           2003
<S>                                <C>            <C>            <C>
Net sales                           $474,060,000   $473,438,000   $430,101,000
Royalty revenue                       43,983,000     42,763,000     38,252,000
                                     -----------    -----------    -----------
Net revenue                          518,043,000    516,201,000    468,353,000
Cost of goods sold                   283,727,000    284,817,000    258,457,000
                                     -----------    -----------    -----------
Gross profit                         234,316,000    231,384,000    209,896,000
Selling, general, and
administrative expenses              188,953,000    174,519,000    157,824,000
Impairment of long-lived assets                -        448,000      1,153,000
                                     -----------    -----------    -----------
Operating income                      45,363,000     56,417,000     50,919,000
Interest and other income, net         4,151,000      1,411,000        825,000
                                     -----------    -----------    -----------
Income before provision for
income taxes                          49,514,000     57,828,000     51,744,000
Provision for income taxes            15,988,000     21,976,000     19,145,000
                                     -----------    -----------    -----------
Net income                           $33,526,000    $35,852,000    $32,599,000
                                     ===========    ===========    ===========
Earnings per share:
    Basic                              $   1.69        $   1.79       $   1.66
    Diluted                            $   1.65        $   1.74       $   1.59

Dividends declared per share           $   0.66        $   0.52       $   0.17

Shares used to compute
earnings per share:

    Basic                            19,888,000     20,050,000      19,609,000
    Diluted                          20,318,000     20,652,000      20,486,000

</TABLE>

        See accompanying notes to consolidated financial statements.

<PAGE>




<TABLE>

             Kenneth Cole Productions, Inc. and Subsidiaries
          Consolidated Statements of Changes in Shareholders' Equity

                                  Class A              Class B
                               Common Stock          Common Stock
                               Number                Number
                               of Shares    Amount   of Shares    Amount

<S>                          <C>         <C>       <C>          <C>
Balance at 12/31/02
Net Income                    13,921,817  139,000   8,360,497    84,000
Translation adjustment,
Foreign currency,
net of taxes $(69,000)
Forward contracts,
net of taxes $126,000

Comprehensive income
Exercise of stock options
Related tax
Benefit $2,370,000               408,368    4,000
Issuance of Class A
Stock for ESPP                    12,606

Dividends paid on
common stock
Purchase of Class A
Stock
Conversion of Class B
to Class A Common Stock          192,000    2,000    (192,000)   (2,000)
                                ----------------------------------------

Balance at 12/31/03           14,534,791  145,000   8,168,497    82,000


Net Income
Translation adjustment
Foreign currency, net
of taxes $199,000
Forward contracts,
net of taxes $(32,000)
Unrealized gain on
available for sale
security,  net of
taxes $18,000

Comprehensive income
Exercise of stock options
Related tax
Benefit $3,031,000               398,113    4,000
Issuance of Class A
Stock for ESPP                     8,941
Dividends paid on
common stock
Purchase of Class A
stock
Conversion of Class B
to Class A common stock          113,000    1,000    (113,000)   (1,000)
                               -----------------------------------------

Balance at 12/31/04           15,054,845 $150,000   8,055,497   $81,000


Net Income
Translation adjustment
Foreign currency,
net of taxes $148,000
Forward contracts,
net of taxes $(351,000)
Unrealized gains on
available for sale
securities,
net of taxes $301,000

Comprehensive income
Issuance of Restricted
Stock, net of forfeitures        152,960    2,000
Amortization of deferred
compensation
Shares surrendered by
employees to pay
taxes on restricted stock         (4,509)
Stock-based compensation
acceleration expense
Exercise of options,
related  tax benefit
$1,403,000                       312,064    3,000
Issuance of Class A
Stock for ESPP                    13,601
Dividends paid on
common stock
Conversion of Class B
to Class A common stock           45,000    1,000     (45,000)   (1,000)
                              ------------------------------------------

Balance at 12/31/05           15,573,961 $156,000   8,010,497   $80,000
                              ==========================================

</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                Additional     Deferred          Accumulated
                                Paid-In        Compensation      Other
                                Capital                          Comprehensive
                                                                 Income


<S>                          <C>             <C>               <C>
Balance at 12/31/02           63,476,000                        654,000

Net Income
Translation adjustment,
Foreign currency,
net of taxes $(69,000)                                         (118,000)
Forward contracts,
net of taxes $126,000                                           215,000

Comprehensive income
Exercise of stock options
Related tax
Benefit $2,370,000             6,304,000
Issuance of Class A
Stock for ESPP                   212,000
Dividends paid on
common stock
Purchase of Class A
Stock
Conversion of Class B
to Class A Common Stock
                              --------------------------------------------
Balance at 12/31/03           69,992,000                        751,000

Net Income
Translation adjustment
Foreign currency, net
of taxes $199,000                                               325,000
Forward contracts,
net of taxes $(32,000)                                          (53,000)
Unrealized gain on
available for sale
security,  net of
taxes $18,000                                                    30,000

Comprehensive income
Exercise of stock options
Related tax
Benefit $3,031,000             8,204,000
Issuance of Class A
Stock for ESPP                   221,000
Dividends paid on
common stock
Purchase of Class A
stock
Conversion of Class B
to Class A common stock
                             ------------------------------------------
Balance at 12/31/04          $78,417,000                     $1,053,000


Net Income
Translation adjustment
Foreign currency,
net of taxes $148,000                                           310,000
Forward contracts,
net of taxes $(351,000)                                        (737,000)
Unrealized gains on
available for sale
securities,
net of taxes $301,000                                           631,000

Comprehensive income
Issuance of Restricted
Stock, net of forfeitures      4,554,000     (4,556,000)
Amortization of deferred
Compensation                                  1,120,000
Shares surrendered by
employees to pay
taxes on restricted stock       (134,000)
Stock-based compensation
acceleration expense             100,000         39,000
Exercise of options,
related  tax benefit
$1,403,000                     6,085,000
Issuance of Class A
Stock for ESPP                   329,000
Dividends paid on
common stock
Conversion of Class B
to Class A common stock
                              -----------------------------------------
Balance at 12/31/05          $89,351,000    $(3,397,000)     $1,257,000
                             ==========================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                           Treasury Stock
                             Retained        Number             Amount
                             Earnings        of
                                             Shares

<S>                         <C>              <C>            <C>
Balance at 12/31/02          162,244,000     (2,688,400)    (61,695,000)

Net Income                    32,599,000
Translation adjustment,
Foreign currency,
net of taxes $(69,000)
Forward contracts,
net of taxes $126,000

Comprehensive income
Exercise of stock options
Related tax
Benefit $2,370,000
Issuance of Class A
Stock for ESPP
Dividends paid on
common stock                  (3,258,000)
Purchase of Class A
Stock                                          (200,000)     (4,526,000)
Conversion of Class B
to Class A Common Stock
                             -------------------------------------------
Balance at 12/31/03           191,585,000    (2,888,400)    (66,221,000)

Net Income                     35,852,000
Translation adjustment
Foreign currency, net
of taxes $199,000
Forward contracts,
net of taxes $(32,000)
Unrealized gain on
available for sale
security,  net of
taxes $18,000

Comprehensive income
Exercise of stock options
Related tax
Benefit $3,031,000
Issuance of Class A
Stock for ESPP
Dividends paid on
common stock                 (10,454,000)
Purchase of Class A
Stock                                          (500,000)    (13,935,000)
Conversion of Class B
to Class A common stock
                             ------------------------------------------
Balance at 12/31/04         $216,983,000     (3,388,400)   $(80,156,000)


Net Income                    33,526,000
Translation adjustment
Foreign currency,
net of taxes $148,000
Forward contracts,
net of taxes $(351,000)
Unrealized gains on
available for sale
securities,
net of taxes $301,000

Comprehensive income
Issuance of Restricted
Stock, net of forfeitures
Amortization of deferred
compensation
Shares surrendered by
employees to pay
taxes on restricted stock
Stock-based compensation
acceleration expense
Exercise of options,
related  tax benefit
$1,403,000
Issuance of Class A
Stock for ESPP
Dividends paid on
common stock                 (13,140,000)
Conversion of Class B
to Class A common stock
                             ------------------------------------------

Balance at 12/31/05         $237,369,000     (3,388,400)   $(80,156,000)
                             ==========================================

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                               Total

<S>                         <C>
Balance at 12/31/02          164,902,000

Net Income                    32,599,000
Translation adjustment,
Foreign currency,
net of taxes $(69,000)          (118,000)
Forward contracts,
net of taxes $126,000            215,000
                             -----------

Comprehensive income          32,696,000
Exercise of stock options
Related tax
Benefit $2,370,000             6,308,000
Issuance of Class A
Stock for ESPP                   212,000
Dividends paid on
common stock                  (3,258,000)
Purchase of Class A
Stock                         (4,526,000)
Conversion of Class B
to Class A Common Stock
                             -----------


Balance at 12/31/03          196,334,000


Net Income                    35,852,000
Translation adjustment
Foreign currency, net
of taxes $199,000                325,000
Forward contracts,
net of taxes $(32,000)           (53,000)
Unrealized gain on
available for sale
security,  net of
taxes $18,000                     30,000
                             -----------

Comprehensive income          36,154,000
Exercise of stock options
Related tax
Benefit $3,031,000             8,208,000
Issuance of Class A
Stock for ESPP                   221,000
Dividends paid on
common stock                 (10,454,000)
Purchase of Class A
Stock                        (13,935,000)
Conversion of Class B
to Class A common stock
                             -----------
Balance at 12/31/04         $216,528,000

Net Income                    33,526,000

Translation adjustment
Foreign currency,
net of taxes $148,000            310,000
Forward contracts,
net of taxes $(351,000)         (737,000)
Unrealized gains on
available for sale
securities,
net of taxes $301,000            631,000
                             -----------

Comprehensive income          33,730,000
Issuance of Restricted
Stock, net of forfeitures
Amortization of deferred
Compensation                   1,120,000
Shares surrendered by
employees to pay
taxes on restricted stock       (134,000)
Stock-based compensation
acceleration expense             139,000
Exercise of options,
related  tax benefit
$1,403,000                     6,088,000
Issuance of Class A
Stock for ESPP                   329,000
Dividends paid on
common stock                 (13,140,000)
Conversion of Class B
to Class A common stock
                             -----------

Balance at 12/31/05         $244,660,000
                             ============
</TABLE>

    See accompanying notes to consolidated financial statement

<PAGE>

<TABLE>
           Kenneth Cole Productions, Inc. and Subsidiaries
              Consolidated Statements of Cash Flows

<CAPTION>

                                         For the years ended December 31,

                                         2005        2004          2003
<S>                                 <C>           <C>          <C>
Cash flows from operating
activities
Net income                           $33,526,000   $35,852,000  $32,599,000
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization          9,400,000     7,844,000    7,604,000
Impairment of long-lived assets                -       448,000    1,153,000
Unrealized gain on deferred
compensation plans                      (914,000)   (1,127,000)  (2,543,000)
Realized gain on sale of
property and equipment                         -       (14,000)           -
Realized gain on sale of
marketable securities                 (1,246,000)            -            -
Provision for doubtful accounts          294,000       227,000      262,000
Benefit for deferred taxes            (5,791,000)   (1,709,000)    (399,000)
Tax benefit from stock options         1,403,000     3,031,000    2,370,000
Taxes related to restricted stock       (134,000)            -            -
Unrealized gains from
available-for-sale securities           (631,000)            -            -
Stock based compensation expense       1,259,000             -            -
Changes in operating assets and
liabilities:
Decrease/(increase) in due
from factors                             961,000    (3,449,000)    (601,000)
Increase in accounts receivable       (2,007,000)   (5,951,000)  (3,632,000)
Decrease/(increase) in inventories       964,000    (2,368,000)    (912,000)
Increase in prepaid expenses
and other current assets              (3,395,000)   (1,321,000)    (269,000)
Increase in other assets              (5,073,000)   (4,404,000)  (4,909,000)
(Decrease)/increase in
income taxes payable                    (421,000)    1,314,000   (3,301,000)
(Decrease)/increase in
accounts payable                      (4,638,000)    1,920,000      213,000
Increase (decrease) in
deferred income, accrued
expenses and
other current liabilities              1,057,000     1,044,000   (2,812,000)
Increase in other non-
current liabilities                    9,268,000     6,604,000    8,067,000
                                      ----------     ---------    ---------

Net cash provided by operating
activities                            33,882,000    37,941,000   32,890,000

Cash flows used in investing
activities
Acquisition of property and
Equipment                            (13,865,000)  (10,101,000)  (9,510,000)
Proceeds from sale of marketable
Securities                            16,755,000             -            -
Proceeds from sale of property and
equipment                                      -        68,000            -
Purchase of stock                     (6,000,000)            -            -
Purchases of marketable securities   (41,909,000)  (40,000,000)           -
                                     ------------   ------------  ----------
Net cash used in investing
Activities                           (45,019,000)  (50,033,000)  (9,510,000)

Cash flows used in financing
activities
Proceeds from short-term
Borrowings                             3,000,000            -             -
Proceeds from exercise of stock
options                                4,685,000     5,177,000    3,938,000
Proceeds from issuance of stock
from employee purchase plan              329,000       221,000      212,000
Principal payments of capital
lease obligations                              -             -     (171,000)
Dividends paid to shareholders       (13,140,000)  (10,454,000)  (3,258,000)
Purchase of treasury stock                     -   (13,935,000)  (4,526,000)
                                     -----------   -----------   -----------
Net cash used in financing
Activities                            (5,126,000)  (18,991,000)  (3,805,000)
Effect of exchange rate changes on
cash                                      (4,000)       (5,000)     (22,000)
                                     -----------   -----------   -----------
Net (decrease)/increase in cash
and cash equivalents                 (16,267,000)  (31,088,000)  19,553,000
Cash and cash equivalents,
beginning of year                     80,014,000   111,102,000   91,549,000
Cash and cash equivalents, end of
year                                 $63,747,000   $80,014,000 $111,102,000
                                     ===========   =========== ============

Supplemental disclosures of cash
flow information

Cash paid during the period for:
Interest                                 $68,000       $27,000      $40,000
Income taxes                         $21,194,000   $19,341,000  $20,583,000

</TABLE>


            See accompanying notes to consolidated financial statements.

<PAGE>



              Kenneth Cole Productions, Inc. and Subsidiaries
               Notes to Consolidated Financial Statements

Note A - Summary of Significant Accounting Policies

1.  Description of business

      Kenneth Cole Productions, Inc. and its subsidiaries (the
"Company") designs, sources and markets a broad range of quality
footwear and handbags, and through license agreements, designs and
markets men's, women's and children's apparel and accessories under
its Kenneth Cole New York, Kenneth Cole Reaction, Unlisted, and
Tribeca brands for the fashion conscious consumer.  In addition,
the Company added the Bongo trademark for footwear through a
license agreement in 2003.  The Company markets its products for
sale to approximately 6,000 department stores and specialty store
locations in the United States, as well as other locations
throughout the world, through its retail and outlet store base, and
its interactive website.  The Company also distributes consumer
catalogs that feature a variety of Kenneth Cole New York and
Kenneth Cole Reaction branded products.

2.    Principles of consolidation

      The consolidated financial statements include the accounts of
Kenneth Cole Productions, Inc. and its wholly owned subsidiaries.
Intercompany transactions and balances have been eliminated in
consolidation.

3.    Use of estimates

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

4.    Cash and cash equivalents

      The Company considers all highly liquid investments with an
original maturity of three months or less at the time of purchase
to be cash equivalents.



5.  Marketable securities

      In 2004, the Company began investing in auction rate securities,
debt securities backed by student loans, and have maturity dates
ranging from approximately 2023 to 2038. The Company accounts for these
investments as marketable securities, and has classified them as
available-for-sale securities under SFAS 115 "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115").
They are recorded at fair value, and are reset every 7 to 35 days, and
repurchased based on the Company's cash needs. The purchase of these
securities is included in the accompanying Statement of Cash Flows as an
investing activity.

<PAGE>

             Kenneth Cole Productions, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements

Note A - Summary of Significant Accounting Policies (continued)


6.    Inventories

      Inventories, which consist of finished goods, are stated at the
lower of cost or fair market value. Cost is determined by the
first-in, first-out method.

7.  Property and equipment

      Property and equipment are stated at cost less accumulated
depreciation and amortization.  Depreciation and amortization is
computed using the estimated useful lives of the related assets
ranging from three to seven years on a straight-line basis.
Leasehold improvements are amortized using the straight-line method
over the term of the related lease or the estimated useful life,
whichever is less.

      The Company reviews long-lived assets for possible impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable as measured by
comparing the undiscounted future cash flows to the asset's net
book value.  Impaired assets are recorded at the lesser of their
carrying value or fair value.

8.   Income taxes

      Income taxes are accounted for in accordance with SFAS No. 109,
"Accounting for Income Taxes."  Deferred income taxes reflect the
net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.


9.  Revenue recognition

      Wholesale revenues are recognized upon shipment of products to
customers since title passes upon shipment.  Retail and outlet
store revenues are recognized at the time of sale.  Both wholesale
and retail store revenues are shown net of returns, discounts, and
other allowances.  Reserves for estimated returns and allowances
for discounts are provided when sales are recorded.  The Company
has also entered into various trade name license agreements that
provide revenues based on minimum royalties and additional revenues
based on percentage of defined sales.  Minimum royalty revenue is
recognized on a straight-line basis over each period, as defined in
each license agreement. In circumstances whereby licensee sales
exceed the quarterly contractual minimums, but not the annual
minimums, royalty contributions are deferred on the balance sheet.
As the licensee sales exceed the annual contractual minimums, the
royalty contributions are recognized.

<PAGE>
        Kenneth Cole Productions, Inc. and Subsidiaries
        Notes to Consolidated Financial Statements (continued)


Note A - Summary of Significant Accounting Policies (continued)



10. Advertising costs

      The Company incurred advertising costs, including certain in-
house marketing expenses of $ 21.8 million, $20.0 million, and $16.8
million for the years ended December 31, 2005, 2004 and 2003,
respectively. Advertising costs are expensed as incurred and are
included in Selling, General, and Administrative expenses in the
accompanying Consolidated Statement of Income.  Included in
advertising expenses are costs associated with cooperative
advertising programs, under which the Company generally shares the
cost of a customer's advertising expenditures.

      In addition, licensee contributions toward advertising are
recognized when licensed products are sold by the Company's
licensees.  Such contributions are based on contractual percentages
of sales and contain minimums.  For licensees whose sales are not
expected to exceed contractual sales minimums, contributions
relating to advertising are recognized based on the contractual
minimums.  In circumstances whereby licensee sales exceed the
quarterly contractual minimums, but not the annual minimums, such
contributions toward advertising are deferred on the balance sheet.
As the licensee sales exceed the annual contractual minimums, the
licensee contributions toward advertising are recognized.

11.  Stock-based compensation

      The Company measures compensation expense for its stock-based
compensation plans using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25") and related Interpretations.
The Company has adopted disclosure only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123").

      Pro forma disclosures, as required by Statement of Financial
Accounting Standard No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure", are computed as if the
Company recorded compensation expense based on the fair value for
stock-based awards or grants.  The following pro forma information
includes the effects of the options discussed above.

<PAGE>

      Kenneth Cole Productions, Inc. and Subsidiaries
       Notes to Consolidated Financial Statements (continued)

Note A - Summary of Significant Accounting Policies (continued)

<TABLE>
<CAPTION>

                                       Year Ended December 31,

                                  2005         2004       2003
<S>                        <C>            <C>          <C>

Net Income, as reported     $33,526,000    $35,852,000  $32,599,000

Add: Stock-based
compensation,
related to
restricted stock,
included in reported
net income, net of
related tax effect              852,000             --           --

Deduct: Stock-based
employee compensation
expense determined under
fair value method,
net of related tax
effects                      (7,318,000)    (3,429,000)  (2,855,000)
                            -----------    -----------   ----------

Pro forma net income        $27,060,000    $32,423,000  $29,744,000
                            ===========     ==========   ==========


Earnings per share:
Basic - as reported               $1.69          $1.79        $1.66
Basic - pro forma                 $1.36          $1.62        $1.52

Diluted - as reported             $1.65          $1.74        $1.59
Diluted - pro forma               $1.33          $1.57        $1.45

</TABLE>

      The effects of applying SFAS 123 on this pro forma disclosure
may not be indicative of future results, and additional awards in
future years may or may not be granted. (See Note K.)

12.  Derivative instruments and hedging activities

      The Company uses derivative instruments, typically forward
contracts, to manage its risk associated with movements in the Euro
exchange rates in purchasing inventory.  In accordance with SFAS
No. 133 "Accounting for Derivative Instruments and Hedge
Activities" ("SFAS 133"), the Company recognizes all derivatives on
the Balance Sheet.  Also, derivative instruments that meet certain
criteria in SFAS 133 are classified as cash flow hedges, and
changes in fair value are recognized in Other Comprehensive Income,
in the accompanying Statement of Changes in Shareholders' Equity,
until the underlying transaction is completed and the derivative is
settled. Upon settlement, any amounts remaining in Other
Comprehensive Income are reclassified to earnings.   Those
derivatives that are not classified as cash flow hedges are
adjusted to fair value through earnings.   The Company does not
hold derivative instruments for the purpose of trading or
speculation, and designated all hedges as cash flow hedges in 2005.
(See Note F.)


<PAGE>
           Kenneth Cole Productions, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements (continued)

Note A - Summary of Significant Accounting Policies (continued)

13.  Shipping and Handling Costs

    The Company includes amounts billed to customers for shipping
costs in net sales.  The related internal and external shipping and
handling costs incurred by the Company are included in the Cost of
Goods Sold line item in the accompanying Consolidated Statements of
Income.  Such costs include inbound freight costs, purchasing
costs, inspection costs, internal transfer costs, and other product
procurement related charges.

14.  Cost of Goods Sold and Selling, General and Administrative
Expenses

      Costs associated with the production and procurement of product
are included in the Cost of Goods Sold line item in the
accompanying Consolidated Statements of Income, including inbound
freight costs, purchasing costs, inspection costs, and other
product procurement related charges.  All other expenses, excluding
interest and income taxes, are included in selling, general, and
administrative expenses, including receiving, warehousing, and
distribution expenses, as the predominant expenses associated
therewith, are general and administrative in nature.

15. Research and Development Costs

The Company does not incur research and development costs.



Note B   - Earnings Per Share

      The Company calculates earnings per share in accordance with
SFAS No. 128, "Earnings Per Share."  Basic earnings per share are
calculated by dividing net income by weighted average common shares
outstanding.  Diluted earnings per share are calculated similarly,
except that it includes the dilutive effect of the assumed exercise
of securities under the Company's stock incentive plans.  Dilutive
securities, which include stock options, 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.  Stock options amounting to 946,000, 916,000 and
376,000 as of December 31, 2005, 2004, and 2003, respectively, have
been excluded from the diluted per share calculations, since their
effect would be antidilutive.

<PAGE>

         Kenneth Cole Productions, Inc. and Subsidiaries
         Notes to Consolidated Financial Statements (continued)

Note B   - Earnings Per Share (continued)

The following is an analysis of the differences between basic and
diluted earnings per common share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share".

<TABLE>
<CAPTION>

                                        For the Year Ended December 31,
                                     2005         2004          2003
<S>                             <C>          <C>          <C>
Weighted average
common shares outstanding        19,888,000   20,050,000   19,609,000
Effect of dilutive securities:
Restricted stock &
shares issued through
Employee Stock Purchase Plan          5,000           -            -
Stock options                       425,000      602,000      877,000
                                 ----------   ----------   ----------
Weighted average common
shares outstanding and common
share equivalents                20,318,000   20,652,000   20,486,000
                                 ==========   ==========   ==========

</TABLE>

Note C   - Due from Factors and Accounts Receivable

      The Company sells substantially all of its accounts receivable
to its factors, without recourse, subject to credit limitations
established by the factor for each individual account.  Certain
accounts receivable in excess of established limits are factored
with recourse.  Included in amounts due from factor at December 31,
2005 and 2004 is accounts receivable subject to recourse totaling
approximately $1,115,000 and $1,132,000 respectively. The
agreements with the factors provide for payment of a service fee on
receivables sold.

      At December 31, 2005 and 2004, the balance due from factor,
which includes chargebacks, is net of allowances for returns,
discounts, and other deductions of approximately $8,068,000 and
$8,377,000, respectively. The allowances are provided for known
chargebacks reserved for but not written off the Company's
financial records and for potential future customer deductions
based on management's estimates.

      In the ordinary course of business, the Company has accounts
receivable that are non-factored and are at the Company's risk.  At
December 31, 2005 and 2004, the accounts receivable balance
includes allowance for doubtful accounts and consumer direct sales
returns of approximately $1,108,000 and $1,002,000.    These
customers include non-factored accounts and credit card receivables
from third party service providers.  The allowances provided for
sales returns are for potential future retail customer merchandise
returns based on management's estimates. The allowance for doubtful
accounts is provided for estimated losses resulting from the
inability of its customers to make required payments.

<PAGE>

               Kenneth Cole Productions, Inc. and Subsidiaries
               Notes to Consolidated Financial Statements (continued)

Note D - Property and Equipment

    Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                 December 31,
                                           2005             2004
<S>                                     <C>               <C>
Property and equipment-at cost:
Furniture and fixtures                   $27,871,000       $24,861,000
Machinery and equipment                   17,473,000        14,311,000
Leasehold improvements                    50,212,000        44,661,000
Leased equipment under capital lease              --           967,000
                                         -----------        ----------
                                          95,556,000        84,800,000
Less accumulated depreciation
                                          52,581,000        46,290,000
                                         -----------       -----------
Net property and equipment               $42,975,000       $38,510,000
                                         ===========       ===========

</TABLE>



Note E - Impairment of Long-Lived Assets

      In 2004 and 2003, the Company recorded non-cash asset
impairment charges of $448,000 and $1,153,000, respectively.
Management reviews its retail stores' estimated undiscounted
future cash flows and determines whether or not a write-down to
current value is required.  The impairment charges related to
stores' leasehold improvements, and furniture and fixtures, and
were separately disclosed in the accompanying Consolidated
Statement of Income.


Note F - Foreign Currency Transactions, Derivative Instruments and
Hedging Activities

       The Company, in the normal course of business, routinely
enters into forward contracts in anticipation of future purchases
of inventory denominated in foreign currencies.  These forward
contracts are used to hedge against the Company's exposure to
changes in Euro exchange rates to protect the purchase price of
merchandise under such commitments.  The Company has classified
these contracts as Cash Flow Hedges under SFAS 133.  The Company
had forward contracts of $7,000,000, $24,000,000, and $9,500,000 at
December 31, 2005, 2004 and 2003, respectively.  At December 31,
2005, forward contracts have maturity dates through May 2006.

       All terms and conditions of the forward contracts are included
in the measurement of the related hedge effectiveness.  The
critical terms of the forward contracts are the same as the
underlying forecasted transactions; therefore changes in the fair
value of the contracts should be highly effective in offsetting
changes in the expected cash flows from the forecasted
transactions.  No gains or losses related to ineffectiveness of
cash flow hedges were recognized in earnings during 2005, 2004, and
2003.  At December 31, 2005, the Company's notional $7,000,000 in
forward exchange contracts

<PAGE>

             Kenneth Cole Productions, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

Note F - Foreign Currency Transactions, Derivative Instruments and
Hedging Activities (continued)

resulted in an unrealized loss of approximately $184,000, net of
taxes, which is included in Accumulated Other Comprehensive Income
in the Statement of Changes in Shareholders' Equity and a decrease
to inventory, which is the underlying exposure on the Consolidated
Balance Sheet.  The Company expects to reclassify all of the
unrealized loss from Other Comprehensive Income into earnings
within the next five-month period due to the actual executions of
forward contracts to purchase merchandise and the Company's
ultimate sale of that merchandise.



Note G - Segment Reporting

       Kenneth Cole Productions, Inc. has three reportable segments:
Wholesale, Consumer Direct, and Licensing.  The Wholesale segment
designs and sources a broad range of fashion footwear, handbags and
accessories and markets its products for sale to approximately
6,000 department and specialty store locations and to the Company's
Consumer Direct segment.  The Consumer Direct segment markets a
broad selection of the Company's branded products, including
licensee products, for sale directly to the consumer through its
own channels of distribution, which include full price retail
stores, outlet stores, catalogs, and e-commerce (at website
addresses www.kennethcole.com and www.kennethcolereaction.com). The
Licensing segment, through third party licensee agreements, has
evolved the Company from a footwear resource to a diverse lifestyle
brand competing effectively in approximately 30 apparel and
accessories categories for both men and women.  The Company
maintains control over quality, image and distribution of the
licensees.  This segment primarily consists of royalties earned on
licensee sales to third parties of the Company's branded products
and royalties earned on the purchase and sale to foreign retailers,
distributors, or to consumers in foreign countries.

       The Company's reportable segments are business units that offer
products to overlapping consumers through different channels of
distribution.  Each segment is managed separately, although
planning, implementation and results are reviewed internally by the
executive management committee.  The Company evaluates performance
and allocates resources based on profit or loss from each segment.
The Wholesale segment is evaluated on income from operations before
income taxes.  The Consumer Direct segment is evaluated on profit
or loss from operations before unallocated corporate overhead and
income taxes.  The Licensing segment is evaluated based on
royalties earned and pretax segment profit. The accounting policies
of the reportable segments are the same as those described in the
Summary of Significant Accounting Policies.  Intersegment sales
between the Wholesale and Consumer Direct segment include a markup,
which is eliminated in consolidation.

<PAGE>

           Kenneth Cole Productions, Inc. and Subsidiaries
            Notes to Consolidated Financial Statements (continued)

Note G - Segment Reporting (continued)

Financial information of the Company's reportable segments is as
follows (dollars in thousands):

<TABLE>
<CAPTION>
                                           Consumer
                               Wholesale   Direct     Licensing    Totals
<S>                           <C>         <C>        <C>          <C>
Year Ended December 31, 2005
Revenues                       $283,991    $190,069   $43,983      $518,043
Intersegment revenues            38,932                              38,932
Interest income, net              4,151                               4,151
Depreciation expense              3,059       6,333         8         9,400
Segment income (1) (2)           27,291       6,763    35,974        70,028
Segment assets                  272,848      57,657    13,157       343,662
Expenditures for long-lived
assets                            3,048      10,817                  13,865

Year Ended December 31, 2004
Revenues                       $279,440    $193,998   $42,763      $516,201
Intersegment revenues            35,133                              35,133
Interest income, net              1,411                               1,411
Depreciation expense              2,745       5,087        12         7,844
Impairment of long-lived
assets                                          448                     448
Segment income (1)(3)            29,135      12,232    35,454        76,821
Segment assets                  249,226      49,929     8,190       307,345
Expenditures for long-lived
assets                            3,150       6,949         2        10,101

Year Ended December 31, 2003
Revenues                       $254,524    $175,577   $38,252      $468,353
Intersegment revenues            32,671                              32,671
Interest income, net                825                                 825
Depreciation expense              2,698       4,893        13         7,604
Impairment of long-lived
assets                                        1,153                   1,153
Segment income (1)               30,644       6,843    31,556        69,043
Segment assets                  219,111      48,454     8,414       275,979
Expenditures for long-lived
assets                            4,924       4,584         2         9,510

</TABLE>
(1)   Before elimination of intersegment profit, unallocated corporate
overhead and provision for income taxes.
(2)   Segment income for the Wholesale segment includes one-time
payment of $0.8 million for severance.
(3)   Segment income for the Wholesale segment includes one-time payment
of $1.1 million for costs associated with the Company's transfer to a
third-party distribution center.

<PAGE>
          Kenneth Cole Productions, Inc. and Subsidiaries
          Notes to Consolidated Financial Statements (continued)

Note G - Segment Reporting (continued)

The reconciliation of the Company's reportable segment revenues,
profit and loss, and assets are as follows (dollars in thousands):

<TABLE>
<CAPTION>

Revenues                                2005            2004         2003
<S>                                  <C>             <C>          <C>
Revenues for reportable segments      $518,043        $516,201     $468,353
Intersegment revenues for reportable
segments                                38,932          35,133       32,671
Elimination of intersegment revenues   (38,932)        (35,133)     (32,671)
                                       -------          -------     -------
     Total consolidated revenues      $518,043        $516,201     $468,353
                                      ========         ========     =======



Income
Total profit for reportable segments    70,028         $76,821      $69,043
Elimination of intersegment profit     (11,005)         (9,303)      (8,524)
Unallocated corporate overhead          (9,509)         (9,690)      (8,775)
                                       --------         -------     --------
     Total income before provision for
     income taxes                      $49,514         $57,828      $51,744
                                       =======         ========     ========

Assets
Total assets for reportable segments  $343,662        $307,345     $275,979
Elimination of inventory profit in
consolidation                           (2,991)         (2,758)      (2,138)
                                       --------        --------     --------
    Total consolidated assets         $340,671        $304,587     $273,841
                                       ========        ========     ========

</TABLE>

      Revenues from international customers were approximately 2.4%,
1.9%, and 1.0% of the Company's consolidated revenues for the years
ended December 31, 2005, 2004, and 2003 respectively.


Note H - Accrued Expenses and Other Liabilities

Accrued expenses and other current liabilities consist of the
following:
<TABLE>
<CAPTION>

                                         December 31,

                                     2005           2004
<S>                              <C>               <C>
Rent                              $  723,000        $  448,000
Compensation                       4,268,000         5,454,000
Customer credits                   2,020,000         1,989,000
Other                              1,764,000         1,056,000
                                  ----------------------------
                                  $8,775,000        $8,947,000
                                  ============================

</TABLE>
<PAGE>



            Kenneth Cole Productions, Inc. and Subsidiaries
            Notes to Consolidated Financial Statements (continued)

Note I - Short-term Borrowings

      In 2005, one of the Company's foreign subsidiaries entered
into a promissory note with a financial institution, which
provided the foreign subsidiary with $3,000,000. The note is due
in September 2006. Interest is payable monthly at an annual rate
equal to the greater of the prime rate in effect on such date or
the Federal Funds Rate in effect on such date plus .50%.  The
agreement contains a number of customary covenants and events of
default.  Upon the occurrence of an event of default, all
borrowings and accrued interest shall become immediately due and
payable. At December 31, 2005, the subsidiary was in compliance
with all covenants. The carrying value of the loan approximates
fair market value.

      In addition, the Company entered into a Cash Collateral Pledge
Agreement, for $3,000,000, with a financial institution, which
serves as collateral on the loan to the foreign subsidiary.  The
collateral will be released to the Company at the time that the
promissory note is settled with the financial institution, and is
included in Prepaid Expenses and Other Current Assets in the
accompanying Consolidated Balance Sheet.

Note J - Benefit Plans

1.      401(k) Plan

      The Company's 401(k) profit-sharing plan covers all non-union
employees, subject to certain minimum age and length of service
requirements who are permitted to contribute specified percentages
of their salary up to the maximum permitted by the Internal Revenue
Service. The Company is obligated to make a matching contribution
and may make an additional discretionary contribution, as defined.
Contributions to the plan for the years ended December 31, 2005,
2004 and 2003 were approximately $487,000, $395,000, and $268,000,
respectively.

2.     Deferred compensation plans

      The Kenneth Cole Productions, Inc. Deferred Compensation Plans
are non-qualified plans maintained primarily to provide deferred
compensation benefits for the Company's Chief Executive Officer, as
well as a select group of "highly compensated employees", which
includes certain Company management. The Company accounts for the
investments in the deferred compensation plans as trading
securities in accordance with SFAS 115.  The amounts, deferred at
the election of the employee, are invested based upon various asset
alternatives.  The assets are included in Deferred compensation
plan assets, and the related liability is included in Deferred
compensation plan liabilities.

      In 2005, 2004 and 2003, the Company deposited $1,215,000,
$1,516,000, and $247,000, respectively, into Supplemental Executive
Retirement Plans ("SERP") for certain key executives.  The amounts
have been recorded in Deposits and Sundry in the accompanying
Consolidated Balance Sheets.  These plans are non-qualified
deferred compensation plans.  Benefits payable under these plans
are based upon the performance of the individual directed
investments from the Company's cumulative and future contributions.
Benefits earned

<PAGE>

Kenneth Cole Productions, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)

Note J - Benefit Plans (continued)

under the SERP begin vesting after 3 years from issuance, and
become 60% vested after 9 years of service, 75% vested upon the
participant retiring at age 60 or later and 100% vested if the
employee dies while in the Company's employment.  The value of
these investments at December 31, 2005 and 2004 were $5,818,000 and
$5,206,000, respectively, which the Company accounts for as trading
securities in accordance with SFAS 115.  The unrealized gains and
losses on the investments were recorded in Selling, General and
Administrative Expenses in the accompanying Consolidated Statements
of Income.  In addition, the Company has recorded an accumulated
long-term vested benefit obligation of approximately $2,377,000 and
$1,814,000 at December 31, 2005 and 2004, respectively, within
Accrued Rent and Other Long Term liabilities in the accompanying
Consolidated Balance Sheets.  In addition, SERP participants are
covered by life insurance through a portion of the Company's
contribution.

3.	Employee Stock Purchase Plan

	 During 2000, the Company established a qualified employee stock
purchase plan ("ESPP"), the terms of which allow for qualified
employees (as defined) to participate in the purchase of designated
shares of the Company's Class A Common Stock at a price equal to
85% of the lower of the closing price at the beginning or end of
each quarterly stock purchase period.  For the years ended December
31, 2005, 2004, and 2003, employees purchased 13,601, 8,941, and
12,606 shares, respectively.  Total shares purchased through
December 31, 2005 were 76,555.

Note K - Stock -Based Compensation

	The Company's 2004 Incentive Stock Option Plan (the "Plan"),
authorizes the grant of options to employees for up to 5,320,162
shares of the Company's Class A Common Stock.  The Company amended
the Plan in 2005 and authorized an additional 1,000,000 shares.
Certain options granted under the Plan vest in one-third increments
in each of the first, second and third years following the date of
grant, while certain other options vest over five years.  Options
granted under the "Plan" have ten-year terms.  Non-employee
Director stock options granted have ten-year terms and vest 50% on
the first anniversary of the date of grant and become fully
exercisable at the end of two years.

    In 2005, the Company accelerated the vesting of 250,000 "out-
of-the-money" stock options held by Kenneth D. Cole.   These
options were originally granted on August 4, 2004 and would have
vested ratably in annual installments on the next three
anniversaries of the date of grant.  The per share exercise price
for these options was  $32.09, which was above the $30.34 fair
market value of the Company's Class A common stock on the date of
acceleration.   The purpose of the acceleration was to eliminate
future compensation expense recognition the Company would
otherwise have been required to recognize with respect to these
accelerated options once Statement of Financial Accounting
Standards No. 123R "Share-Based Payment" ("SFAS 123R") becomes
effective in January 2006. The estimated future expense
recognition that was eliminated was

<PAGE>

           Kenneth Cole Productions, Inc. and Subsidiaries
         Notes to Consolidated Financial Statements (continued)

Note K - Stock-Based Compensation (continued)

approximately $2,115,000.  The acceleration of these options did
not trigger an expense for accounting purposes, as the stock
options had no intrinsic value at the date of acceleration.

      Also in 2005, the Company accelerated the vesting of 224,500
stock options held by various employees. These options were
originally granted on July 1, 2004 and would have vested ratably
in annual installments on the next two anniversaries of the date
of grant.  The per share exercise price for these options was
$34.27, which was above the $25.50 fair market value of the
Company's Class A common stock on the date of acceleration.   The
estimated future expense recognition that was eliminated was
approximately $1,400,000.  The acceleration of these options did
not trigger an expense for accounting purposes, as the stock
options had no intrinsic value at the date of acceleration.

      In 2005, the Company granted 152,960 Class A common shares of
restricted stock to selected employees, net of 5,084 of forfeited
shares, which had a fair value of $4,556,000 on the grant dates.
The shares have graded vesting periods of up to four years. The
Company has recorded the total compensation expense as Deferred
Compensation in the Condensed Consolidated Statement of Changes
in Shareholders' Equity, and recognized $1,259,000 ($852,000 net
of related taxes) of compensation expense in the Condensed
Consolidated Statement of Income for the year ended December 31,
2005, which represents the amortization of the original deferred
compensation on a straight-line basis over the vesting period.
Included in the compensation expense is approximately $139,000
related to the expenses incurred upon termination of one of the
Company's senior executives. The weighted-average grant-date fair
value of the nonvested shares as of December 31, 2005 was
$4,265,000.

The following table summarizes information about currently
outstanding and exercisable stock options at December 31, 2005:

<TABLE>
<CAPTION>
	 Outstanding Stock Options  		Exercisable Stock Options



Range of          Outstanding   Weighted     Weighted    Exercisable  Weighted
Exercise          Shares        Average      Average     Shares       Average
Prices                          Remaining    Exercise                 Exercise
                                Contractual  Price                    Price
                                Life


<S>                <C>           <C>          <C>         <C>          <C>
$4.00 to $12.00     192,356       1.79         11.36       192,356      11.36
$12.01 to $24.00  1,156,996       5.49         18.68       715,830      24.47
$24.01 to $36.00  1,251,365       6.43         30.11     1,064,116      31.69

</TABLE>
<PAGE>

                  Kenneth Cole Productions, Inc. and Subsidiaries
               Notes to Consolidated Financial Statements (continued)

Note K - Stock-Based Compensation (continued)

      The following table summarizes all stock option transactions
from December 31, 2002 through December 31, 2005.

<TABLE>
<CAPTION>

                                       Shares                Weighted-Average
                                                             Exercise Price
<S>                                <C>                      <C>
Outstanding at December 31, 2002    2,631,980                $17.44

Granted                               657,500                $23.33
Exercised                            (316,216)               $11.68
Forfeited                             (41,929)               $19.87
                                    ----------
Outstanding at December 31, 2003    2,931,335                $19.36

Granted                               574,900                $32.97
Exercised                            (398,113)               $12.97
Forfeited                            (159,186)               $22.20
                                    ----------
Outstanding at December 31, 2004    2,948,936                $22.71

Granted                                46,667                $29.28
Exercised                            (312,064)               $15.01
Forfeited                             (82,822)               $26.31
                                    ----------
Outstanding at December 31, 2005    2,600,717                $23.64
                                    ==========

</TABLE>

The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following
weighted-average assumptions for 2005, 2004 and 2003, respectively:
risk-free interest rate of 4.1%, 3.2% and 4.0%; expected volatility
factors of 49.1%, 59.7% and 64.5% and expected lives of 7.6, 5.2
and 5.0 years.  Dividend yield assumptions were 2.19%, 1.68% and
1.38% for 2005, 2004 and 2003, respectively.  The weighted-average
fair value of options granted during 2005, 2004 and 2003 were
$13.14, $15.63 and $14.48, respectively.

	The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options, which have no
vesting restrictions and are fully transferable.  In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.  As a
result of the Company's employee stock options having
characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

<PAGE>

           Kenneth Cole Productions, Inc. and Subsidiaries
         Notes to Consolidated Financial Statements (continued)

Note L   - Income Taxes

      In 2004, Internal Revenue Code Section 965 was enacted, as
part of the American Job Creation Act. This is a temporary
provision that allows U.S. companies to repatriate earnings from
their foreign subsidiaries at a reduced tax rate provided that
specified conditions and restrictions are satisfied.  In
addition, FASB Staff Position FAS 109-2 was issued to provide
accounting and disclosure guidance relating to the repatriation
provision.  In 2005, the Company's Board of Directors approved
and adopted a repatriation plan and, as such, the Company
repatriated $12.5 million of unremitted foreign earnings, which
resulted in a tax benefit of approximately $3.0 million for the
year ended December 31, 2005, as a result of the Company
providing for taxes for the foreign earnings at the prior
statutory rate. The Company borrowed $3 million through its
foreign subsidiary to fund a portion of these remittances (see
Note I).

The components of income before provision for income taxes are as
follows:

<TABLE>
<CAPTION>



Years Ended December 31   2005              2004           2003
<S>                      <C>               <C>            <C>
Domestic                  $45,341,000       $54,460,000    $51,063,000
International               4,173,000         3,368,000        681,000
                          -----------       -----------    -----------
                          $49,514,000       $57,828,000    $51,744,000

</TABLE>
      Significant items comprising the Company's deferred tax assets
and liabilities are as follows:


<TABLE>
<CAPTION>


                                                      December 31,
                                                2005                2004
<S>                                         <C>                 <C>
Deferred tax assets:
Inventory allowances and capitalization      $1,927,000          $2,105,000
Allowance for doubtful accounts and
sales allowances                                940,000           1,031,000
Deferred rent                                 4,449,000           4,379,000
Deferred compensation                        10,137,000           8,406,000
Asset impairment                              1,835,000           1,879,000
Deferred Income - Licensing Agreements          791,000             493,000
Other                                           511,000              38,000
                                            -----------         ------------
                                            $20,590,000         $18,331,000
                                            -----------         ------------
Deferred tax liabilities:
Depreciation                                 (1,662,000)         (2,680,000)
Tax effect on unrealized gains on
available-for-sale securities                  (381,000)                 --
Undistributed foreign earnings                 (375,000)         (2,890,000)
                                            ------------        ------------
                                             (2,418,000)         (5,570,000)
                                            ------------        ------------
Net deferred tax assets                     $18,172,000         $12,761,000
                                            ============        ============
</TABLE>
<PAGE>

                 Kenneth Cole Productions, Inc. and Subsidiaries
              Notes to Consolidated Financial Statements (continued)

Note L   - Income Taxes (continued)

The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>

                                           December 31,
                            2005           2004            2003
<S>                     <C>              <C>              <C>
Current:
   Federal               $19,477,000      $21,005,000      $16,816,000
   State and local         1,882,000        2,483,000        2,587,000
   Foreign                   420,000          197,000          141,000
                         -----------      -----------      -----------
                          21,779,000       23,685,000       19,544,000
Deferred:
   Federal                (5,486,000)      (1,574,000)        (368,000)
   State and local          (305,000)        (135,000)         (31,000)
                          ----------      -----------      -----------
                          (5,791,000)      (1,709,000)        (399,000)
                          ----------      -----------      -----------
                         $15,988,000      $21,976,000      $19,145,000
                          ==========       ==========      ===========
</TABLE>


      The reconciliation of income tax computed at the U.S. federal
statutory tax rate to the effective income tax rate for 2005, 2004
and 2003 is as follows:

<TABLE>
<CAPTION>
                                                   2005     2004      2003
<S>                                               <C>      <C>       <C>
Federal income tax at statutory rate               35.0%    35.0%     35.0%
State and local taxes, net of federal tax benefit   3.0%     3.0%      2.0%
Repatriation Benefit                               (5.7%)
                                                   -----    -----     -----
                                                   32.3%    38.0%     37.0%
                                                   =====    =====     =====

</TABLE>

Note M - Commitments and Contingencies

1.  Operating leases and Other Property Agreements

     The Company leases office, retail and warehouse facilities
under non-cancelable operating leases between 5 and 20 years with
options to renew at varying terms.  Future minimum lease payments
for non-cancelable leases with initial terms of one year or more
consisted of the following at December 31, 2005:

<TABLE>
<CAPTION>




<S>                         <C>
2006                         $27,713,000
2007                          27,333,000
2008                          26,828,000
2009                          25,463,000
2010                          23,527,000
Thereafter                    84,623,000
                             -----------
Total minimum cash payments $215,487,000
                             ===========
</TABLE>
<PAGE>

            Kenneth Cole Productions, Inc. and Subsidiaries
         Notes to Consolidated Financial Statements (continued)

Note M - Commitments and Contingencies (continued)

	In addition, certain of these leases contain rent escalation
provisions and require additional percentage rent payments to be
made.  Step rent provisions and escalation clauses are taken into
account in computing the minimum lease payments, recognized on a
straight-line basis over the minimum lease term.  The Company may
also receive capital improvement funding from landlords, primarily
as an incentive for the Company to lease retail and outlet store
space from the landlords.  Such amounts are amortized as a
reduction of rent expense over the life of the related lease.

      Rent expense is as follows:
<TABLE>
<CAPTION>
                                           For the years ended December 31,
                                    2005          2004         2003
<S>                              <C>           <C>            <C>
Minimum Rent                      $27,711,000   $24,340,000    $23,173,000
Contingent Rent
and other                           6,413,000     7,530,000      7,995,000
                                   ----------    ----------    -----------
Total Rent Expense                $34,124,000   $31,870,000    $31,168,000

</TABLE>


      Sub-tenants rental income for 2005, 2004, and 2003 was $849,000,
$1,073,000, and $1,225,000, respectively.  Future minimum rental
income from sub-tenants is $849,000 for 2006.  Future minimum
rental income from sub-tenants does not include rent escalation and
other charges that are subsequently passed through to the sub-
tenant.

      In 2004, the Company entered into an agreement to purchase the
office building that it is currently leasing for its New York City
worldwide headquarters for approximately $24 million.  The
contracted closing date is May 2006.  The specific timing of an
earlier closing date can be determined by the parties, based on the
ability of the current landlord to satisfy certain terms and
conditions of the agreement.

      Also in 2004, the Company entered into a new 10-year lease for
51,000 square feet in Secaucus, New Jersey for its administrative
offices and completed the move in June 2004.  In 2004, the
distribution facility was moved to a third-party public warehouse and
distribution center in New Jersey.  In addition to these two
leases, the Company also leases a 23,500 square foot facility in
Secaucus used for outlet store space as well as an additional
distribution warehousing facility. The Company also has a technical
and administrative office in Florence, Italy, and signed a lease
for a similar office in China in November 2005.  The Company does not
own or operate any manufacturing facilities.

      The Company leases space for all of its 53 specialty retail
stores (aggregating approximately 243,000 square feet) and 39
outlet stores (aggregating approximately 200,000 square feet).
Generally, the leases provide for an initial term of five to ten
years and certain leases provide for renewal options permitting the
Company to extend the term thereafter.


<PAGE>
                Kenneth Cole Productions, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

Note M - Commitments and Contingencies (continued)

2. Letters of credit

	The Company was not contingently liable for any open letters of
credit as of December 31, 2005, and was contingently liable for
$91,000 of open letters of credit as of December 31, 2004. In
addition, at December 31, 2005 and 2004, the Company was
contingently liable for approximately $6,679,000 and $6,576,000 of
standby letters of credit, respectively.

3.  Concentrations

	In the normal course of business, the Company sells to major
department stores and specialty retailers and believes that its
broad customer base will mitigate the impact that financial
difficulties of any such retailers might have on the Company's
operations.  The Company had no customer account for more than 10%
of consolidated net sales for the years ended December 31, 2005,
2004, and 2003.

	The Company sources each of its product lines separately, based
on the individual design, styling and quality specifications of
such products.  The Company primarily sources its products directly
or indirectly through manufacturers in Italy, Spain, Brazil, and
China.  However, approximately 46% and 42% of total handbag
purchases came from two manufacturers in China during the years
ended December 31, 2005 and 2004, respectively.  Approximately 21%
of Kenneth Cole and Kenneth Cole Reaction men's footwear purchases
were from one manufacturer in China during the year ended December
31, 2005, and approximately 37% of those purchases were from one
manufacturer in Italy utilizing many different factories during the
year ended December 31, 2004.  Also, approximately 32% of Kenneth
Cole ladies' footwear was purchased from one Brazilian manufacturer
during the year ended December 31, 2005, while 33% of those
purchases were from one Italian manufacturer during the year ended
December 31, 2004.  Furthermore, approximately 44% of Kenneth Cole
Reaction ladies' footwear purchases were sourced through one
Chinese manufacturer during the year ended December 31, 2005, and
58% were purchased from one Italian manufacturer during the year
ended December 31, 2004. The Company believes it has alternative
manufacturing sources available to meet its current and future
production requirements in the event the Company is required to
change current manufacturers or current manufacturers are
unavailable to fulfill the Company's production needs.

<PAGE>

               Kenneth Cole Productions, Inc. and Subsidiaries
            Notes to Consolidated Financial Statements (continued)

Note M - Commitments and Contingencies (continued)

4.  Severance

      In October 2005, the Company entered into an agreement with a
senior executive of the Company relating to termination of
employment.  The Company incurred expenses of approximately
$900,000 of severance and other benefits related to such agreement,
substantially all in the three months ended December 31, 2005.

      In 2004, in conjunction with the Company's decision to close its
east coast distribution center and transfer the operation to a
third-party service provider, the Company entered into a shutdown
agreement in 2004, with a local affiliate of the International
Leather Goods, Plastics, Handbags and Novelty Workers Union, Local
I Division of Local 342-50 United Food and Commercial Workers
Union, which provided for, among other things, severance payments
for employees covered by the expiring collective bargaining
agreement.   In connection with this transition, the Company
incurred approximately $1.1 million in aggregate costs, including
severance from the aforementioned agreement, the write-off of
unamortized leasehold improvements and moving costs. These costs
were expensed as incurred in accordance with SFAS No. 146
"Accounting for Costs Associated with Exit or Disposal Activity"
and recorded in Selling, General and Administrative expenses in the
Consolidated Statement of Income.

      As of December 31, 2005 and 2004, the Company did not have any
employees covered under a collective bargaining agreement with a
local union.  As of December 31, 2003, the Company had
approximately 6% of its employees covered under a collective
bargaining agreement with a local union.

5.  Line of Credit Facility

      The Company has a Line of Credit Facility (the "Facility") that,
as amended, allows for uncommitted borrowings, letters of credit
and banker's acceptances subject to individual maximums and in the
aggregate, an amount not to exceed the lesser of $25,000,000 or a
"Borrowing Base." The Borrowing Base is calculated on a specified
percentage of eligible amounts due under factoring arrangements,
eligible non-factored accounts receivable, and eligible inventory.
Borrowings under the revolving loan portion of the Facility
("Advances") are due on demand. The Company may pay down and re-
borrow at will under the Facility. Advances bear interest at the
Alternate Base Rate (defined as the higher of the Prime Rate or the
Federal Funds in effect at borrowing date plus 1/2 of 1%) or the
Note Rate (which will be agreed upon between the lender and the
Company).  There were no outstanding advances under this agreement
at December 31, 2005, and 2004.

      Amounts available under the Facility at December 31, 2005 were
reduced by $6,679,000 of standby letters of credit. In connection
with the line of credit, the Company has agreed to eliminate all
the outstanding

<PAGE>


             Kenneth Cole Productions, Inc. and Subsidiaries
          Notes to Consolidated Financial Statements (continued)

Note M - Commitments and Contingencies (continued)

advances under the Facility for at least 30 consecutive days during
each calendar year, which the Company has complied with. In
addition, borrowings under the line of credit are secured by
certain assets of the Company.

6.  Other

      In April 2005, a purported class action lawsuit was filed against the
Company in the Superior Court of California for the County of San
Diego.  The individual plaintiff is a floor supervisor in one of
the Company's retail stores who purports to bring suit on behalf of
him and other similarly situated current and former floor
supervisors.  Among other claims, the plaintiff alleges that he and
other floor supervisors worked hours for which they were entitled
to receive, but did not receive, overtime compensation under
California law.  The lawsuit seeks damages, penalties, restitution,
equitable relief, interest and attorneys' fees and costs.  The
Company denies the allegations in the complaint and plans to defend
the action vigorously.  The Company does not believe that the outcome
will have a material adverse effect on its business operations.

      In September 2004, a purported class action lawsuit was filed
against the Company in the Superior Court of California for the County
of Los Angeles.  The individual plaintiffs are current or former store
managers or assistant managers who purport to bring suit on behalf
of themselves and other similarly situated store managers and
assistant managers.  Among other claims, the plaintiffs allege that
they worked hours for which they were entitled to receive, but did
not receive, overtime compensation under California law.  The
lawsuit sought damages, penalties, restitution, reclassification
and attorneys' fees and costs.  In January 2006, the Company
reached an agreement in principle to settle the matter, and the
parties filed a fully executed Stipulation of Class Settlement and
Release. The Court signed and entered an order granting preliminary
approval to the settlement.  The settlement provides for a maximum
settlement of $900,000, which includes all payments to class
members, incentive awards, attorney's fees and administration
costs.  While there is still uncertainty relating to the ultimate
settlement amount, the Company believes that its reserves as of
December 31, 2005 are adequate.

      The Company is, from time to time, a party to other litigation
that arises in the normal course of its business operations.  The
Company is not presently a party to any other litigation that it
believes might have a material adverse effect on its business
operations.

Note N - Shareholders' Equity

1.  Common stock

      Class A Common Shareholders are entitled to one vote for each
share held of record and Class B Common Shareholders are entitled
to ten votes for each share held of record. Each share of Class B
Common Stock is convertible into one share of Class A Common Stock
at the option of the Class B Shareholder.  The

<PAGE>

               Kenneth Cole Productions, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

Note N - Shareholders' Equity (continued)

Class A Common Shareholders vote together with Class B Common
Shareholders on all matters subject to shareholder approval, except
that Class A Common Shareholders vote separately as a class to
elect 25% of the Board of Directors of the Company. Shares of
neither class of common stock have preemptive or cumulative voting
rights.

2.  Preferred Stock

      The Company's Certificate of Incorporation authorizes the
issuance of 1,000,000 shares of preferred stock. The preferred
stock may be issued from time to time as determined by the Board of
Directors of the Company, without shareholder approval. Such
preferred stock may be issued in such series and with such
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or other
provisions, as may be fixed by the Board of Directors.

3.  Common Stock Repurchase

      In December 2004, the Company repurchased 500,000 of its shares
from Liz Claiborne, Inc. at an aggregate price of $13.9 million,
which were originally acquired by Liz Claiborne, Inc. in connection
with its licensing agreement with the Company.  In December 2003,
2,888,400 shares were repurchased in the open market at an
aggregate price of $66,221,000.   The Company's stock purchase plan
authorizes the repurchase of an aggregate of 4,250,000 of shares of Class A
common stock.  No shares were repurchased in 2005, and the Company
had 861,600 shares available for repurchase as of December 31, 2005.
In 2006, the Company's Board of Directors increased the authorization
for the Company's repurchase plan by approximately 1,138,400 shares, and
now has an aggregate of 2 million shares available for repurchase.

Note O - Licensing Agreements

      In 2005, the Company entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement") with Bernard Chaus, Inc.,
("Chaus"), pursuant to which the Company purchased 6,000,000
shares of Chaus common stock for an aggregate purchase price of
$6,000,000.  The Stock Purchase Agreement provides the Company
with one demand and one piggyback registration right.  The
Company recorded the shares at their fair value at the date of
acquisition, and classified the shares as "available for sale"
under SFAS 115, which is included in Deposits and Sundry in the
accompanying Consolidated Balance Sheet.  The Company has
recorded unrealized gains of $414,000, net of taxes, related to
the Chaus shares, in Accumulated Other Comprehensive Income in
the accompanying Statement of Changes in Shareholders' Equity.

      In addition, the Company also entered into a license agreement
("License Agreement") with Chaus, dated June 13, 2005.  The License
Agreement grants Chaus an exclusive license to design, manufacture,
sell and distribute women's sportswear under the Company's
trademark, Kenneth Cole Reaction.  The initial term of the License
Agreement expires on December 31, 2010. Chaus has the option to
renew the License Agreement for an additional term of three years
if it meets specified sales targets and is in compliance with the
License

<PAGE>

         Kenneth Cole Productions, Inc. and Subsidiaries
    Notes to Consolidated Financial Statements (continued)

Note O - Licensing Agreements (continued)

Agreement. The License Agreement provides that the Company receives
payment of specified royalties on net sales. The License Agreement
also requires Chaus to achieve certain minimum sales levels, to pay
certain minimum royalties and to maintain a minimum net worth.
Chaus is also obligated to pay specified percentages of net sales
to support advertising and to expend a specified amount in the
period ending December 31, 2007 to support the initial launch of
the Licensed Products, as defined.

      In November 2004, the Company entered into a licensing agreement
with G-III Apparel Group, LTD ("G-III"), in connection with
worldwide manufacturer, sale, and distribution of women's and men's
outerwear.  The agreement commenced on January 1, 2005 and
continues through December 31, 2008, with options to renewbased on
certain milestones to be met by G-III.  As part of the agreement,
the Company will earn royalties based on a percentage of G-III's
net sales.  The Company will receive $3,000,000 over the term of
the agreement, as consideration for the grant of the license, and
also received 50,000 shares of its G-III's unregistered stock, with
a value of $297,000 at the date of receipt.  The cash and stock
consideration are being amortized over the term of the agreement as
part of the royalty stream.  In addition, the Company recorded the
shares as an "available for sale" investment under SFAS 115, which
is included in Deposits and Sundry in the accompanying Consolidated
Balance Sheet.

Note P - Related Party Transactions

      The Company has an exclusive license agreement with Iconix Brand
Group, Inc., formerly Candies, Inc., and its trademark holding
company, IP Holdings, LLC ("Candies"), to use the Bongo trademark
in connection with worldwide manufacture, sale and distribution of
women's, men's and children's footwear.  The Chief Executive
Officer and Chairman of Candies is the brother of the Company's
Chief Executive Officer and Chairman.  The initial term of the
agreement is through December 31, 2007, with options to renew
through December 31, 2016 based upon the Company reaching certain
sales thresholds.  The license agreement with Candies was entered
into at arm's-length.  During these periods, the Company is obligated
to pay Candies a percentage of net sales based upon the terms of
the agreement.  The Company recorded approximately $1,260,000 and
$1,070,000 in aggregate royalty and advertising expense with
respect to Candies for the years ended December 31, 2005 and
December 31, 2004, respectively.

Note Q - New Accounting Pronouncements

      In November 2004, the FASB issued Statement of Financial
Accounting Standards No. 151, "Inventory Costs - An Amendment of
ARB No. 43, Chapter 4" ("SFAS 151").  SFAS 151 amends the guidance
in ARB No. 43, Chapter 4, "Inventory Pricing", to clarify the
accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage). SFAS 151 is
effective for fiscal years beginning after June 15, 2005 and, as
such, the Company adopted SFAS 151 on January 1, 2006.   The
adoption of SFAS 151 did not have a material impact on the
Company's consolidated results of operations, financial position,
or cash flows.

<PAGE>

          Kenneth Cole Productions, Inc. and Subsidiaries
       Notes to Consolidated Financial Statements (continued)

Note Q - New Accounting Pronouncements (continued)

      In December 2004, the FASB issued SFAS 123R, which
supersedes APB Opinion No. 25. SFAS 123R requires all share-based
payments, including grants of employee stock options, to be
recognized in the financial statements based on their fair values.
Under SFAS 123R, public companies will be required to measure the
cost of services received in exchange for stock options and similar
awards based on the grant-date fair value of the award and
recognize this cost in the income statement over the period during
which an award recipient is required to provide service in exchange
for the award. The pro forma disclosures previously permitted under
SFAS 123 no longer will be an alternative to financial statement
recognition. Under SFAS 123R, the Company must determine the
appropriate fair value model to be used for valuing share-based
payments, the amortization method for compensation cost and the
transition method to be used at the date of adoption. The
transition methods include modified prospective and retroactive
adoption options. The Company adopted SFAS 123R on January 1, 2006
using the modified prospective method. Under this method, the
Company will recognize compensation cost, on a prospective basis,
for the portion of outstanding awards for which the requisite
service has not yet been rendered as of January 1, 2006, based upon
the grant-date fair value of those awards calculated under SFAS 123
for pro forma disclosure purposes. Earnings and diluted earnings
per share are expected to decrease by approximately $5.4 million
and $0.16, respectively, as a result of share-based grants in 2006,
and those grants as of December 31, 2005 for which compensation
expense has not been recognized under SFAS 123.

      Also in December 2004, the FASB issued SFAS No. 153, Exchanges
of Nonmonetary Assets-An Amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions ("SFAS 153"). SFAS 153
eliminates the exception from fair value measurement for
nonmonetary exchanges of similar productive assets in
paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary
Transactions, and replaces it with an exception for exchanges that
do not have commercial substance. SFAS 153 specifies that a
nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a
result of the exchange. The adoption of SFAS 153 on January 1,
2006, did not have a material impact on the Company's consolidated
results of operations or financial condition

      In May 2005, the FASB issued SFAS No. 154, "Accounting Changes
and Error Corrections," ("SFAS 154"), a replacement of Accounting
Principles Board Opinion (APB) No. 20, Accounting Changes, and FASB
Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements." This Statement requires retrospective application to
prior periods' financial statements of a change in accounting
principle. It applies both to voluntary changes and to changes
required by an accounting pronouncement if the pronouncement does
not include specific transition provisions. APB 20 previously
required that most voluntary changes in accounting principles be
recognized by recording the cumulative effect of a change in
accounting principle. SFAS 154 is effective for fiscal years
beginning after December 15, 2005. The Company adopted this
statement on January 1, 2006, and does not anticipate that it will
have a material effect on the Company's consolidated results of
operations, financial position, or cash flows.

<PAGE>

            Kenneth Cole Productions, Inc. and Subsidiaries
          Notes to Consolidated Financial Statements (continued)

Note Q - New Accounting Pronouncements (continued)

In March 2005, the FASB issued FASB Interpretation No. 47,
"Accounting for Conditional Asset Retirement Obligations ("FIN
47").  FIN 47 is an interpretation of Statement of Financial
Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"), and clarifies the term conditional asset
retirement obligation as used in SFAS 143, which refers to a legal
obligation to perform an asset retirement activity in which the
timing and/or method of settlement are conditional on a future
event that may or may not be within the control of the entity.
Accordingly, the Company is required to identify any conditional
asset retirement obligations it may have with respect to its long-
lived assets, and recognize a liability for the fair value of any
conditional asset retirement obligations, if the fair value of the
liability can be reasonably estimated.  FIN 47 is effective for the
fiscal year ending December 31, 2005. As such, the Company adopted
FIN 47 in 2005, which did not materially impact the Company's
consolidated results of operations, financial position, or cash
flows.

Note R- Quarterly Financial Data (Unaudited)

Summarized quarterly financial data for 2005 and 2004 appear below
(in thousands, except per share data):

<TABLE>
<CAPTION>
                              First       Second       Third       Fourth
                              Quarter     Quarter      Quarter     Quarter
<S>                          <C>         <C>         <C>         <C>
2005
Net sales                     $120,292    $109,281    $124,720    $119,767
Royalty revenue                  9,606      10,054      11,059      13,264
Net revenues                   129,898     119,335     135,779     133,031
Gross profit                    56,166      55,369      60,533      62,248
Operating income                11,184      11,208      12,618      10,353
Net income                       7,489       7,708      10,853       7,476
Earnings per share basic         $0.38       $0.39       $0.54       $0.37
Earnings per share diluted       $0.37       $0.38       $0.53       $0.37
Dividends Declared               $0.16       $0.16       $0.16       $0.18

2004
Net sales                     $113,351    $103,720    $132,929    $123,438
Royalty revenue                  9,026       9,337      11,784      12,616
Net revenues                   122,377     113,057     144,713     136,054
Gross profit                    52,468      51,374      63,624      63,918
Operating income                11,676      10,992      19,280      14,469
Net income                       7,393       7,027      12,158       9,274
Earnings per share basic         $0.37       $0.35       $0.60       $0.46
Earnings per share diluted       $0.36       $0.34       $0.59       $0.45
Dividends Declared               $0.12       $0.12       $0.14       $0.14

</TABLE>
<PAGE>

                    Kenneth Cole Productions, Inc. and Subsidiaries
                 Notes to Consolidated Financial Statements (continued)


Note S- Subsequent Event

       On March 1, 2006, the Board of Directors declared a
quarterly cash dividend of $0.18 per share payable on March 30,
2006 to shareholders of record at the close of business on March
9, 2006.

<PAGE>




                         Signatures

      Pursuant to the requirements of Section 13 or 15(d) 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.

                                 By /s/ KENNETH D. COLE
                                        Kenneth D. Cole
                                        Chief Executive Officer

                                        Date: March 10, 2006


Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.


Signature                 Title                          Date

/s/ KENNETH D. COLE     Chief Executive Officer      March 10, 2006
    Kenneth D. Cole     and Chairman of the Board


/s/ DAVID P. EDELMAN    Chief Financial Officer      March 10, 2006
    David P. Edelman


/s/ ROBERT C. GRAYSON   Director                     March 10, 2006
    Robert C. Grayson


/s/ DENIS F. KELLY      Director                     March 10, 2006
    Denis F. Kelly


/s/ PHILIP B. MILLER    Director                     March 10, 2006
    Phillip B. Miller


/s/ PHILIP R. PELLER    Director                     March 10, 2006
    Philip R. Peller


/s/ MARTIN E. FRANKLIN  Director                     March 10, 2006
    Martin E. Franklin

<PAGE>





<TABLE>
                        Kenneth Cole Productions, Inc.
                               Schedule II
                    Valuation and Qualifying Accounts
        For the Years Ended December 31, 2005, 2004, and 2003
<CAPTION>

                          Balance at    Charged to                 Balance
                          Beginning     Costs and                  at End
                          of Period     Expenses     Deductions    of Period
Description
<S>                     <C>           <C>           <C>           <C>
Year ended
December 31, 2005
Allowance for
doubtful accounts        $(302,000)    $(290,000)    $294,000      $(298,000)
Reserve for returns
and sales allowances   $(8,377,000)                   309,000    $(8,068,000)
                       ------------    ----------    ---------   ------------
                       $(8,679,000)    $(290,000)    $603,000    $(8,366,000)
                       ============    ==========    =========   ============

Year ended
December 31, 2004
Allowance for
doubtful accounts        $(475,000)     $(54,000)    $227,000      $(302,000)
Reserve for returns
and sales allowances   $(9,425,000)                 1,048,000    $(8,377,000)
                       ------------     ---------   ---------    ------------
                       $(9,900,000)     $(54,000)  $1,275,000    $(8,679,000)
                       ============     =========   =========    ============

Year ended
December 31, 2003
Allowance for
doubtful accounts        $(475,000)    $(262,000)    $262,000      $(475,000)
Reserve for returns
and sales allowances   $(9,400,000)      (25,000)                $(9,425,000)
                       ------------     ---------   ----------   ------------
                       $(9,875,000)    $(287,000)    $262,000    $(9,900,000)
                       ============    ==========   ==========   ============

</TABLE>
<PAGE>

                                                      Exhibit 21.01

Kenneth Cole Productions, Inc.
Affiliate Group Members                                 location of
Subsidiaries at: 12/31/2005                             incorporation


Cole 57th. St., LLC                                     Delaware
Cole Amsterdam, B.V.                                    Amsterdam
Cole Amsterdam, Inc.                                    Delaware
Cole Broadway, Inc.                                     New York
Cole Clinton, Inc.                                      Connecticut
Cole Dawsonville, Inc.                                  Delaware
Cole Fashion Valley, Inc.                               Delaware
Cole Forum, Inc.                                        Delaware
Cole Garden State, Inc.                                 Delaware
Cole Georgetown, Inc.                                   District of Columbia
Cole Grand Central, Inc.                                Delaware
Cole Grant, Inc.                                        Delaware
Cole Las Vegas, Inc.                                    Delaware
Cole Michigan Avenue, Inc.                              Delaware
Cole New Orleans, Inc.                                  Delaware
Cole Pike, Inc.                                         Delaware
Cole Reading Outlet, Inc.                               Pennsylvania
Cole SFC, LLC                                           Delaware
Cole Short Hills, Inc.                                  New Jersey
Cole South Beach, Inc.                                  Florida
Cole Tyson, Inc.                                        Virginia
Cole Waikele, Inc.                                      New York
K.C.P.L., Inc.                                          Delaware
KCP Beneficiary Services, LLC                           Delaware
KCP Consulting (Dongguan), Co. Ltd.                     PRC
KCP Trust, LLC                                          Delaware
Kenneth Cole Asia, Inc.                                 Delaware
Kenneth Cole Canada, Inc.                               Canada
Kenneth Cole Catalog, Inc.                              Virginia
Kenneth Cole Productions, (LIC), Inc.                   Bahamas
Kenneth Cole Productions, Inc.                          New York
Kenneth Cole Productions, LP                            Delaware
Kenneth Cole Services  (NY), Inc.                       Delaware
Kenneth Cole Services, Inc.                             Delaware
Kenneth Cole Trading, Inc.                              Delaware
Kenneth Cole, Inc.                                      New Jersey
Kenneth Productions, Inc.                               Delaware
Kenth, Ltd.                                             Hong Kong
Riviera Holding, LLC                                    Delaware
South Side, LLC                                         Delaware
Kenneth Cole International Services, LLC                Delaware

<PAGE>


























                                                      Exhibit 23.01


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We consent to the incorporation by reference in Registration
Statement (Form S-8 No. 333-92094) pertaining to the Kenneth Cole
Productions, Inc. 1994 Stock Option Plan, Registration Statement
(Form S-8 No. 333-31868) pertaining to the Kenneth Cole
Productions, Inc. Employee Stock Purchase Plan, Registration
Statement (Form S-8 No.  333-119101) pertaining to the Kenneth Cole
Productions, Inc. 2004 Stock Incentive Plan, and Registration
Statement (Form S-8 No.  333-131724) pertaining to the Kenneth Cole
Productions, Inc. 2004 Stock Incentive Plan of our reports dated
March 9, 2006, with respect to the consolidated financial
statements and schedule of Kenneth Cole Productions, Inc., Kenneth
Cole Productions, Inc. management's assessment of the effectiveness
of internal control over financial reporting, and the effectiveness
of internal control over financial reporting of Kenneth Cole
Productions, Inc., included in the Annual Report (Form 10-K) for
the year ended December 31, 2005.


                                          /s/ Ernst & Young LLP

New York, New York
March 9, 2006

<PAGE>


                                                      Exhibit 31.1
                   CERTIFICATIONS PURSUANT TO
             SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Kenneth D. Cole, certify that:
1.    I have reviewed this annual report of Kenneth Cole
Productions, Inc.;
2.    Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements were
made, not misleading with respect to the period covered by
this report;
3.    Based on my knowledge, the financial statements, and other
financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4.    The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:
a.    Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by
others within those entities, particularly during the
period in which this report is being prepared;
b.    Designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the
preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles;
c.    Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of
the  disclosure controls and procedures, as of the end
of the period covered by this report based on such
evaluation; and
d.    Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is
reasonably likely to materially affect, the
registrant's internal control over financial reporting;
and

<PAGE>

5.    The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent
functions):
a.    all significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
b.    any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting.

                                    By: /s/ Kenneth D. Cole
	                                      ------------------
                                            Kenneth D. Cole
                                            Chief Executive Officer
Date: March 10, 2006

<PAGE>

                                                      Exhibit 31.2
                   CERTIFICATIONS PURSUANT TO
           SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, David P. Edelman, certify that:
1.    I have reviewed this annual report of Kenneth Cole
Productions, Inc.;
2.    Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements were
made, not misleading with respect to the period covered by
this report;
3.    Based on my knowledge, the financial statements, and other
financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4.    The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:
a.    Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by
others within those entities, particularly during the
period in which this report is being prepared;
b.    Designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the
preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles;
c.    Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of
the  disclosure controls and procedures, as of the end
of the period covered by this report based on such
evaluation; and
d.    Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is
reasonably likely to materially affect, the
registrant's internal control over financial reporting;
and

<PAGE>

5.    The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent
functions):
a.    all significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
b.    any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting.

                                    By: /s/ David P. Edelman
	                                      ------------------
                                            David P. Edelman
                                            Chief Financial Officer
Date: March 10, 2006

<PAGE>

                                                      Exhibit 32.1
                    CERTIFICATION PURSUANT TO
                    18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO
                    SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Kenneth Cole Productions,
Inc. (the "Company") on Form 10-K for the period ending December
31, 2005 as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), I, Kenneth D. Cole, Chairman and
Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C.  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

          (1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
          (2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.

/s/ Kenneth D. Cole

Kenneth D. Cole
Chairman and Chief Executive Officer
Kenneth Cole Productions, Inc.
March 10, 2006

<PAGE>

                                                      Exhibit 32.2
                    CERTIFICATION PURSUANT TO
                    18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO
                    SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Kenneth Cole Productions,
Inc. (the "Company") on Form 10-K for the period ending December
31, 2005 as filed with the Securities and Exchange Commission on
the date hereof (the "Report"), I, David P. Edelman, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C.
 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

          (1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
          (2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.

/s/ David P. Edelman

David P. Edelman
Chief Financial Officer
Kenneth Cole Productions, Inc.
March 10, 2006


<PAGE>