##### Table of Contents





UNITED STATES
  SECURITIES AND EXCHANGE
    COMMISSIONWASHINGTON, D.C.
    20549
      FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED JANUARY 3, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   COMMISSION
    FILE NUMBER: 1-10857
      THE
    WARNACO GROUP, INC.(Exact name of registrant as
    specified in its charter)
      Delaware

95-4032739(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification No.)   501
    Seventh Avenue
    New York, New York 10018(Address of principal executive
    offices)
  Registrants telephone number, including area code:
    (212) 287-8000
      Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon Stock, par value $0.01 per share

New York Stock Exchange, Inc.   Securities registered pursuant to Section 12(g) of the
    Act: None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





THE
    WARNACO GROUP, INC.
    2008 ANNUAL REPORT ON
    FORM 10-K
  TABLE OF
    CONTENTS
   
 PAGEPART IItem 1.


Business


1Item 1A.


Risk Factors


22Item 1B.


Unresolved Staff Comments


31Item 2.


Properties


31Item 3.


Legal Proceedings


31Item 4.


Submission of Matters to a Vote of Security
    Holders


32PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


33Item 6.


Selected Financial Data


35Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


37Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


82Item 8.


Financial Statements and Supplementary Data


84Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


84Item 9A.


Controls and Procedures


84Item 9B.


Other Information


87PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


88Item 11.


Executive Compensation


88Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


88Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


88Item 14.


Principal Accounting Fees and Services


88PART IVItem 15.


Exhibits, Financial Statement Schedules


89EX-10.18: AMENDED AND RESTATED COMPENSATION PLANEX-10.20: 2007 NON-EMPLOYEE DIRECTORS DEFERRED COMPENSATION PLANEX-10.27: AMENDED AND RESTATED LETTER AGREEMENTEX-10.28: AMENDED AND RESTATED LETTER AGREEMENTEX-10.29: AMENDED AND RESTATED LETTER AGREEMENTEX-10.30: EMPLOYMENT AGREEMENTEX-10.31: EMPLOYMENT AGREEMENTEX-10.32: AMENDED AND RESTATED LETTER AGREEMENTEX-10.33: AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-12.1: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGESEX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION




---



##### Table of Contents



PART I  Item 1.
    Business.  Introduction
  Calvin
    Klein ® Speedo ® Chaps ® Warners ® Olga ®
  Calvin Klein Calvin Klein Calvin Klein shop-in-shop/concession Calvin Klein Speedo
      Owned
    Trademarks (a)
  Calvin Klein and formatives (beneficially owned for
    mens/womens/childrens underwear, loungewear
    and sleepwear: see Trademarks and Licensing
    Agreements)

Warners
    Olga
    Body Nancy
    Ganz®/Bodyslimmers®   Trademarks
    Licensed in Perpetuity
   Trademark

TerritorySpeedo(a)

United States, Canada, Mexico, Caribbean IslandsFastskin®(secondary Speedo mark)

United States, Canada, Mexico, Caribbean Islands  1




---



##### Table of Contents



Trademarks
    Licensed for a Term
  Trademark

Territory

Expires (j)Calvin Klein (for mens/womens/juniors jeans
    and certain jeans-related products)(b)

North, South and Central America

12/31/2044CK/Calvin Klein Jeans (for retail stores selling
    mens/womens/juniors jeans and certain
    jeans-related products and ancillary products bearing the Calvin
    Klein marks)(b)

Canada, Mexico and Central and South America

12/31/2044CK/Calvin Klein (for bridge apparel, bridge accessories and
    retail stores selling bridge apparel and accessories)(c)

All countries constituting European Union, Norway, Switzerland
    Monte Carlo, Vatican City, Liechtenstein, Iceland and parts of
    Eastern Europe, Russia, Middle East and Africa

12/31/2046CK/Calvin Klein (for retail stores selling bridge accessories
    and jeans accessories)(d)

Central and South America (excluding Mexico) 
    Europe and Asia

12/31/2044
    12/31/2046Calvin Klein and CK/Calvin Klein (for
    mens/womens/childrens jeans and other related
    apparel as well as retail stores selling such items and
    ancillary products)(c)

Western Europe including Ireland, Great Britain, France, Monte
    Carlo, Germany, Spain, Portugal, Andorra, Italy,
    San Marino, Vatican City, Benelux, Denmark, Sweden, Norway,
    Finland, Austria, Switzerland, Lichtenstein, Greece, Cyprus,
    Turkey and Malta and parts of Eastern Europe, Russia, the Middle
    East and Africa, Japan, China, South Korea and Rest of
    Asia (Hong Kong, Thailand, Australia, New Zealand,
    Philippines, Taiwan, Singapore, Malaysia, Indonesia, New Guinea,
    Vietnam, Cambodia, Laos, Myanmar, Macau and the Federated State
    of Micronesia)

12/31/2046CK/Calvin Klein (for independent or common internet sites for
    the sale of jeanswear apparel and jeanswear accessories)(d)

North America, Europe and Asia

12/31/2046CK/Calvin Klein (for independent or common internet sites for
    the sale of jeanswear apparel and jeanswear accessories)(d)

Central and South America (excluding Mexico)

12/31/2044Calvin Klein (for jeans accessories)(c)

All countries constituting European Union, Norway, Switzerland,
    Monte Carlo, Vatican City, Liechtenstein, Iceland and parts of
    Eastern Europe, Russia, Middle East, Africa and Asia

12/31/2046Chaps (for mens sportswear, jeanswear,
    activewear, sport shirts and mens swimwear)(e)

United States, Canada, Mexico, Puerto Rico and Caribbean Islands

12/31/2018Calvin Klein and CK/Calvin Klein (for womens and
    juniors swimwear)(f)

Worldwide with respect to Calvin Klein; Worldwide in
    approved forms with respect to CK/Calvin Klein

12/31/2014 2




---



##### Table of Contents



Trademark

Territory

Expires (j)Calvin Klein (for mens swimwear)(f)

Europe (countries constituting European Union at May 1, 2004),
    Switzerland, Norway, United Arab Emirates, Saudi Arabia, Kuwait,
    Lebanon, Jordan, the West Bank, Egypt, Israel and Russia

12/31/2014Lifeguard®

    (for wearing apparel excluding underwear and loungewear)(g)

Worldwide (United States, Canada, Mexico, Caribbean Islands and
    all other countries where trademark filings are or will be made)

6/30/2030     (a)
    
    Licensed in perpetuity from Speedo
    International, Ltd. (SIL).(b)
    
    Expiration date reflects a renewal
    option, which permits the Company to extend for an additional
    ten-year term through
    12/31/2044
    (subject to compliance with certain terms and conditions).(c)
    
    In January 2006, the Company
    acquired the companies that operate the license and related
    wholesale and retail businesses of Calvin KleinJeans and
    accessories in Europe and Asia and the CK/Calvin Kleinbridge line of sportswear and accessories in
    Europe. See Acquisitions, Dispositions and
    Discontinued OperationsCKJEA Acquisition.
    In connection with the acquisition, the Company acquired various
    exclusive license agreements. In addition, the Company entered
    into amendments to certain of its existing license agreements
    with Calvin Klein, Inc. (in its capacity as licensor). See
    -Trademarks and Licensing Agreements.(d)
    
    By agreement dated January 31,
    2008, the Company acquired the rights to operate CK/Calvin
    Kleinretail stores for the sale of bridge and jeans
    accessories (in countries constituting Europe, Asia and Central
    and South America (excluding Mexico)) as well as the rights to
    operate CK/Calvin Kleinindependent or common internet
    sites for the sale of jeanswear apparel and jeanswear
    accessories in the Americas (excluding Mexico), Europe and Asia.(e)
    
    Expiration date reflects a renewal
    option, which permits the Company to extend for an additional
    five-year term (subject to compliance with certain terms and
    conditions) for the trademark Chapsand the Chapsmark and logo.  (f)
    
    The current term extends through
    December 31, 2009. Expiration date reflects a renewal
    option, which permits the Company to extend for an additional
    five-year term (subject to compliance with certain terms and
    conditions).  (g)
    
    Expiration date reflects four
    successive renewal options of five years each (each subject to
    compliance with certain terms and conditions).    Form 10-K
  Sections 101-1330,
 3




---



##### Table of Contents



Acquisitions,
    Dispositions and Discontinued Operations
  CKJEA
    Acquisition
  Calvin Klein CK/Calvin Klein Note 2 of
    Notes to Consolidated Financial Statements Calvin Klein
  Item 7. Managements Discussion
    and Analysis of Financial Condition and Results of
    OperationsCapital Resources and LiquidityFinancing
    ArrangementsRevolving Credit Facility; Amended and
    Restated Credit Agreement Note 12 of Notes to
    Consolidated Financial Statements
  Trademarks and Licensing
    Agreements
    Calvin Klein
  Calvin Klein
 4




---



##### Table of Contents



Calvin Klein Calvin Klein Calvin Klein CK/Calvin Klein CK/Calvin Klein Calvin Klein (v) e-commerce Calvin Klein Calvin Klein Calvin Klein
    Retail
    Stores in China
    Dispositions
    and Discontinued Operations
  Exit of
    Designer Swimwear Business (except Calvin Klein)
  Calvin Klein OP OP OP OP Catalina Anne Cole Cole of California work-in-process work-in-process Catalina Anne Cole Cole of California
 5




---



##### Table of Contents



OP Catalina Anne Cole Cole of California
  Nautica Michael Kors Nautica Michael Kors
  Lejaby
    Sale
  Lejaby Lejaby Lejaby Lejaby Lejaby Lejaby Lejaby
  OP
    Sale
  OP OP OP OP
  J. Lo by
    Jennifer
    Lopez®

    (JLO), Lejaby Rose, Axcelerate Activewear and Speedo
    retail stores
  JLO Lejaby Rose Axcelerate Speedo
 6




---



##### Table of Contents



Note 3 of Notes to Consolidated Financial Statements
  Business
    Groups
      Fiscal 2008


Fiscal 2007


Fiscal 2006(in thousands of dollars)% of Total





% of Total





% of TotalNet revenues:Sportswear Group

$
1,102,771



53.4
%

$
939,147



51.6
%

$
791,634



49.1
%Intimate Apparel Group


702,252



34.0
%


627,014



34.5
%


545,151



33.9
%Swimwear Group


260,000



12.6
%


253,418



13.9
%


274,416



17.0
%Net revenues (a), (b), (c)

$
2,065,023



100.0
%

$
1,819,579



100.0
%

$
1,611,201



100.0
%     (a)
    
    International operations accounted
    for approximately 54.4%, 49.0% and 42.2% of net revenues in
    Fiscal 2008, Fiscal 2007 and Fiscal 2006, respectively.(b)
    
    Direct to consumer businesses
    accounted for approximately 20.7%, 18.3% and 15.3% of net
    revenues in Fiscal 2008, Fiscal 2007 and Fiscal 2006,
    respectively.  (c)
    
    Sales of products bearing the
    Calvin Kleinbrand name accounted for 72.6%, 68.2% and
    62.1% of net revenues in Fiscal 2008, Fiscal 2007 and Fiscal
    2006, respectively.  % of Total Net





% of Total Net





% of Total NetFiscal 2008


Revenues


Fiscal 2007


Revenues


Fiscal 2006


Revenues(in thousands of dollars)Operating income (loss):Sportswear Group

$
88,656






$
97,946






$
58,421Intimate Apparel Group


126,133







108,343







78,273Swimwear Group


11,478







(24,499
)






20,292Unallocated corporate expenses (a)


(85,946
)






(38,100
)






(37,745
)Operating income (b)

$
140,321



6.8
%

$
143,690



7.9
%

$
119,241



7.4
%     (a)
    
    Includes $31.4 million of
    pension expense, $9.0 million of pension income and
    $2.8 million of pension income for Fiscal 2008, Fiscal 2007
    and Fiscal 2006, respectively.(b)
    
    Includes approximately
    $27.8 million, $1.3 million, $3.9 million and
    $2.3 million of restructuring expenses for Fiscal 2008 in
    the Sportswear Group, Intimate Apparel Group, Swimwear Group and
    Unallocated corporate expenses, respectively, approximately
    $0.1 million, $2.1 million, $29.8 million and
    $0.3 million of restructuring expenses for Fiscal 2007 in
    the Sportswear Group, Intimate Apparel Group, Swimwear Group and
    Unallocated corporate expenses, respectively, and approximately
    $0.4 million of restructuring expenses for Fiscal 2006 in
    Unallocated corporate expenses. 7




---



##### Table of Contents



January 3, 2009


% of Total


December 29, 2007


% of TotalTotal assets:Sportswear Group

$
801,038



53.5
%

$
758,311



47.2
%Intimate Apparel Group


304,724



20.4
%


359,508



22.4
%Swimwear Group


147,685



9.9
%


166,862



10.4
%Corporate/Other


242,646



16.2
%


321,822



20.0
%Total assets

$
1,496,093



100.0
%

$
1,606,503



100.0
%   Sportswear
    Group
    Brand Name (a)

Price Range

Type of ApparelCalvin Klein

Better to premium

Mens, womens and childrens (b) designer
    jeanswear (bottoms and tops) and bridge sportswear in Europe;
    jeans accessories in Europe and Asia and bridge accessories in
    EuropeChaps

Moderate

Mens sportswear, jeanswear, activewear, knit and woven
    sports shirts and swimwear (c)     (a)
    
    In December 2003, the Company sold
    its White
    Stag®

    trademark to Wal-Mart Stores. Pursuant to the sale agreement,
    the Company provided certain sourcing and design services
    related to the White Stagwomens sportswear line. The
    design services agreement expired in January 2007.(b)
    
    The Sportswear Group sub-licenses
    the rights to produce childrens designer jeanswear to a
    third party.  (c)
    
    The Sportswear Group sub-licenses
    the rights to produce mens leather outerwear to a third
    party.  Calvin Klein CK Calvin Klein Calvin Klein Calvin Klein Calvin Klein CK
    Calvin Klein Acquisitions,
    Dispositions and Discontinued OperationsCKJEA
    Acquisition. Calvin Klein
  Calvin Klein Calvin Klein
 8




---



##### Table of Contents



e-commerce Calvin Klein e-commerce Calvin Klein Calvin
    Klein
  Chaps Chaps Chaps
      Channels of Distribution

Customers

BrandsUnited StatesDepartment Stores

Macys Inc./ Carsons/Bon Ton

Calvin KleinJeansStage Stores

ChapsIndependent Retailers

Nordstrom/ Dillards Belk

Calvin KleinJeans Calvin KleinJeans and
    ChapsChain Stores

Kohls

ChapsMembership Clubs

Sams Club and BJs

Calvin KleinJeans and ChapsCostco

Calvin KleinJeansOther

Military

Calvin KleinJeans and ChapsEurope

Stores operated under shop-in-shop and concession agreements

Calvin KleinJeansEl Corte InglesCanada

Hudson Bay Company and Sears

Calvin KleinJeans and ChapsCostco and Sams Club

Calvin KleinJeans and ChapsMexico, Central and South America

Liverpool and Sears

Calvin KleinJeans and ChapsSams Clubs

Calvin KleinJeans and ChapsStores operated under distributor agreements

Calvin KleinJeansAsia

Company operated retail stores, shop-in-shop/concession locations/ stores under retail licenses or  distributor agreements/direct wholesale distributors

Calvin KleinJeans and Accessories    9




---



##### Table of Contents



Fiscal 2008


Fiscal 2007


Fiscal 2006Net


% of


Net


% of


Net


% ofRevenues


Total


Revenues


Total


Revenues


Total(in thousands of dollars)Net revenues:United States

$
420,388



38.1
%

$
405,188



43.1
%

$
403,002



50.9
%International


682,383



61.9
%


533,959



56.9
%


388,632



49.1
%$
1,102,771



100.0
%

$
939,147



100.0
%

$
791,634



100.0
%   Intimate
    Apparel Group
        Brand Name

Price Range

Type of ApparelCalvin KleinUnderwear

Better to premium

Womens intimate apparel and sleepwear and mens
    underwear and loungewearWarners

Moderate to better

Womens intimate apparelOlga

Moderate to better

Womens intimate apparelOlgas Christina

Better

Womens intimate apparelBody Nancy Ganz/Bodyslimmers

Better to premium

Womens intimate apparel   Calvin Klein Calvin Klein Calvin Klein Calvin Klein Calvin Klein
  Warners Olga Warners
 10




---



##### Table of Contents



shop-in-shop/concession CKU.com Calvin Klein
    Channels of Distribution

Customers

BrandsUnited StatesDepartment Stores

Macys Inc. Carsons/Bon-Ton

Warners, Olga Christina, and Calvin KleinUnderwearIndependent Retailers

Nordstrom, Dillards, and Belk

Warners, Olgaand Calvin KleinUnderwearChain Stores

Kohls, JCPenney and Sears

Warners, Olga,and private labelMembership Clubs

Costco and Sams Club

Warners, Olga, Bodyslimmersand Calvin KleinUnderwearCanada

Hudson Bay Company, Zellers, Sears and Wal-Mart

Warners, Olga, Body Nancy Ganz/Bodyslimmers and Calvin Klein UnderwearCostco

Calvin KleinUnderwearMexico, Central and South America

Liverpool, Palacio de Hierro, Suburbia and Sears

Warners, Olga, Body Nancy Ganz/Bodyslimmersand Calvin KleinUnderwearSams Clubs

WarnersCostco

Calvin KleinUnderwearEurope

Harrods, House of Fraser, Galeries Lafayette, Selfridges Debenhams, Au Printemps, Karstadt, Kaufhof and El Corte Ingles

Calvin Klein UnderwearCompany operated retail stores, shop-in-shop/concession locations and stores under retail licenses or distributor agreements

Calvin KleinUnderwearAsia

Company operated retail stores, shop-in-shop/concession locations and stores under retail licenses or distributor agreements

Calvin KleinUnderwear      11




---



##### Table of Contents



Fiscal 2008


Fiscal 2007


Fiscal 2006Net


% of


Net


% of


Net


% ofRevenues


Total


Revenues


Total


Revenues


Total(in thousands of dollars)Net revenues:United States

$
308,119



43.9
%

$
304,765



48.6
%

$
280,922



51.5
%International


394,133



56.1
%


322,249



51.4
%


264,229



48.5
%$
702,252



100.0
%

$
627,014



100.0
%

$
545,151



100.0
%   Swimwear
    Group
  Speedo
    Brand Name

Price Range

Type of ApparelSpeedo

Moderate to premium

Mens and womens competitive swimwear, competitive
    and non- competitive swim accessories, mens swimwear and
    coordinating T-shirts, womens fitness swimwear, fashion
    swimwear, footwear and childrens swimwearCalvin Klein

Better to premium

Mens and womens swimwearLifeguard

Upper moderate to better

Mens and womens swimwear and related products   Speedo ® Speedo SpeedoUSA.com Speedo
  Speedo Speedo Speedo Speedo
 12




---



##### Table of Contents



SpeedoUSA. Speedo
  Speedo Speedo Speedo SpeedoUSA.
  Calvin Klein Calvin Klein Calvin Klein
    Channels of Distribution

Customers

BrandsUnited StatesDepartment Stores

Macys Inc.

Speedoswimwear and accessories, Calvin KleinswimwearIndependent Retailers

Nordstrom, Dillards, and Belk

Speedoswimwear, Calvin KleinswimwearChain Stores

J. C. Penney, Kohls and Sears

Speedoswimwear and accessories,Membership Clubs

Costco and Sams Club

Speedoswimwear, active apparel and accessoriesMass Merchandisers

Target

SpeedoaccessoriesOther

Military, Victorias Secret Catalog and The Sports Authority, team dealers

Speedoswimwear and accessories, Lifeguard, Calvin KleinswimwearCanada

Hudson Bay Company and Sears

Speedoswimwear and accessories, Calvin KleinCostco and Sams Clubs

Speedoswimwear and accessoriesMexico, Central and South America

Liverpool, Palacio De Hierro, Marti, Wal-Mart and

Speedoswimwear and accessories, Calvin KleinCostco

Speedoswimwear and accessoriesEurope

EL Corte Ingles, House of Fraiser, La Rinascente and Company-owned stores/stores operated under distributor agreements

Calvin Kleinswimwear    13




---



##### Table of Contents



Fiscal 2008


Fiscal 2007


Fiscal 2006Net


% of


Net


% of


Net


% ofRevenues


Total


Revenues


Total


Revenues


Total(in thousands of dollars)Net revenues:United States

$
213,696



82.2
%

$
217,199



85.7
%

$
247,980



90.4
%International


46,304



17.8
%


36,219



14.3
%


26,436



9.6
%$
260,000



100.0
%

$
253,418



100.0
%

$
274,416



100.0
%   Customers
      Advertising,
    Marketing, and Promotion
    and/or Speedo
  Calvin Klein Chaps
 14




---



##### Table of Contents



Sales
      Distribution
  and/or
  Raw
    Materials and Sourcing
    Government Regulations.
  work-in-process
      Trademarks
    and Licensing Agreements
  Calvin Klein
 15




---



##### Table of Contents



Speedo Speedo Warners Olga Calvin Klein Chaps
  cease-and-desist
  and/or
  Intimate
    Apparel Group
  Calvin Klein Calvin
    Klein Calvin Klein
  Sportswear
    Group
  Calvin Klein Calvin Klein Calvin
    Klein Acquisitions,
    Dispositions and Discontinued OperationsCKJEA
    Acquisition
  Calvin Klein CK Calvin Klein Acquisitions,
    Dispositions and Discontinued Operations CKJEA
    Acquisition. CK/Calvin Klein
 16




---



##### Table of Contents



Calvin Klein CK/Calvin Klein Calvin Klein and/or CK/Calvin Klein
  Calvin Klein Calvin Klein Calvin Klein CK/Calvin Klein CK/Calvin
    Klein Calvin
    Klein (v) e-commerce Calvin Klein Calvin Klein Calvin Klein
  Chaps
  Swimwear
    Group
  Speedo Speedo Speedo
 17




---



##### Table of Contents



Speedo Speedo
  Calvin Klein CK Calvin Klein Calvin Klein 5-year Calvin Klein CK
    Calvin Klein
  Lifeguard Lifeguard Lifeguard
  Nautica Nautica Nautica Acquisitions, Dispositions
    and Discontinued Operations.
  Michael Kors MICHAEL Michael Kors Michael Kors Acquisitions,
    Dispositions and Discontinued Operations.
  Anne Cole, Cole of California Catalina Cole of California Catalina Anne
    Cole Acquisitions, Dispositions and Discontinued
    OperationsDispositions and Discontinued
    Operations.
  OP Op Ocean
    Pacific Seven2®
 18




---



##### Table of Contents



International
    Operations
  and/or
    Item 1A. Risk Factors Managements Discussion and Analysis of Financial
    Condition and Results of OperationsCapital Resources and
    Liquidity
  Competition
    Item 1A. Risk Factors.
  Government
    Regulations
   19




---



##### Table of Contents



and/or Item 1A. Risk Factors
  Employees
  Note 4 to Notes to Consolidate
    Financial Statements.
  Backlog
    Executive
    Officers of the Registrant
    Name

Age

PositionJoseph R. Gromek


62


Director, President and Chief Executive OfficerLawrence R. Rutkowski


50


Executive Vice President and Chief Financial OfficerHelen McCluskey


53


PresidentIntimate Apparel GroupDwight Meyer


56


PresidentGlobal Sourcing, Distribution and LogisticsFrank Tworecke


62


PresidentSportswear GroupStanley P. Silverstein


56


Executive Vice PresidentInternational Strategy and
    Business DevelopmentJay A. Dubiner


45


Senior Vice President, General Counsel and SecretaryElizabeth Wood


47


Senior Vice PresidentHuman Resources   Mr. Gromek
 20




---



##### Table of Contents



Mr. Rutkowski
  Ms. McCluskey Calvin Klein Warners Olga Body Nancy Ganz Speedo
  Mr. Meyer
  Mr. Tworecke
  Mr. Silverstein
 21




---



##### Table of Contents



Mr. Dubiner
  Ms. Wood
  Website
    Access to Reports
  http://www.warnaco.com Form 10-K, Form 10-Q, Form 8-K Form 10-K,
  Item 1 of
    Part I Note 5
    of Notes to Consolidated Financial Statements
  Item 1A.
    Risk
    Factors    Form 10-K
  Recent and future economic conditions, including turmoil
    in the financial and credit markets, may adversely affect our
    business.
   22




---



##### Table of Contents



and/or
  and/or
  Item 1A.
  The worldwide apparel industry is heavily influenced by
    general economic conditions.
    We have foreign currency exposures relating to buying,
    selling and financing in currencies other than the
    U.S. dollar, our functional currency.
   23




---



##### Table of Contents



The apparel industry is subject to constantly changing
    fashion trends and if we misjudge consumer preferences, the
    image of one or more of our brands may suffer and the demand for
    our products may decrease.
    The apparel industry is subject to pricing pressures that
    may require us to lower the prices we charge for our
    products.
      The markets in which we operate are highly competitive and
    we may not be able to compete effectively.
   24




---



##### Table of Contents




    product quality;
    brand recognition;
    price;
    product differentiation (including product innovation);
    manufacturing and distribution expertise and efficiency;
    marketing and advertising; and
    customer service.    Increases in the prices of raw materials used to
    manufacture our products or increases in costs to transport our
    products could materially increase our costs and decrease our
    profitability.
    Shortages in the supply of sourced goods, difficulties
    encountered by the third parties that source certain of our
    products, or interruptions in our contracted production
    facilities or distribution operations could result in difficulty
    in procuring, producing and distributing our products.
     25




---



##### Table of Contents



The failure of our suppliers or contractors to adhere to
    quality and production standards and the failure of our
    inspections to identify and correct such quality or production
    problems could have a material adverse effect on our business,
    financial condition and results of operations.
    We depend on a limited number of customers for a
    significant portion of our sales, and our financial success is
    linked to the success of our customers, our customers
    commitment to our products and our ability to satisfy
    and/or
    maintain our customers.
    order-by-order
    Our success depends upon the continued protection of our
    trademarks and other intellectual property rights and we may be
    forced to incur substantial costs to maintain, defend, protect
    and enforce our intellectual property rights.
   26




---



##### Table of Contents



A significant portion of our operations is dependent on
    license agreements with third parties that allow us to design,
    produce, source and market our products.
  and/or
    Our success depends on the reputation of our owned and
    licensed brand names, including, in particular, Calvin
    Klein.
  and/or
  Calvin Klein Calvin Klein Calvin Klein Calvin Klein Calvin Klein
  We are subject to local laws and regulations in the
    U.S. and abroad.
   27




---



##### Table of Contents



Changing international trade regulation may increase our
    costs and limit the amount of products or raw materials that we
    may import from or export to a given country.
      Our business outside of the U.S. exposes us to
    uncertain conditions in overseas markets.
    
    currency fluctuations;
    import and export license requirements;
    trade restrictions;
    changes in quotas, tariffs, taxes and duties;
    restrictions on repatriating foreign profits back to the U.S.;
    foreign laws and regulations;
    international trade agreements;
    difficulties in staffing and managing international operations;
    economic conditions overseas;
    political or social unrest; and
    disruptions or delays in shipments.    We are subject to certain risks as a result of our
    indebtedness.
  Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    OperationsCapital Resources and LiquidityFinancing
    Arrangements
 28




---



##### Table of Contents



Item 1A.
  7 8
  Our business depends on our senior management team and
    other key personnel.
    We rely significantly on information technology. Any
    inadequacy, interruption, integration failure or security
    failure of that technology could harm our ability to effectively
    operate our business.
    Fluctuations in the valuation of our pension plans
    investments can have a negative effect on our financial
    condition and results of operations.
  U.S.-based
 29




---



##### Table of Contents



Businesses that we may acquire may fail to perform to
    expectations. In addition, we may be unable to successfully
    integrate acquired businesses with our existing business.
      The restructuring activities that we engage in may not be
    successfully implemented and may have an adverse effect on our
    results of operations or financial condition.
    We have a history of restated financial statements and
    insufficient disclosure controls and procedures and internal
    control over financial reporting, the recurrence of which could
    impair our ability to provide timely and reliable financial
    information in the future and have a negative effect on our
    business and stock price.
   30




---



##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.  13-year
  Lejaby Item 1. Acquisitions, Dispositions and Discontinued
    OperationsDispositions and Discontinued Operations
      Item 3.
    Legal
    Proceedings.  SEC Inquiry: Chaps
   31




---



##### Table of Contents



OP Litigation:
  Other: and/or
  Item 4.
    Submission
    of Matters to a Vote of Security Holders.   32




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    High


Low2007First Quarter

$
29.03


$
24.40Second Quarter

$
39.71


$
26.90Third Quarter

$
41.78


$
30.21Fourth Quarter

$
44.94


$
32.562008First Quarter

$
44.74


$
28.70Second Quarter

$
51.22


$
40.50Third Quarter

$
53.89


$
36.38Fourth Quarter

$
39.76


$
12.222009First Quarter (through February 20, 2009)

$
24.67


$
15.99       Repurchases
    of Shares
     33




---



##### Table of Contents



Total Number


Number of Sharesof Shares


that May Yet BeTotal Number


Average


Purchased as


Repurchasedof Shares


Price Paid


Part of Publicly


Under thePeriod

Repurchased


per Share


Announced Plan


Announced PlansOctober 5, 2008  November 1, 2008


518


$
26.66







2,433,131November 2, 2008  December 6, 2008


946,977


$
16.87



943,000



1,490,131December 7, 2008  January 3, 2009


759


$
17.57







1,490,131  34




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.    Nautica, Michael Kors, Private Label,
    Lejaby Anne Cole Cole of California Catalina, OP, JLO Lejaby Rose, Axcelerate Speedo Accounting for the
    Impairment or Disposal of Long-Lived Assets
  Item 7. Managements Discussion
    and Analysis of Financial Condition and Results of Operations Form 10-K.
  Fiscal 2008


Fiscal 2007


Fiscal 2006


Fiscal 2005


Fiscal 2004(Dollars in millions, except per share data)Statement of operations data:Net revenues

$
2,065.0


$
1,819.6


$
1,611.2


$
1,259.5


$
1,183.4Gross profit


922.0



749.7



629.2



428.7



389.7Selling, general and administrative expenses


740.5



601.7



500.0



335.5



323.2Amortization of intangible assets


9.6



13.2



12.3



4.0



2.8Pension expense (income)


31.6



(8.8
)


(2.4
)


1.2



(6.2
)Operating income


140.3



143.7



119.2



88.0



69.8Other (income) loss


1.9



(7.1
)


(2.9
)


0.7



(2.3
)Interest expense


29.5



37.7



38.5



22.4



22.3Interest income


(3.1
)


(3.8
)


(2.9
)


(3.6
)


(1.9
)Income from continuing operations


50.2



86.9



66.5



43.2



30.3Income (loss) from discontinued operations, net of taxes


(2.9
)


(7.8
)


(15.7
)


6.3



12.3Net income


47.3



79.1



50.8



49.5



42.5Net income applicable to Common Stock


47.3



79.1



50.8



49.5



42.5Dividends on Common Stock


















Per share data:Income from continuing operationsBasic

$
1.11


$
1.94


$
1.45


$
0.94


$
0.67Diluted


1.07



1.86



1.42



0.92



0.66Income (loss) from discontinued operations, net of taxesBasic


(0.07
)


(0.18
)


(0.34
)


0.14



0.27Diluted


(0.06
)


(0.16
)


(0.34
)


0.13



0.27Net incomeBasic


1.04



1.76



1.11



1.08



0.94Diluted


1.01



1.70



1.08



1.06



0.92Dividends declared


















Shares used in computing earnings per shareBasic


45,351,336



44,908,028



45,719,910



45,872,308



45,418,069Diluted


46,779,107



46,618,307



46,882,399



46,804,053



46,178,535   35




---



##### Table of Contents



Fiscal 2008


Fiscal 2007


Fiscal 2006


Fiscal 2005


Fiscal 2004(Dollars in millions, except per share data)Other data:Cash flows from operating activities


125.9



160.4



86.7



138.1



50.3Cash flows from investing activities


(44.3
)


(20.8
)


(187.1
)


(36.7
)


(45.2
)Cash flows from financing activities


(120.7
)


(121.7
)


99.7



(0.1
)


0.6Depreciation and amortization


46.3



65.3



47.6



30.7



31.2Capital expenditures


41.0



41.8



30.2



36.7



29.3Ratio of earnings to fixed charges (a)


2.6



2.6



2.3



2.7



2.4   January


December


December


December


January3, 2009


29, 2007


30, 2006


31, 2005


1, 2005(Dollars in millions, except per share data)Balance sheet data:Working capital


474.6



588.0



453.9



494.8



434.2Total assets


1,496.1



1,606.5



1,681.0



1,220.1



1,153.987/8% Senior
    Notes due 2013


160.9



205.0



205.0



210.0



210.0Long-term debt (b)


163.8



310.5



332.5



210.0



210.8Stockholders equity


787.7



772.9



682.9



629.5



576.9     (a)
    
    For the purposes of computing the
    ratio of earnings of fixed charges, earnings are defined as
    income from continuing operations before income taxes, plus
    fixed changes and less capitalized interest. Fixed charges are
    defined as the sum of interest expense, including the
    amortization of deferred financing costs, capitalized interest
    and that portion of rental expense which the Company believes to
    be representative of an interest factor. The deficit of earnings
    to fixed charges represents the amount of earnings that would be
    required to increase the ratio of earnings to fixed charges to
    1.00 in those cases where earnings are less than the total fixed
    charges.(b)
    
    Does not include current maturities
    of long-term debt. See Note 12 of Notes to Consolidated
    Financial Statements. 36




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Form 10-K, Statement Regarding Forward-Looking Disclosure Item 1A. Risk Factors.
  Managements Discussion and Analysis of
    Financial Condition and Results of Operations Form 10-K. Calvin Klein Warners Olga Body Nancy Ganz
    /Bodyslimmers concession / shop-in-shop
  Overview
  Calvin
    Klein shop-in-shop/concession Speedo Calvin Klein
  The Companys mission is to become the premier global,
    branded apparel company. To accomplish its mission, the Company
    has identified the following key strategic objectives:
  
    Build and maintain powerful global brands.  The
    Company believes that one of its strengths is its portfolio of
    highly recognized brand names. The Company strives to enhance
    its brand image through superior design, product innovation,
    focused marketing and high quality product construction.
    Leverage the Companys international
    platform.  The Companys international
    design, sales and distribution network allows it to reach
    consumers around the world. The Company works to effectively
    utilize its international presence to enhance and expand the
    worldwide reach of its branded apparel products. In Fiscal 2008
    the Company derived over 54% of its net revenue from its foreign
    business. The Company believes that there are opportunities for
    significant continued growth in Europe, Asia and South America.
    Grow the Companys direct- to- consumer
    business.  As noted above, as of January 3,
    2009, the Company had (either directly or through licensees)
    1,489 direct-to-consumer outlets throughout the world. The
    Company expects to continue to expand this aspect of its
    business, particularly in Europe and Asia.  The Company notes the following significant highlights with
    respect to Fiscal 2008:
  
    Net revenues increased $245.4 million, or 13.5%, to
    $2.1 billion for Fiscal 2008 led primarily by the
    Companys Calvin Kleinbusinesses. International
    operations generated $1.1billion, or 54.4% of the Companys
    net revenues compared with $892.4 million, or 49.0% of net
    revenues, 37




---



##### Table of Contents



in Fiscal 2007. In addition, approximately 21% of net revenues
    were from direct to consumer sales compared to 18% for Fiscal
    2007. The increase in direct to consumer net revenues reflects
    the opening of over 300 Calvin Kleinretail stores and a
    13.1% increase in same store sales on a constant dollar basis.
    In addition, Fiscal 2008 benefited from an extra week of
    operating activity as Fiscal 2008 contained fifty-three weeks of
    operations while Fiscal 2007 contained fifty-two weeks of
    operations. Net revenues related to the extra week of operations
    were approximately $23.0 million.  
    Operating income decreased $3.4 million, or 2.3%, from
    $143.7 million for Fiscal 2007 to $140.3 million for
    Fiscal 2008. Operating income for Fiscal 2008 includes pension
    expense of $31.6 million and restructuring charges of
    $35.3 million, including a charge of $18.5 million
    (the Collection License Company Charge) recorded in
    the Sportswear segment related to the transfer of the Collection
    License Company (defined below) to Phillips-Van Heusen
    Corporation (PVH). Operating income for Fiscal 2007
    includes pension income of $8.8 million and restructuring
    expenses of $32.4 million. Both net revenues and operating
    income for Fiscal 2008 were impacted by fluctuations in foreign
    currencies (see below).
    On August 26, 2008, Warnaco and Warnaco of Canada Company,
    an indirect wholly-owned subsidiary of Warnaco Group, each
    entered into separate revolving credit agreements (the New
    Credit Agreement and the New Canadian Credit
    Agreement, respectively, and together the New Credit
    Agreements). The New Credit Agreements provide for
    revolving credit facilities under which up to a total of
    $300.0 million will be available initially and up to an
    additional $200.0 million may be requested. The New Credit
    Agreements mature on August 26, 2013. The obligations under
    the New Credit Agreement are guaranteed by Warnaco Group and
    certain of its U.S. subsidiaries. The obligations under the
    New Canadian Credit Agreement are guaranteed by Warnaco Group
    and certain of its Canadian subsidiaries. The guarantees are
    secured by first priority liens, for the benefit of the
    financial lending institutions and issuers of letters of credit,
    on substantially all of the tangible and intangible assets of
    the Warnaco Group and certain of its
    U.S. and/or
    Canadian subsidiaries. The Company used $90.0 million of
    the proceeds from the New Credit Agreements and
    $16.0 million of its cash and cash equivalents to repay in
    full the $106.0 million in loans outstanding under the Term
    B Note of the Amended and Restated Credit Agreement (see
    Capital Resources and Liquidity,below). The Amended and
    Restated Credit Agreement and the Foreign Revolving Credit
    Facility (see Capital Resources and Liquidity,below)
    were terminated along with all related guarantees, mortgages,
    liens and security interests. In connection with the termination
    of the Amended and Restated Credit Agreement, the Company wrote
    off $2.1 million of deferred financing costs, which had
    been recorded as Other Assets on the Consolidated Balance Sheet.
    The Company recorded $4.2 million of deferred financing
    costs in connection with the New Credit Agreements, which will
    be amortized using the straight-line method through
    August 26, 2013.
    On average, for Fiscal 2008 compared to Fiscal 2007, the
    U.S. dollar weakened relative to the functional currencies
    of countries where the Company conducts certain of its
    operations overseas (primarily the Euro and the Canadian Dollar)
    and strengthened relative to the Korean won. However, the annual
    trends for those periods reflect a U.S. dollar that was
    stronger in the fourth quarter of 2008 relative to the Euro and
    Canadian dollar. Therefore, translating foreign currencies into
    the U.S. Dollar resulted in a $10.6 million increase
    in net revenues and a $6.0 million increase in operating
    income for Fiscal 2008 and a $41.6 million decrease in net
    revenues and a $1.8 million decrease in operating income
    for the fourth quarter of Fiscal 2008 (see Item 7A.
    Quantitative and Qualitative Disclosure About Market
    RiskForeign Exchange Risk,below).
    In addition, certain of the Companys foreign subsidiaries
    that purchase a portion of their inventory from suppliers
    denominated in U.S. dollars experienced increases of
    approximately $10 million in gross profit during Fiscal
    2008 when compared to Fiscal 2007 as a result of 38




---



##### Table of Contents



fluctuations in foreign currency exchange rates. The Company
    also recorded losses of approximately $28.5 million (on the
    Selling, general and administrative line item) related to the
    effect that fluctuations in foreign currencies had on U.S dollar
    denominated liabilities in certain of the Companys foreign
    subsidiaries.  
    Income from continuing operations for Fiscal 2008 was $1.07 per
    diluted share, a 42.5% decrease compared to the $1.86 per
    diluted share for Fiscal 2007. Included in income from
    continuing operations for Fiscal 2008 is a tax charge of
    approximately $14.6 million, or $0.31 per diluted share,
    related to the repatriation, to the U.S., of the proceeds
    received in connection with the sale of the Companys
    Lejabybusiness, net of adjustments for working capital,
    as well as restructuring charges of $31.1 million (net of
    income tax benefits of $4.2 million), or $0.66 per diluted
    share and pension expense of $19.0 million (net of income
    tax benefits of $12.6 million) or $0.41 per diluted share.
    Income from continuing operations for Fiscal 2007 includes
    restructuring charges of $32.4 million and pension income
    of $8.8 million.
    On January 30, 2008, the Company entered into an agreement
    with PVH whereby, for total payments of approximately
    $42 million (net of expected adjustments for working
    capital), the Company transferred 100% of the shares of the
    company (the Collection License Company) that
    operates the license (the Collection License) for
    Calvin Kleinmens and womens Collection
    apparel and accessories worldwide to PVH and entered into
    certain new, and amended certain existing, Calvin Klein
    licenses. The new licenses acquired and amendments to existing
    licenses will allow the Company to further extend its Calvin
    Klein direct-to-consumer business in Europe, Asia and South
    America. The additional rights granted to the Company extend
    through 2046. During Fiscal 2008, the Company recorded
    intangible assets of $24.7 million related to the new
    licenses acquired and recorded a restructuring charge (included
    in selling, general and administrative expenses) of
    $18.5 million related to the transfer of the Collection
    License Company to PVH. See Note 2 of Notes to
    Consolidated Financial Statements.
    On February 14, 2008, the Company entered into an agreement
    with Palmers Textil AG (Palmers) whereby, effective
    March 10, 2008, Palmers acquired the Lejabybusiness
    for a base purchase price of 32.5 million
    (approximately $47.4 million) payable in cash and
    12.5 million (nominal value) (approximately
    $18.2 million) evidenced by an interest free promissory
    note (payable on December 31, 2013), subject to certain
    adjustments, including adjustments for working capital. Pursuant
    to the agreement, the Company continued to operate the Canadian
    portion of the Lejabybusiness through December 2008. In
    addition, the Company entered into a transition services
    agreement with Palmers whereby for a period of nine months
    following the closing (subject to mutually agreed upon extension
    periods), the Company provided certain transitional services to
    Palmers. During March 2008, the Company recorded a gain of
    $3.4 million (as part of income from discontinued
    operations, net of income taxes) related to the sale of
    Lejaby. In addition, during Fiscal 2008, the Company
    repatriated, in the form of a dividend, to the U.S., the
    proceeds received in connection with the Lejabysale, net
    of adjustments for working capital. The repatriation of the net
    proceeds from the Lejaby sale resulted in an income tax
    charge of approximately $14.6 million which was recorded as
    part of Provision for income taxes in the
    Companys consolidated statement of operations.
    Using the proceeds from the sale of the Lejabybusiness,
    the Company repurchased $44.1 million aggregate principal
    amount of the outstanding Senior Notes (defined below) for total
    consideration of $46.2 million. In connection with the
    purchase, the Company recognized a loss of approximately
    $3.2 million, which included the write-off of approximately
    $1.1 million of deferred financing costs.
    The Company repurchased 943,000 shares of its common stock
    under the 2007 Share Repurchase Program at a cost of
    $15.9 million. 39




---



##### Table of Contents




    Following the economic downturn in the fourth quarter of 2008,
    as a result of the turmoil in world financial markets and the
    expected decline in the demand for the Companys products,
    the Company reduced its workforce in the United States during
    the fourth quarter of 2008 by 44 employees at a cost of
    approximately $1.4 million in order to align its cost
    structure to match current economic conditions. A further
    reduction in force was implemented during the first quarter of
    2009 (257 employees in both the Companys domestic and
    foreign operations) at a cost of approximately $8.6 million.
    In an effort to increase efficiencies related to financial
    reporting, the Company initiated a plan to upgrade and
    standardize certain of its financial reporting information
    systems on a global basis. The Company expects to complete the
    system upgrades during the first half of 2009.  Item 1A.
    Risk Factors Statement Regarding Forward-Looking
    Disclosure
  Discussion
    of Critical Accounting Policies
      Use of
    Estimates
    Revenue
    Recognition
   40




---



##### Table of Contents



Cost
    of Goods Sold
    Accounts
    Receivable
    Inventories
  first-in,
 41




---



##### Table of Contents



Long-Lived
    Assets
      Accounting for the
    Impairment or Disposal of Long-Lived
      Goodwill
    and Other Intangible Assets
  Goodwill and Other Intangible Assets
 42




---



##### Table of Contents



Warners® Olga ® Body

    Nancy
    Ganz® Bodyslimmers ® Calvin Klein Calvin Klein Chaps ®
       43




---



##### Table of Contents



Note 10 of Notes to Consolidated Financial Statements.
  Income
    Taxes
    Accounting for
    Uncertainty in Income Taxes  an Interpretation of
    SFAS No. 109 Accounting for Income
    Taxes Note 6 of Notes to Consolidated Financial Statements
  Pension
    Plans
   44




---



##### Table of Contents



Employers Accounting for Pensions
  Employers Accounting for Defined Benefit Pension and
    Other Post Retirement Plans
   45




---



##### Table of Contents



Note 7 of Notes to
    Consolidated Financial Statements
  Stock-Based
    Compensation
  Share-Based Payment
  
    In determining the stock price volatility assumption used, the
    Company considers the historical volatility of the stock prices
    of selected companies in the apparel industry, the nature of
    those companies, the Companys own historical stock price
    volatility since its emergence from bankruptcy and other
    factors. Historical volatilities are based upon daily quoted
    market prices of the Companys common stock on the New York
    Stock Exchange and, prior to May 15, 2008, on the NASDAQ
    Stock Market LLC, over a period equal to the expected term of
    the related equity instruments. The Company relies only on
    historical volatility since it provides the most reliable
    indication of future volatility. Future volatility is expected
    to be consistent with historical; historical volatility is
    calculated using a simple average calculation method; historical
    data is available for the length of the options expected
    term and a sufficient number of price observations are used
    consistently. Since the Companys stock options are not
    traded on a public market, the Company does not use implied
    volatility. A higher volatility input to the
    Black-Scholes-Merton model increases the resulting compensation
    expense.
    The Company based its Fiscal 2008, Fiscal 2007 and Fiscal 2006
    estimates of the expected life of a stock option of six years
    upon the average of the sum of the vesting period of
    36-42 months
    and the option term of ten years for issued and outstanding
    options in accordance with the simplified method as detailed in
    Staff Accounting Bulletin No. 110
    (SAB 110). A shorter expected term would result
    in a lower compensation expense.
    The Companys risk-free rate of return assumption for
    options granted in Fiscal 2008, Fiscal 2007 and Fiscal 2006 was
    equal to the quoted yield for U.S. treasury bonds as of the
    date of grant.    Advertising
    Costs
   46




---



##### Table of Contents



Acquisitions
  Note 2 of Notes to Consolidated Financial
    Statements
  Dispositions
    and Discontinued Operations
  See Note 3 of Notes to Consolidated Financial
    Statements
  Results
    of Operations
  Statement
    of Operations (Selected Data)
    % of Net





% of Net





% of NetFiscal 2008


Revenues


Fiscal 2007


Revenues


Fiscal 2006


Revenues(in thousands of dollars)Net revenues

$
2,065,023



100.0
%

$
1,819,579



100.0
%

$
1,611,201



100.0
%Cost of goods sold


1,142,977



55.3
%


1,069,904



58.8
%


982,017



60.9
%Gross profit


922,046



44.7
%


749,675



41.2
%


629,184



39.1
%Selling, general and administrative expenses


740,452



35.9
%


601,656



33.1
%


500,030



31.0
%Amortization of intangible assets


9,629



0.5
%


13,167



0.7
%


12,269



0.8
%Pension expense (income)


31,644



1.5
%


(8,838
)


0.5
%


(2,356
)


0.1
%Operating income


140,321



6.8
%


143,690



7.9
%


119,241



7.4
%Other (income) loss


1,926







(7,063
)






(2,934
)Interest expense


29,519







37,718







38,527Interest income


(3,120
)






(3,766
)






(2,903
)Income from continuing operations before provision for income
    taxes and minority interest


111,996







116,801







86,551Provision for income taxes


60,469







29,892







20,074Income from continuing operations before minority interest


51,527







86,909







66,477Minority interest


1,347















Income from continuing operations


50,180







86,909







66,477Income (loss) from discontinued operations, net of taxes


(2,926
)






(7,802
)






(15,727
)Net income

$
47,254






$
79,107






$
50,750  47




---



##### Table of Contents



Comparison
    of Fiscal 2008 to Fiscal 2007
  Net
    Revenues
    Fiscal


Fiscal


Increase2008


2007


(Decrease)


% Change(in thousands of dollars)Sportswear Group

$
1,102,771


$
939,147


$
163,624



17.4
%Intimate Apparel Group


702,252



627,014



75,238



12.0
%Swimwear Group


260,000



253,418



6,582



2.6
%Net revenues (a)

$
2,065,023


$
1,819,579


$
245,444



13.5
%     (a)
    
    Includes $1.50 billion and
    $1.24 billion related to the Companys total Calvin
    Kleinbusinesses for Fiscal 2008 and Fiscal 2007,
    respectively (an increase of approximately 21%).  Calvin Klein Calvin Klein Calvin
    Klein
    Fiscal


Fiscal2008


2007United States  wholesaleDepartment stores and independent retailers


12
%


15
%Specialty stores


8
%


9
%Chain stores


8
%


8
%Mass merchandisers


1
%


2
%Membership clubs


7
%


7
%Off price and other


8
%


10
%Total United States  wholesale


44
%


51
%International  wholesale


35
%


31
%Retail / other


21
%


18
%Net revenues  consolidated


100
%


100
%  48




---



##### Table of Contents



Sportswear
    Group
    Fiscal


Fiscal


Increase2008


2007


(Decrease)


% Change(in thousands of dollars)Calvin KleinJeans

$
663,732


$
544,505


$
119,227



21.9
%Chaps


177,288



190,741



(13,453
)


7.1
%Mass sportswear licensing (a)






233



(233
)


100.0
%Sportswear wholesale


841,020



735,479



105,541



14.3
%Sportswear retail


261,751



203,668



58,083



28.5
%Sportswear Group (b), (c)

$
1,102,771


$
939,147


$
163,624



17.4
%     (a)
    
    Relates to design services fees
    earned in connection with the White Stag womens
    sportswear line which business ceased in January 2007.(b)
    
    Includes net revenues of
    $86.5 million and $53.6 million related to the
    Calvin Kleinaccessories business in Europe and Asia for
    Fiscal 2008 and Fiscal 2007, respectively.  (c)
    
    Includes approximately
    $49.8 million and $42.3 million for Fiscal 2008 and
    Fiscal 2007, respectively, related to certain sales of Calvin
    Klein underwear in regions managed by the Sportswear Group.  Calvin Klein
  Chaps Chaps Chaps
   49




---



##### Table of Contents



Intimate
    Apparel Group
    Fiscal


Fiscal


Increase2008


2007


(Decrease)


% Change(in thousands of dollars)Calvin KleinUnderwear

$
399,853


$
358,359


$
41,494



11.6
%Core Intimates


156,074



154,180



1,894



1.2
%Intimate Apparel wholesale


555,927



512,539



43,388



8.5
%Calvin KleinUnderwear retail


146,325



114,475



31,850



27.8
%Intimate Apparel Group

$
702,252


$
627,014


$
75,238



12.0
%   Calvin Klein Calvin Klein Calvin Klein
  Warners Olga Warners Warners Olga
  Calvin Klein
 50




---



##### Table of Contents



Swimwear
    Group
    Fiscal


Fiscal


Increase2008


2007


(Decrease)


% Change(in thousands of dollars)Speedo

$
218,043


$
219,372


$
(1,329
)


0.6
%Designer


23,570



18,363



5,207



28.4
%Swimwear wholesale


241,613



237,735



3,878



1.6
%Swimwear retail (a)


18,387



15,683



2,704



17.2
%Swimwear Group

$
260,000


$
253,418


$
6,582



2.6
%     (a)
    
    Includes $6.9 million and
    $5.0 million for Fiscal 2008 and Fiscal 2007, respectively,
    related to Calvin Kleinretail swimwear.  Speedo
  Calvin Klein Calvin Klein
  Calvin Klein Speedo
  Gross
    Profit
    Fiscal


% of Segment


Fiscal


% of Segment2008


Net Revenues


2007


Net Revenues(in thousands of dollars)Sportswear Group (a)

$
480,012



43.5
%

$
397,075



42.3
%Intimate Apparel Group


347,773



49.5
%


286,923



45.8
%Swimwear Group


94,261



36.3
%


65,676



25.9
%Total gross profit

$
922,046



44.7
%

$
749,674



41.2
%     (a)
    
    Sportswear Group gross profit
    includes approximately $34.9 million and $30.7 million
    for Fiscal 2008 and Fiscal 2007, respectively, related to
    certain sales of Calvin Kleinunderwear in regions
    managed by the Sportswear Group.   51




---



##### Table of Contents



Note 4
    of Notes to Consolidated Financial Statements
  Note 17 to Notes to
    Consolidated Financial Statements
  Calvin Klein Chaps
  Calvin Klein Calvin Klein Calvin Klein
  Note 5 of
    Notes to Consolidated Condensed Financial Statements)
  Selling,
    General and Administrative Expenses
   52




---



##### Table of Contents



Calvin
    Klein Speedo Calvin Klein
  Amortization
    of Intangible Assets
  Calvin Klein
  Pension
    Income / Expense
  Note 7 of Notes
    to Consolidated Financial Statements
  Operating
    Income
    Fiscal


Fiscal2008 (a)


2007 (a)(in thousands of dollars)Sportswear Group

$
88,656


$
97,946Intimate Apparel Group


126,133



108,343Swimwear Group


11,478



(24,499
)Unallocated corporate expenses (b)


(85,946
)


(38,100
)Operating income

$
140,321


$
143,690Operating income as a percentage of net revenue


6.8
%


7.9
%     (a)
    
    Includes approximately
    $27.8 million, $1.3 million, $3.9 million and
    $2.3 million of restructuring expenses for Fiscal 2008 in
    the Sportswear Group, Intimate Apparel Group, Swimwear Group and
    Unallocated corporate expenses, respectively, and approximately
    $0.1 million, $2.1 million, $29.8 million and
    $0.3 million of restructuring expenses for Fiscal 2007 in
    the Sportswear Group, Intimate Apparel Group, Swimwear Group and
    Unallocated corporate expenses, respectively.(b)
    
    Includes approximately
    $31.4 million of pension expense and approximately
    $9.0 million of pension income for Fiscal 2008 and Fiscal
    2007, respectively.   53




---



##### Table of Contents



Sportswear
    Group
    Fiscal


% of Brand


Fiscal


% of Brand2008 (c)


Net Revenues


2007 (c)


Net Revenues(in thousands of dollars)Calvin KleinJeans

$
61,820



9.3
%

$
70,559



13.0
%Chaps


17,426



9.8
%


10,920



5.7
%Mass sportswear licensing






0.0
%


(268
)


115.0
%Sportswear wholesale


79,246



9.4
%


81,211



11.0
%Sportswear retail


9,410



3.6
%


16,735



8.2
%Sportswear Group (a) (b)

$
88,656



8.0
%

$
97,946



10.4
%     (a)
    
    Includes the Collection License
    Company Charge of $18.5 million for Fiscal 2008 related to
    the transfer of the Collection License Company to PVH.(b)
    
    Includes approximately
    $1.5 million and $4.1 million for Fiscal 2008 and
    2007, respectively, related to certain sales of Calvin Kleinunderwear in regions managed by the Sportswear Group.  (c)
    
    Includes an allocation of shared
    services expenses by brand as detailed below:  Fiscal


Fiscal2008


2007Calvin KleinJeans

$
12,990


$
12,866Chaps


8,465



9,037Mass sportswear licensing






Sportswear wholesale


21,455



21,903Sportswear retail


369



425Sportswear Group

$
21,824


$
22,328   Calvin Klein Calvin Klein Chaps
 54




---



##### Table of Contents



Note 3 of Notes to
    Consolidated Condensed Financial Statements
  Intimate
    Apparel Group
    % of Brand





% of BrandFiscal


Net





Net2008 (a)


Revenues


Fiscal 2007 (a)


Revenues(in thousands of dollars)Calvin KleinUnderwear

$
81,111



20.3
%

$
71,124



19.8
%Core Intimates


14,142



9.1
%


8,730



5.7
%Intimate Apparel wholesale


95,253



17.1
%


79,854



15.6
%Calvin KleinUnderwear retail


30,880



21.1
%


28,489



24.9
%Intimate Apparel Group

$
126,133



18.0
%

$
108,343



17.3
%     (a)
    
    Includes an allocation of shared
    services expenses by brand as detailed below:  Fiscal


Fiscal2008


2007Calvin KleinUnderwear

$
10,628


$
10,293Core Intimates


7,100



6,867Intimate Apparel wholesale


17,728



17,160Calvin KleinUnderwear retail






Intimate Apparel Group

$
17,728


$
17,160   Calvin Klein Calvin Klein Calvin Klein
 55




---



##### Table of Contents



Swimwear
    Group
    % of Brand





% of BrandFiscal


Net





Net2008 (a)


Revenues


Fiscal 2007 (a)


Revenues(in thousands of dollars)Speedo

$
5,625



2.6
%

$
(26,766
)


12.2
%Designer


1,196



5.1
%


(3,079
)


16.8
%Swimwear wholesale


6,821



2.8
%


(29,845
)


12.6
%Swimwear retail


4,657



25.3
%


5,346



34.1
%Swimwear Group

$
11,478



4.4
%

$
(24,499
)


9.7
%     (a)
    
    Includes an allocation of shared
    services expenses by brand as detailed below:  Fiscal


Fiscal2008


2007Speedo

$
14,842


$
18,725Designer


455



611Swimwear wholesale


15,297



19,336Swimwear retail






Swimwear Group

$
15,297


$
19,336   Speedo Calvin Klein Speedo Calvin Klein Calvin Klein
  Other
    (Income) Loss
   56




---



##### Table of Contents



Interest
    Expense
  Capital Resources and
    LiquidityFinancing Arrangements,
  Interest
    Income
    Income
    Taxes
  Lejaby Note 4 Note 7 Notes to Consolidated Condensed
    Financial Statements.
  Discontinued
    Operations
  Note 3 of Notes to
    Consolidated Financial Statements
  Comparison
    of Fiscal 2007 to Fiscal 2006
  Net
    Revenues
    Fiscal


Fiscal


Increase2007


2006


(Decrease)


% Change(in thousands of dollars)Sportswear Group

$
939,147


$
791,634


$
147,513



18.6
%Intimate Apparel Group


627,014



545,151



81,863



15.0
%Swimwear Group


253,418



274,416



(20,998
)


−7.7
%Net revenues (a)

$
1,819,579


$
1,611,201


$
208,378



12.9
%     (a)
    
    Includes $1.24 billion and
    $1.0 billion related to the Companys total Calvin
    Kleinbusinesses for Fiscal 2007 and Fiscal 2006,
    respectively (an increase of approximately 24%).  Calvin Klein Calvin Klein
 57




---



##### Table of Contents



Fiscal 2007


Fiscal 2006United States  wholesaleDepartment stores and independent retailers


15
%


16
%Specialty stores


9
%


10
%Chain stores


8
%


8
%Mass merchandisers


2
%


2
%Membership clubs


7
%


10
%Off price and other


10
%


11
%Total United States  wholesale


51
%


57
%International  wholesale


31
%


28
%Retail / other


18
%


15
%Net revenues  consolidated


100
%


100
%   Sportswear
    Group
    Fiscal


Fiscal


Increase2007


2006


(Decrease)


% Change(in thousands of dollars)Calvin KleinJeans

$
544,505


$
442,290


$
102,215



23.1
%Chaps


190,741



196,269



(5,528
)


2.8
%Mass sportswear licensing (a)


233



4,456



(4,223
)


−94.8
%Sportswear wholesale


735,479



643,015



92,464



14.4
%Sportswear retail


203,668



148,619



55,049



37.0
%Sportswear Group (b), (c)

$
939,147


$
791,634


$
147,513



18.6
%     (a)
    
    Relates to design services fees
    earned in connection with the White Stagwomens
    sportswear line which business ceased in January 2007.(b)
    
    Includes net revenues of
    $53.6 million and $31.2 million related to the
    Calvin Kleinaccessories business in Europe and Asia for
    Fiscal 2007 and Fiscal 2006, respectively.  (c)
    
    Includes approximately
    $42.0 million and $29.0 million for Fiscal 2007 and
    Fiscal 2006, respectively, related to certain sales of Calvin
    Kleinunderwear in regions managed by the Sportswear Group.  Calvin Klein
  Chaps
 58




---



##### Table of Contents



Chaps
    Intimate
    Apparel Group
    Fiscal


Fiscal


Increase2007


2006


(Decrease)


% Change(in thousands of dollars)Calvin KleinUnderwear

$
358,359


$
307,090


$
51,269



16.7
%Core Intimates


154,180



151,390



2,790



1.8
%Intimate Apparel wholesale


512,539



458,480



54,059



11.8
%Calvin KleinUnderwear retail


114,475



86,671



27,804



32.1
%Intimate Apparel Group

$
627,014


$
545,151


$
81,863



15.0
%   Calvin Klein Calvin Klein
  Speedo Warners
  Calvin Klein Calvin
    Klein CKU.com.
 59




---



##### Table of Contents



Swimwear
    Group
    Fiscal


Fiscal


Increase2007


2006


(Decrease)


% Change(in thousands of dollars)Speedo

$
219,372


$
249,114


$
(29,742
)


11.9
%Designer


18,363



14,467



3,896



26.9
%Swimwear wholesale


237,735



263,581



(25,846
)


9.8
%Swimwear retail


15,683



10,835



4,848



44.7
%Swimwear Group

$
253,418


$
274,416


$
(20,998
)


7.7
%   Speedo
  Calvin
    Klein
  Gross
    Profit
    Fiscal


% of Segment





% of Segment2007


Net Revenues


Fiscal 2006


Net Revenues(in thousands of dollars)Sportswear Group

$
397,075



42.3
%

$
294,012



37.1
%Intimate Apparel Group


286,923



45.8
%


230,198



42.2
%Swimwear Group


65,676



25.9
%


104,975



38.3
%Total gross profit

$
749,674



41.2
%

$
629,185



39.1
%   Note 4 of Notes to Consolidated Financial
    Statements
 60




---



##### Table of Contents



Calvin Klein Chaps Calvin Klein Chaps Calvin Klein Chaps
  Calvin Klein Calvin Klein Calvin Klein Calvin Klein
  Note 4 of Notes to Consolidated
    Financial Statements
  Selling,
    General and Administrative Expenses
  Calvin Klein
  Amortization
    of Intangible Assets
  Calvin Klein
  Pension
    Income / Expense
   61




---



##### Table of Contents



Note 7 of Notes to Consolidated Financial Statements
  Operating
    Income
    Fiscal


Fiscal2007 (a)


2006 (b)(in thousands of dollars)Sportswear Group

$
97,946


$
58,421Intimate Apparel Group


108,343



78,273Swimwear Group


(24,499
)


20,292Unallocated corporate expenses


(38,100
)


(37,745
)Operating income

$
143,690


$
119,241Operating income as a percentage of net revenue


7.9
%


7.4
%     (a)
    
    Includes approximately
    $0.1 million, $2.1 million, $29.8 million and
    $0.3 million of restructuring expenses for Fiscal 2007 in
    the Sportswear Group, Intimate Apparel Group, Swimwear Group and
    unallocated corporate expenses, respectively.(b)
    
    Includes approximately
    $0.4 million of restructuring expenses for Fiscal 2006 in
    unallocated corporate expenses.  Calvin Klein
 62




---



##### Table of Contents



Sportswear
    Group
    % of





% ofFiscal


Brand Net


Fiscal


Brand Net2007(b)


Revenues


2006 (b)


Revenues(in thousands of dollars)Calvin KleinJeans

$
70,559



13.0
%

$
47,029



10.6
%Chaps


10,920



5.7
%


89



0.0
%Mass sportswear licensing (a)


(268
)


115.0
%


(190
)


4.3
%Sportswear wholesale


81,211



11.0
%


46,928



7.3
%Sportswear retail


16,735



8.2
%


11,493



7.7
%Sportswear Group

$
97,946



10.4
%

$
58,421



7.4
%     (a)
    
    Relates to design services fees
    earned in connection with the White Stagwomens
    sportswear line, which business ceased in January 2007.(b)
    
    Includes an allocation of shared
    services expenses by brand as detailed below:  Fiscal


Fiscal2007


2006Calvin KleinJeans

$
12,866


$
12,461Chaps


9,037



10,873Mass sportswear licensing






241Sportswear wholesale


21,903



23,575Sportswear retail


425



Sportswear Group

$
22,328


$
23,575   Calvin Klein Calvin Klein
 63




---



##### Table of Contents



Intimate
    Apparel Group
    % of





% ofBrand Net





Brand NetFiscal 2007 (a)


Revenues


Fiscal 2006 (a)


Revenues(in thousands of dollars)Calvin KleinUnderwear

$
71,124



19.8
%

$
51,358



16.7
%Core Intimates


8,730



5.7
%


6,958



4.6
%Intimate Apparel wholesale


79,854



15.6
%


58,316



12.7
%Calvin KleinUnderwear retail


28,489



24.9
%


19,957



23.0
%Intimate Apparel Group

$
108,343



17.3
%

$
78,273



14.4
%     (a)
    
    Includes an allocation of shared
    services expenses by brand as detailed below:  Fiscal


Fiscal2007


2006Calvin KleinUnderwear

$
10,293


$
8,207Core Intimates


6,867



6,725Intimate Apparel wholesale


17,160



14,932Calvin KleinUnderwear retail






Intimate Apparel Group

$
17,160


$
14,932   Calvin Klein Calvin Klein Calvin Klein Calvin Klein Calvin
    Klein Calvin Klein
 64




---



##### Table of Contents



Swimwear
    Group
    % of





% ofFiscal


Brand Net


Fiscal


Brand Net2007 (a)


Revenues


2006 (a)


Revenues(in thousands of dollars)Speedo

$
(26,766
)


12.2
%

$
21,638



8.7
%Designer


(3,079
)


16.8
%


(5,654
)


39.1
%Swimwear wholesale


(29,845
)


12.6
%


15,984



6.1
%Swimwear retail


5,346



34.1
%


4,308



39.8
%Swimwear Group

$
(24,499
)


9.7
%

$
20,292



7.4
%     (a)
    
    Includes an allocation of shared
    services expenses by brand as detailed below:  Fiscal


Fiscal2007


2006Speedo

$
18,725


$
13,602Designer


611



54Swimwear wholesale


19,336



13,656Swimwear retail






5Swimwear Group

$
19,336


$
13,661   Note 4 of Notes to
    Consolidated Financial Statements
  Other
    (Income) Loss
  Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Capital Resources and
    Liquidity  Financing Arrangements  Senior
    Notes
  Interest
    Expense
   65




---



##### Table of Contents



Interest
    Income
    Income
    Taxes
    Discontinued
    Operations
  Note 3 of Notes to
    Consolidated Financial Statements
  Capital
    Resources and Liquidity
  Financing
    Arrangements
  Senior
    Notes
  7 8 %
   66




---



##### Table of Contents



Interest
    Rate Swap Agreements
  7 8
  7 8
      January 3,


December 29,2009


2007(in thousands of dollars)Unrealized gain (loss):2003 Swap Agreement

$
1,972


$
1282004 Swap Agreement


932



(148
)Net unrealized gain (loss)

$
2,904


$
(20
)   New
    Credit Agreements
   67




---



##### Table of Contents



per annum per annum
       68




---



##### Table of Contents



Revolving
    Credit Facility; Amended and Restated Credit Agreement
  OP Note 12 of Notes to
    Consolidated Condensed Financial Statements Catalina, Anne Cole and Cole of California
     69




---



##### Table of Contents



Foreign
    Revolving Credit Facility
  non-amortizing
   70




---



##### Table of Contents



Euro-Denominated
    CKJEA Notes Payable
    Liquidity
  Results of
    Operations  Net Revenues,
  Contractual Obligations Capital Resources and LiquidityFinancing Arrangements,
  Item 3. Quantitative
    and Qualitative Disclosures About Market RiskForeign
    Exchange Risk Note 17 to Notes to Consolidated
    Financial Statements
       71




---



##### Table of Contents



7 8
        and/or
   72




---



##### Table of Contents



Share
    Repurchase Program
     73




---



##### Table of Contents



Cash
    Flows
    Fiscal


Fiscal


Fiscal2008


2007


2006(in thousands of dollars)Net cash provided by (used in) operating activities:Continuing operations

$
151,887


$
124,483


$
69,578Discontinued operations


(26,000
)


35,940



17,169Net cash (used in) investing activities:Continuing operations


(44,263
)


(20,357
)


(185,764
)Discontinued operations






(443
)


(1,314
)Net cash provided by (used in) financing activities:Continuing operations


(120,692
)


(121,688
)


99,682Discontinued operations










Translation adjustments


(5,223
)


6,993



3,438Increase (decrease) in cash and cash equivalents

$
(44,291
)

$
24,928


$
2,789   Lejaby
   74




---



##### Table of Contents



OP
  OP
   75




---



##### Table of Contents



Contractual
    Obligations
    Payments Due by Year2009


2010


2011


2012


2013


Thereafter


Total(Dollars in thousands)New Revolving Credit Agreements (a)

$



$



$



$



$



$



$
Senior Notes (b)


















160,890







160,890CKJEA short term notes payable (c)


62,316























62,316Minimum royalties (d)


57,791



60,397



58,419



58,520



58,624



816,659



1,110,410Operating leases (d)


56,729



48,378



40,409



36,449



29,321



74,214



285,500Interest payments (e)


16,630



16,630



16,630



16,630



8,941







75,461Pension plan funding (f)


3,900



5,400



5,400



5,400



5,400



1,000



26,500Employment contracts


4,177



2,001



1,470











414



8,062Purchase obligations (g)


16,192



16,600



8,400















41,192Trade letters of credit (h)


81,113























81,113Employee termination payments


884























884IT license and maintenance contracts


2,780



1,940



797



520



520







6,557Liabilities for uncertain tax positions


2,050



20,550



3,450



1,450



50



1,950



29,500Other long-term obligations


862



420



















1,282Total

$
305,424


$
172,316


$
134,975


$
118,969


$
263,746


$
894,237


$
1,889,667     (a)
    
    The New Credit Agreements mature on
    August 26, 2013. See Capital Resources and
    LiquidityFinancing Arrangementsand Note 12 of
    Notes to Consolidated Financial Statements.(b)
    
    The Senior Notes mature on
    June 15, 2013. See-Capital Resources and
    LiquidityFinancing ArrangementsSenior Notesand Note 12 of Notes to Consolidated Financial
    Statements.  (c)
    
    All of the CKJEA short-term notes
    payable were renewed for additional one-year terms during Fiscal
    2008.  (d)
    
    See Note 15 of Notes to
    Consolidated Financial Statements.(e)
    
    Reflects expected interest
    obligations after considering required minimum repayments of the
    related debt. Interest on variable rate debt instruments is
    estimated based upon rates in effect at January 3, 2009.
    See Item 7A. Quantitative and Qualitative Disclosures
    About Market Risk - Interest Rate Risk.  (f)
    
    Reflects expected contributions to
    the Companys U.S. pension plan in accordance with the
    Pension Protection Act of 2006. See Capital Resources and
    LiquidityLiquidity and Note 7 of Notes to
    Consolidated Financial Statements.  (g)
    
    Represents contractual commitments
    for goods or services not received or recorded on the
    Companys consolidated balance sheet. Includes, among other
    items, purchase obligations of approximately $40.8 million
    pursuant to a production agreement with the buyer of the
    Companys manufacturing facilities in Mexico. See
    Note 4and Note 15 of Notes to Consolidated
    Financial Statements.(h)
    
    Trade letters of credit represent
    obligations, in the ordinary course of business, for inventory
    purchases.    Seasonality
   76




---



##### Table of Contents



For the Three Months Ended


For the Three Months EndedApril 5,


July 5,


October 4,


January 3,


March 31,


June 30,


September 29,


December 29,2008


2008


2008


2009


2007


2007


2007


2007(in millions of dollars)Net revenues

$
567.7


$
503.3


$
548.1


$
445.9


$
468.7


$
411.8


$
472.6



466.5Operating income


55.7



48.9



47.7


$
(12.0
)


51.2



28.2



37.0



27.3Cash flow provided by (used in) operating activities


(43.4
)


81.9



32.4



55.0



(23.5
)


120.7



29.6



(90.9
)   Inflation
    Deflation
    of Apparel Selling Prices
    Off-Balance
    Sheet Arrangements
    Recent
    Accounting Pronouncements
  Business Combinations Business Combination
 77




---



##### Table of Contents



Non-controlling Interests in Consolidated Financial
    Statements, an Amendment of ARB 51
    No. 157-3 Determining the Fair Value of a Financial Asset in a Market
    That is Not Active (FSP 157-3). FSP 157-3 Fair Value
    Measurements, FSP 157-3 FSP 157-3
  The Fair Value
    Option for Financial Assets and Financial
    LiabilitiesIncluding an Amendment of FASB Statement
    No. 115 ( ) instrument-by-instrument
 78




---



##### Table of Contents



Disclosures about Derivative Instruments and Hedging
    Activities an amendment of FASB Statement No. 133
    ( ).
  No. 142-3, Determination of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3 FSP 142-3 FSP 142-3 FSP 142-3
  The
    Hierarchy of Generally Accepted Accounting Principles
  Employers Disclosures about
    Postretirement Benefit Plan Assets FAS 132R-1). FAS 132R-1 Employers Disclosures about Pensions and Other
    Postretirement Benefits ,
 79




---



##### Table of Contents



FAS 132R-1in Form 10-K
  Statement
    Regarding Forward-Looking Disclosure
  Form 10-K,
  Form 10-K Item 1A. Risk Factors Calvin Klein
 80




---



##### Table of Contents



Item 1A. Risk Factors Discussion of
    Critical Accounting Policies Form 10-K,
 81




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.    Market
    Risk
      Interest
    Rate Risk
   82




---



##### Table of Contents



7 8 Managements
    Discussion and Analysis of Financial Condition and Results of
    OperationsCapital Resources and LiquidityFinancing
    Arrangements Note 12 of Notes to Consolidated
    Financial Statements.
  Foreign
    Exchange Risk
  Notes 1 and 17 of Notes to the
    Consolidated Financial Statements
     83




---



##### Table of Contents



Effect ofHypothetical10% IncreaseWeighted


in ContractualAverage


ExchangeContractual


Rate orForeign




Exchange


Strike RateCurrency (a)

Amount


Rate or


on EarningsDerivative Instrument

Hedged Transaction

Sell/Buy

Hedged


Strike Rate


Gain (loss) (b)thousands





thousandsForeign exchange contracts

Minimum royalty and adverising costs

Euro/USD

$
10,000



1.389


$
(1,000
)Foreign exchange contracts

Minimum royalty and adverising costs

Euro/USD


8,866



1.374



(887
)Foreign exchange contracts

Purchases of inventory

Euro/USD


18,275



1.526



(1,827
)Foreign exchange contracts

Purchases of inventory

Euro/USD


5,183



1.408



(518
)Foreign exchange contracts

Purchases of inventory

KRW/USD


5,340



0.000720



(534
)Foreign exchange contracts

Purchases of inventory

CAD/USD


10,915



0.8138



(1,091
)Foreign exchange contracts

Intercompany sales of inventory

Euro/GBP


3,487



0.841



(347
)Zero-cost collars

Intercompany loans

Euro/CAD


8,400



1.5770



384Zero-cost collars

Intercompany loans

USD/CAD


12,700



1.2175



806Zero-cost collars

Intercompany payables

Euro/USD


25,000



1.2900



1,844Zero-cost collars

Intercompany payables

KRW/USD


25,000



0.000667



(4,087
)     (a)
    
    USD - U.S. dollar, KRW = Korean
    won, CAD = Canadian dollar(b)
    
    These hypothetical gains and losses
    would offset gains and losses on the related underlying
    transactions.  Item 8.
    Financial
    Statements and Supplementary Data.  Item Form 10-K. Item 15. Exhibits, Financial Statement Schedules
  Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Evaluation of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-K.
  Managements Annual Report on Internal Control Over
    Financial Reporting
  Rule 13a-15(f) 15d-15(f)
 84




---



##### Table of Contents




    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Company;
    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
    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.  Internal Control-Integrated
    Framework.
      Changes in Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Limitations on the Effectiveness of Controls
   85




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal ControlIntegrated
    Framework Managements Annual Report
    on Internal Control Over Financial Reporting
        Internal ControlIntegrated Framework
    /s/  DELOITTE &
    TOUCHE LLP
    86




---



##### Table of Contents



Item 9B.
    Other
    Information.   87




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Item 10 Item 1.
    Business Executive Officers of the Registrant
  Item 11.
    Executive
    Compensation.  Item 11
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Item 12
  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence.  Item 13
  Item 14.
    Principal
    Accountant Fees and Services.  Item 14
 88




---



##### 



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules.   
 PAGE(a) 1. The Consolidated Financial Statements of The Warnaco
    Group, Inc.Report of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets as of January 3,
    2009 and December 29, 2007


F-2Consolidated Statements of Operations for the
    years ended January 3, 2009, December 29, 2007 and
    December 30, 2006


F-3Consolidated Statements of Stockholders
    Equity and Comprehensive Income for the years ended
    January 3, 2009, December 29, 2007 and
    December 30, 2006


F-4Consolidated Statements of Cash Flows for the
    years ended January 3, 2009, December 29, 2007 and
    December 30, 2006


F-5-F-6Notes to Consolidated Financial Statements


F-7-F-692. Financial Statement ScheduleSchedule II. Valuation and Qualifying
    Accounts and Reserves


A-1     89




---



##### Table of Contents



3.
    List of Exhibits.  Form 10-K,
  
    should not in all instances be treated as categorical statements
    of fact, but rather as a way of allocating the risk to one of
    the parties if those statements prove to be inaccurate;
    have been qualified by disclosures that were made to the other
    party in connection with the negotiation of the applicable
    agreement, which disclosures are not necessarily reflected in
    the agreement;
    may apply standards of materiality in a way that is different
    from what may be viewed as material to you or other
    investors; and
    were made only as of the date of the applicable agreement or
    such other date or dates as may be specified in the agreement
    and are subject to more recent developments.  Form 10-K http://www.sec.gov. Item 1 Part I
  Exhibit No.

Description of Exhibit2.1

First Amended Joint Plan of Reorganization of The Warnaco Group,
    Inc. and its Affiliated Debtors in Possession Under
    Chapter 11 of the Bankruptcy Code (incorporated by
    reference to Exhibit 99.2 to The Warnaco Group, Inc.s
    Form 10-Q
    filed on November 18, 2002).*2.2

Disclosure Statement with respect to the First Amended Joint
    Plan of Reorganization of The Warnaco Group, Inc. and its
    Affiliated Debtors and Debtors in Possession Under
    Chapter 11 of the Bankruptcy Code (incorporated by
    reference to Exhibit 99.3 to The Warnaco Group, Inc.s
    Form 10-Q
    filed November 18, 2002).*2.3

Stock Purchase Agreement, dated as of August 3, 2004, by
    and among Warnaco Inc., Ocean Pacific Apparel Corp. and
    Doyle & Boissiere Fund I, LLC, Anders Brag, Leo
    Isotolo and Richard A. Baker (incorporated by reference to
    Exhibit 2.1 to The Warnaco Group, Inc.s
    Form 10-Q
    filed November 10, 2004).* ##**2.4

Stock Purchase Agreement, dated as of December 20, 2005, by
    and among Warnaco Inc., Fingen Apparel N.V., Fingen S.p.A., Euro
    Cormar S.p.A., and Calvin Klein, Inc. (incorporated by reference
    to Exhibit 10.1 to The Warnaco Group, Inc.s
    Form 8-K
    filed December 23, 2005).***2.5

Amendment, dated as of January 30, 2006, to the Stock
    Purchase Agreement, dated as of December 20, 2005, by and
    among Warnaco Inc., Fingen Apparel N.V., Fingen S.p.A., Euro
    Cormar S.p.A., and Calvin Klein, Inc. (incorporated by reference
    to Exhibit 10.1 to The Warnaco Group, Inc.s
    Form 8-K
    filed February 3, 2006).*2.6

Asset Purchase Agreement, dated as of October 31, 2006, by
    and among The Warnaco Group, Inc., Ocean Pacific Apparel Corp.
    and Iconix Brand Group, Inc. (incorporated by reference to
    Exhibit 2.1 to The Warnaco Group, Inc.s
    Form 8-K
    filed November 6, 2006).***2.7

Stock and Asset Purchase Agreement, dated as of
    February 14, 2008, between Warnaco Netherlands BV and
    Palmers Textil AG (incorporated by reference to Exhibit 2.1
    to The Warnaco Group, Inc.s
    Form 8-K
    filed February 19, 2008).*** 90




---



##### Table of Contents



Exhibit No.

Description of Exhibit3.1

Amended and Restated Certificate of Incorporation of The Warnaco
    Group, Inc. (incorporated by reference to Exhibit 1 to the
    Form 8-A/A
    filed by The Warnaco Group, Inc. on February 4, 2003).*3.2

Second Amended and Restated Bylaws of The Warnaco Group, Inc.
    (incorporated by reference to Exhibit 3.1 to the
    Form 8-K
    filed by The Warnaco Group, Inc. on January 11, 2008).*4.1

Registration Rights Agreement, dated as of June 12, 2003,
    among Warnaco Inc., the Guarantors (as defined therein) and the
    Initial Purchasers (as defined therein) (incorporated by
    reference to Exhibit 4.1 to the Registration Statement on
    Form S-4
    (File
    No. 333-107788)
    filed by The Warnaco Group, Inc. and certain of its subsidiaries
    on August 8, 2003).*4.2

Indenture, dated as of June 12, 2003, among Warnaco Inc.,
    the Guarantors (as defined therein) and the Trustee (as defined
    therein) (incorporated by reference to Exhibit 4.2 to the
    Registration Statement on
    Form S-4
    (File
    No. 333-107788)
    filed by The Warnaco Group, Inc. and certain of its subsidiaries
    on August 8, 2003).*4.3

Registration Rights Agreement, dated as of February 4,
    2003, among The Warnaco Group, Inc. and certain creditors
    thereof (as described in the Registration Rights Agreement)
    (incorporated by reference to Exhibit 4.5 to The Warnaco
    Group, Inc.s
    Form 8-K
    filed February 10, 2003).*10.1

Credit Agreement, dated as of August 26, 2008, among
    Warnaco Inc., The Warnaco Group, Inc., the Lenders (as defined
    therein) and Issuers (as defined therein) party thereto, Bank of
    America, N.A., as administrative agent for the revolving credit
    facility and as collateral agent for the Lenders and the Issuers
    party thereto, Banc of America Securities LLC and Deutsche Bank
    Securities Inc., as joint lead arrangers, Banc of America
    Securities LLC, Deutsche Bank Securities Inc. and
    J.P. Morgan Securities Inc., as joint bookrunners, Deutsche
    Bank Securities Inc., as sole syndication agent for the Lenders
    and the Issuers party thereto, and HSBC Business Credit (USA)
    Inc., JPMorgan Chase Bank, N.A. and RBS Business Capital, a
    division of RBS Asset Finance Inc., each as a co-documentation
    agent for the Lenders and Issuers (incorporated by reference to
    Exhibit 10.1 to The Warnaco Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.2

Guaranty, dated as of August 26, 2008, by The Warnaco
    Group, Inc. and each of the other entities listed on the
    signature pages thereof or that becomes a party thereto, in
    favor of Bank of America, N.A., as administrative agent for the
    revolving credit facility and as collateral agent for the
    Lenders (as defined therein) and Issuers (as defined therein)
    party thereto, and the Issuers and Lenders party thereto
    (incorporated by reference to Exhibit 10.2 to The Warnaco
    Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.3

Pledge and Security Agreement, dated as of August 26, 2008,
    by The Warnaco Group, Inc., Warnaco Inc., and each of the other
    entities listed on the signature pages thereto or that becomes a
    party thereto, in favor of Bank of America, N.A., as collateral
    agent for the secured parties thereunder (incorporated by
    reference to Exhibit 10.3 to The Warnaco Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.4

Canadian Credit Agreement, dated as of August 26, 2008,
    among Warnaco of Canada Company, The Warnaco Group, Inc., the
    Lenders (as defined therein) and Issuers (as defined therein)
    party thereto, Bank of America, N.A., as administrative agent
    for the revolving credit facility and as collateral agent for
    the Lenders and the Issuers party thereto, Banc of America
    Securities LLC and Deutsche Bank Securities Inc., as joint lead
    arrangers and joint book managers, and Deutsche Bank Securities
    Inc., as sole syndication agent for the Lenders and the Issuers
    party thereto (incorporated by reference to Exhibit 10.4 to
    The Warnaco Group Inc.s
    Form 8-K
    filed August 28, 2008).* 91




---



##### Table of Contents



Exhibit No.

Description of Exhibit10.5

U.S. Loan Party Canadian Facility Guaranty, dated as of
    August 26, 2008, by The Warnaco Group, Inc., Warnaco Inc.,
    and each of the other entities listed on the signature pages
    thereto or that becomes a party thereto, in favor of, Bank of
    America, N.A. as administrative agent for the revolving credit
    facility and as collateral agent for the Lenders (as defined
    therein) and Issuers (as defined therein) party thereto, and the
    Issuers and Lenders party thereto (incorporated by reference to
    Exhibit 10.5 to The Warnaco Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.6

Guaranty, dated as of August 26, 2008 by 4278941 Canada
    Inc., in favor of Bank of America, N.A. as lender (acting
    through its Canada branch) and as collateral agent, for itself
    and on behalf of the secured parties (incorporated by reference
    to Exhibit 10.6 to The Warnaco Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.7

General Security Agreement, dated as of August 26, 2008,
    granted by Warnaco of Canada Company to Bank of America, N.A.
    (incorporated by reference to Exhibit 10.7 to The Warnaco
    Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.8

General Security Agreement, dated as of August 26, 2008,
    granted by 4278941 Canada Inc. to Bank of America, N.A.
    (incorporated by reference to Exhibit 10.8 to The Warnaco
    Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.9

Securities Pledge Agreement, dated as of August 26, 2008
    made by Warnaco of Canada Company to and in favour of Bank of
    America, N.A. as collateral agent (incorporated by reference to
    Exhibit 10.9 to The Warnaco Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.10

Deed of Hypothec, dated as of August 26, 2008, between
    Warnaco of Canada Company and Bank of America, N.A.
    (incorporated by reference to Exhibit 10.10 to The Warnaco
    Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.11

Deed of Hypothec, dated as of August 26, 2008, between
    4278941 Canada Inc.and Bank of America, N.A. (incorporated by
    reference to Exhibit 10.11 to The Warnaco Group Inc.s
    Form 8-K
    filed August 28, 2008).*10.12

Warnaco Employee Retirement Plan (incorporated by reference to
    Exhibit 10.11 to The Warnaco Group, Inc.s
    Registration Statement on
    Form S-1
    (File
    No. 33-4587)).*10.13

The Warnaco Group, Inc. 2003 Stock Incentive Plan (incorporated
    by reference to Appendix D to The Warnaco Group,
    Inc.s Proxy Statement filed April 29, 2003).*10.14

The Warnaco Group, Inc. Incentive Compensation Plan
    (incorporated by reference to Appendix E to The Warnaco
    Group, Inc.s Proxy Statement filed April 29, 2003).*10.15

The Warnaco Group, Inc. 2005 Stock Incentive Plan (incorporated
    by reference to Annex A to The Warnaco Group, Inc.s
    2005 Proxy Statement on Schedule 14A filed on
    April 12, 2005).*10.16

The Warnaco Group, Inc. Amended and Restated 2005 Stock
    Incentive Plan (incorporated by reference to Appendix A to
    The Warnaco Group, Inc.s 2008 Proxy Statement on
    Schedule 14A filed on April 11, 2008).*10.17

The Warnaco Group, Inc. 2008 Incentive Compensation Plan
    (incorporated by reference to Appendix B to The Warnaco
    Group, Inc.s 2008 Proxy Statement on Schedule 14A
    filed on April 11, 2008).*10.18

The Warnaco Group, Inc. Amended and Restated Deferred
    Compensation Plan.10.19

2007 Non-Employee Directors Deferred Compensation Plan
    (incorporated by reference to Exhibit 10.17 to The Warnaco
    Group, Inc.s
    Form 10-K
    filed March 7, 2007).*10.20

Amended and Restated 2007 Non-Employee Directors Deferred
    Compensation Plan.10.21

Form of Restricted Stock Award Agreement (incorporated by
    reference to Exhibit 10.2 to The Warnaco Group, Inc.s
    Form 8-K
    filed May 25, 2005).*10.22

Form of Non-Qualified Stock Option Agreement (incorporated by
    reference to Exhibit 10.3 to The Warnaco Group, Inc.s
    Form 8-K
    filed May 25, 2005).*10.23

Form of Restricted Stock Unit Award Agreement for Joseph R.
    Gromek (incorporated by reference to Exhibit 10.4 to The
    Warnaco Group, Inc.s
    Form 8-K
    filed May 25, 2005).* 92




---



##### Table of Contents



Exhibit No.

Description of Exhibit10.24

Form of The Warnaco Group, Inc. 2005 Stock Incentive Plan Notice
    of Grant of Restricted Stock (incorporated by reference to
    Exhibit 10.8 to The Warnaco Group, Inc.s
    Form 8-K
    filed August 12, 2005).*10.25

Offer Letter and Employee Waiver, Release and Discharge of
    Claims pursuant to the Key Domestic Employee Retention Plan for
    Stanley P. Silverstein, dated November 26, 2001
    (incorporated by reference to Exhibit 10.41 to The Warnaco
    Group, Inc.s
    Form 10-K
    filed July 31, 2002).*10.26

Amended and Restated Employment Agreement, dated as of
    December 19, 2007, between The Warnaco Group, Inc. and
    Joseph R. Gromek (incorporated by reference to Exhibit 10.1
    to The Warnaco Group, Inc.s
    Form 8-K
    filed December 20, 2007).*10.27

Amended and Restated Letter Agreement, dated as of
    December 31, 2008, by and between The Warnaco Group, Inc.
    and Lawrence R. Rutkowski.10.28

Amended and Restated Letter Agreement, dated as of
    December 31, 2008, by and between The Warnaco Group, Inc.
    and Frank Tworecke.10.29

Amended and Restated Letter Agreement, dated as of
    December 31, 2008, by and between The Warnaco Group, Inc.
    and Helen McCluskey.10.30

Amended and Restated Employment Agreement, dated as of
    December 31, 2008, by and between The Warnaco Group, Inc.
    and Stanley P. Silverstein.10.31

Employment Agreement, dated as of August 11, 2008, by and
    between The Warnaco Group, Inc. and Jay L. Dubiner.10.32

Amended and Restated Letter Agreement, dated as of
    December 31, 2008, by and between The Warnaco Group, Inc.
    and Dwight Meyer.10.33

Amended and Restated Employment Agreement, dated as of
    December 31, 2008 by and between The Warnaco Group, Inc.
    and Elizabeth Wood.10.34

Amended and Restated License Agreement, dated as of
    January 1, 1996, between Polo Ralph Lauren, L.P. and
    Warnaco Inc. (incorporated by reference to Exhibit 10.4 to
    The Warnaco Group, Inc.s
    Form 10-Q
    filed November 14, 1997).*10.35

Amended and Restated Design Services Agreement, dated as of
    January 1, 1996, between Polo Ralph Lauren Enterprises,
    L.P. and Warnaco Inc. (incorporated by reference to
    Exhibit 10.5 to The Warnaco Group, Inc.s
    Form 10-Q
    filed November 14, 1997).*10.36

License Agreement and Design Services Agreement Amendment and
    Extension, dated as of September 19, 2003, by and among PRL
    USA, Inc., as successor to Polo Ralph Lauren L.P., The
    Polo/Lauren Company, L.P., Polo Ralph Lauren Corporation, as
    successor to Polo Ralph Lauren L.P., and Warnaco Inc. and
    Warnaco of Canada Company (incorporated by reference to
    Exhibit 10.2 to The Warnaco Group, Inc.s
    Form 10-Q
    filed November 18, 2003).* #10.37

License Agreement, dated as of August 4, 1994, between
    Calvin Klein, Inc. and Calvin Klein Jeanswear Company
    (incorporated by reference to Exhibit 10.20 to Designer
    Holdings, Ltd.s Registration Statement on
    Form S-1
    (File
    No. 333-02236)).*10.38

Amendment to the Calvin Klein License Agreement, dated as of
    December 7, 1994 (incorporated by reference to
    Exhibit 10.21 to Designer Holdings, Ltd.s
    Registration Statement on
    Form S-1
    (File
    No. 333-02236)).*10.39

Amendment to the Calvin Klein License Agreement, dated as of
    January 10, 1995 (incorporated by reference to
    Exhibit 10.22 to Designer Holdings, Ltd.s
    Registration Statement on
    Form S-1
    (File
    No. 333-02236)).*10.40

Amendment to the Calvin Klein License Agreement, dated as of
    February 28, 1995 (incorporated by reference to
    Exhibit 10.23 to Designer Holdings, Ltd.s
    Registration Statement on
    Form S-1
    (File
    No. 333-02236)).*10.41

Amendment to the Calvin Klein License Agreement, dated as of
    April 22, 1996 (incorporated by reference to
    Exhibit 10.38 to Designer Holdings, Ltd.s
    Registration Statement on
    Form S-1
    (File
    No. 333-02236)).* 93




---



##### Table of Contents



Exhibit No.

Description of Exhibit10.42

Amendment and Agreement, dated June 5, 2003, by and among
    Calvin Klein, Inc., Phillips-Van Heusen Corporation, Warnaco
    Inc., Calvin Klein Jeanswear Company, and CKJ Holdings Inc.
    (incorporated by reference to Exhibit 10.25 to Amendment
    No. 2 to the Registration Statement on
    Form S-4/A
    (File
    No. 333-107788)
    filed by The Warnaco Group, Inc. and certain of its subsidiaries
    on December 18, 2003).*##10.43

Consent and Amendment No. 1 to the Facility Agreement,
    dated as of February 5, 2002 (incorporated by reference to
    Exhibit 10.49 to The Warnaco Group, Inc.s
    Form 10-K
    filed July 31, 2002).*10.44

Speedo Settlement Agreement, dated November 25, 2002, by
    and between Speedo International Limited and Authentic Fitness
    Corporation, Authentic Fitness Products, Inc., The Warnaco
    Group, Inc. and Warnaco Inc. (incorporated by reference to
    Exhibit 10.28 to The Warnaco Group, Inc.s
    Form 10-K
    filed April 4, 2003).*10.45

Amendment to the Speedo Licenses, dated as of November 25,
    2002, by and among Speedo International Limited, Authentic
    Fitness Corporation and Authentic Fitness Products, Inc.
    (incorporated by reference to Exhibit 10.29 to The Warnaco
    Group, Inc.s
    Form 10-K
    filed April 4, 2003).* ##10.46

Settlement Agreement, dated January 22, 2001, by and
    between Calvin Klein Trademark Trust, Calvin Klein, Inc. and
    Calvin Klein and Linda Wachner, The Warnaco Group, Inc., Warnaco
    Inc., Designer Holdings, Ltd, CKJ Holdings, Inc., Jeanswear
    Holdings Inc., Calvin Klein Jeanswear Company and Outlet
    Holdings, Inc. (incorporated by reference to Exhibit 10.57
    to The Warnaco Group, Inc.s
    Form 10-K
    filed July 31, 2002).* ##10.47

Settlement Agreement, dated November 15, 2002, by and among
    Linda J. Wachner, the Debtors, the Bank of Nova Scotia and
    Citibank, N.A. in their capacity as Debt Coordinators for the
    Debtors Prepetition Secured Lenders and the Official
    Committee of Unsecured Creditors of the Debtors (incorporated by
    reference to Exhibit 10.38 to The Warnaco Group,
    Inc.s
    Form 10-K
    filed April 4, 2003).*10.48

Acquisition Agreement, dated as of March 14, 1994, by and
    among Calvin Klein, Inc., The Warnaco Group, Inc. and Warnaco
    Inc. (incorporated by reference to Exhibit 10.6 to The
    Warnaco Group, Inc.s
    Form 10-Q
    filed on May 24, 1994).*10.49

License Agreement, dated as of June 21, 2004, by and
    between The Warnaco Group, Inc. and Michael Kors (USA), Inc.
    (incorporated by reference to Exhibit 10.3 to The Warnaco
    Group, Inc.s
    Form 10-Q
    filed August 6, 2004).* ##10.50

License Agreement, dated as of July 26, 2004, by and
    between Calvin Klein, Inc. and Warnaco Swimwear Inc.
    (incorporated by reference to Exhibit 10.1 to The Warnaco
    Group, Inc.s
    Form 10-Q
    filed November 10, 2004).* ##10.51

License Agreement, dated as of December 1, 2004, by and
    between The Warnaco Group, Inc. and SAP America, Inc.
    (incorporated by reference to Exhibit 10.46 to The Warnaco
    Group, Inc.s
    Form 10-K
    filed March 17, 2005)* #10.52

Amended and Restated License Agreement, dated as of
    January 1, 1997, by and between Calvin Klein, Inc. and
    Calvin Klein Jeanswear Asia Ltd. (incorporated by reference to
    Exhibit 10.62 to The Warnaco Group, Inc.s
    Form 10-K
    filed March 3, 2006).* ##10.53

Amendment and Agreement, dated as of January 31, 2006, by
    and among Calvin Klein, Inc., WF Overseas Fashion C.V. and the
    CKJ Entities (as defined therein), with respect to the Amended
    and Restated License Agreement, dated as of January 1,
    1997, by and between Calvin Klein, Inc. and Calvin Klein
    Jeanswear Asia Ltd. (incorporated by reference to
    Exhibit 10.63 to The Warnaco Group, Inc.s
    Form 10-K
    filed March 3, 2006).*#10.54

Amended and Restated Letter Agreement, dated as of March 6,
    2002, by and among Calvin Klein, Inc., CK Jeanswear N.V., CK
    Jeanswear Asia Limited and CK Jeanswear Europe S.p.A.
    (incorporated by reference to Exhibit 10.64 to The Warnaco
    Group, Inc.s
    Form 10-K
    filed March 3, 2006).* ## 94




---



##### Table of Contents



Exhibit No.

Description of Exhibit10.55

Letter Agreement, dated as of January 31, 2006, by and
    among Calvin Klein, Inc., WF Overseas Fashion C.V., CK
    Jeanswear N.V., CK Jeanswear Asia Limited and CK Jeanswear
    Europe S.p.A., with respect to the Amended and Restated Letter
    Agreement, dated as of March 6, 2002, by and among Calvin
    Klein, Inc., CK Jeanswear N.V., CK Jeanswear Asia Limited and CK
    Jeanswear Europe S.p.A. (incorporated by reference to
    Exhibit 10.65 to The Warnaco Group, Inc.s
    Form 10-K
    filed March 3, 2006).* #10.56

Amended and Restated License Agreement. dated January 1,
    1997, by and between Calvin Klein, Inc. and CK Jeanswear Europe,
    S.p.A. (incorporated by reference to Exhibit 10.66 to The
    Warnaco Group, Inc.s
    Form 10-K
    filed March 3, 2006).* ##10.57

Letter Agreement, dated as of January 31, 2006, by and
    among Calvin Klein, Inc., WF Overseas Fashion C.V. and CK
    Jeanswear Europe, S.p.A., with respect to the Amended and
    Restated License Agreement. dated January 1, 1997, by and
    between Calvin Klein, Inc. and CK Jeanswear Europe, S.p.A.
    (incorporated by reference to Exhibit 10.67 to The Warnaco
    Group, Inc.s
    Form 10-K
    filed March 3, 2006).* #10.58

License Agreement, dated as of January 31, 2006, by and
    among Calvin Klein, Inc., CK Jeanswear Europe S.p.A and WF
    Overseas Fashion C.V. (re: Bridge Apparel) (incorporated by
    reference to Exhibit 10.68 to The Warnaco Group,
    Inc.s
    Form 10-K
    filed March 3, 2006).* ##10.59

License Agreement, dated as of January 31, 2006, by and
    among Calvin, Klein, Inc., CK Jeanswear Europe S.p.A and WF
    Overseas Fashion C.V. (re: Bridge Accessories) (incorporated by
    reference to Exhibit 10.69 to The Warnaco Group,
    Inc.s
    Form 10-K
    filed March 3, 2006).* ##10.60

License Agreement, dated as of January 31, 2006, by and
    among Calvin, Klein, Inc., CK Jeanswear Europe S.p.A, CK
    Jeanswear Asia Limited and WF Overseas Fashion C.V. (re: Jean
    Accessories) (incorporated by reference to Exhibit 10.70 to
    The Warnaco Group, Inc.s
    Form 10-K
    filed March 3, 2006).* ##10.61

Letter Agreement, dated January 31, 2006, by and among
    Calvin Klein, Inc., CK Jeanswear N.V., CK Jeanswear Europe
    S.p.A., CK Jeanswear Asia Limited and WF Overseas Fashion C.V.
    (re: Bridge Store) (incorporated by reference to
    Exhibit 10.71 to The Warnaco Group, Inc.s
    Form 10-K
    filed March 3, 2006).* ##10.62

License Agreement, dated as of January 31, 2008, between
    Calvin Klein, Inc., WF Overseas Fashion C.V. and CK Jeanswear
    Europe S.r.l. (re: Bridge Accessories) (incorporated by
    reference to Exhibit 10.68 to The Warnaco Group,
    Inc.s
    Form 10-K
    filed February 27, 2008).* ##10.63

License AgreementCentral and South America, dated as of
    January 31, 2008, between Calvin Klein, Inc. and WF
    Overseas Fashion C.V. (re: Bridge Accessories) (incorporated by
    reference to Exhibit 10.69 to The Warnaco Group,
    Inc.s
    Form 10-K
    filed February 27, 2008).* ##10.64

License Agreement, dated as of January 31, 2008, between
    Calvin Klein, Inc., WF Overseas Fashion C.V., CK Jeanswear Asia
    Limited and CK Jeanswear Europe S.r.l. (re: Jean Accessories)
    (incorporated by reference to Exhibit 10.70 to The Warnaco
    Group, Inc.s
    Form 10-K
    filed February 27, 2008).* ##10.65

License AgreementCentral and South America, dated as of
    January 31, 2008, between Calvin Klein, Inc. and WF
    Overseas Fashion C.V. (re: Jean Accessories) (incorporated by
    reference to Exhibit 10.71 to The Warnaco Group,
    Inc.s
    Form 10-K
    filed February 27, 2008).* ##10.66

E-Commerce
    Agreement, dated as of January 31, 2008, Calvin Klein,
    Inc., WF Overseas Fashion C.V., CK Jeanswear N.V., CK Jeanswear
    Asia Limited, CK Jeanswear Europe S.r.l., Calvin Klein Jeanswear
    Company and CKJ Holdings, Inc. (incorporated by reference to
    Exhibit 10.72 to The Warnaco Group, Inc.s
    Form 10-K
    filed February 27, 2008).* ##12.1

Computation of Ratio of Earnings to Fixed Charges. 95




---



##### Table of Contents



Exhibit No.

Description of Exhibit21.1

Subsidiaries of The Warnaco Group, Inc.23.1

Consent of Independent Registered Public Accounting Firm.31.1

Certification of Chief Executive Officer of The Warnaco Group,
    Inc. pursuant to
    Rule 13a-14(a)/15d-14(a)
    of the Securities Exchange Act of 1934.31.2

Certification of Chief Financial Officer of The Warnaco Group,
    Inc. pursuant to
    Rule 13a-14(a)/15d-14(a)
    of the Securities Exchange Act of 1934.32.1

Certifications of Chief Executive Officer and Chief Financial
    Officer of The Warnaco Group, Inc. pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002. (furnished herewith)     *
    
    Previously filed.**
    
    The schedules to this agreement have been omitted pursuant to
    Item 601(b)(2) of
    Regulation S-K.
    The Company will furnish copies of any of the schedules to the
    Securities and Exchange Commission upon request.
    
    Filed herewith.#
    
    Certain portions of this exhibit omitted and filed separately
    with the Securities and Exchange Commission pursuant to a
    request for confidential treatment.##
    
    Certain portions of this exhibit omitted and filed separately
    with the Securities and Exchange Commission pursuant to a
    request for confidential treatment, which request was granted 96




---



##### Table of Contents



SIGNATURES
     By:
    /s/  JOSEPH
    R. GROMEK       SIGNATURE

TITLE

DATE/s/  JOSEPH
    R. GROMEK(Joseph
    R. Gromek)

Director, President and Chief Executive Officer (Principal
    Executive Officer)

February 27, 2009/s/  LAWRENCE
    R. RUTKOWSKI(Lawrence
    R. Rutkowski)

Executive Vice President and Chief Financial Officer (Principal
    Financial and Accounting Officer)

February 27, 2009/s/  CHARLES
    R. PERRIN(Charles
    R. Perrin)

Non-Executive Chairman of the Board of Directors

February 27, 2009/s/  (DAVID
    A. BELL(David
    A. Bell)

Director

February 27, 2009/s/  (ROBERT
    A. BOWMAN(Robert
    A. Bowman)

Director

February 27, 2009/s/  RICHARD
    KARL GOELTZ(Richard
    Karl Goeltz)

Director

February 27, 2009/s/  SHEILA
    A. HOPKINS(Sheila
    A. Hopkins)

Director

February 27, 2009/s/  NANCY
    A. REARDON(Nancy
    A. Reardon)

Director

February 27, 2009/s/  DONALD
    SEELEY(Donald
    Seeley)

Director

February 27, 2009/s/  CHERYL
    NIDO TURPIN(Cheryl
    Nido Turpin)

Director

February 27, 2009  97




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
            Internal ControlIntegrated Framework
  /s/ DELOITTE & TOUCHE LLP
    F-1




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
  CONSOLIDATED
    BALANCE SHEETS
 (Dollars
    in thousands, excluding per share data)
  January 3,


December 29,2009


2007ASSETSCurrent assets:Cash and cash equivalents

$
147,627


$
191,918Accounts receivable, less reserves of $87,375 and $86,703 as of
    January 3, 2009 and December 29, 2007, respectively


251,886



267,450Inventories


326,297



332,652Assets of discontinued operations


6,279



67,931Prepaid expenses and other current assets


91,727



58,940Deferred income taxes


65,050



74,271Total current assets


888,866



993,162Property, plant and equipment, net


109,563



111,916Other assets:Licenses, trademarks and other intangible assets, net


282,656



282,827Deferred financing costs, net


7,758



9,286Deferred income taxes


76,196



90,635Other assets


30,918



11,729Goodwill


100,136



106,948Total assets

$
1,496,093


$
1,606,503LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term debt

$
79,888


$
56,115Accounts payable


146,030



138,944Accrued liabilities


168,892



155,327Liabilities of discontinued operations


12,055



42,566Accrued income taxes payable


6,041



9,978Deferred income taxes


1,406



2,221Total current liabilities


414,312



405,151Long-term debt


163,794



310,500Deferred income taxes


51,192



64,062Other long-term liabilities


79,108



53,894Commitments and contingenciesStockholders equity:Preferred stock (See Note 13)






Common stock: $0.01 par value, 112,500,000 shares
    authorized, 50,122,614 and 48,202,442 issued as of
    January 3, 2009 and December 29, 2007, respectively


501



482Additional paid-in capital


631,891



587,099Accumulated other comprehensive income


12,841



69,583Retained earnings


268,016



220,762Treasury stock, at cost 4,865,401 and 3,796,302 shares as
    of January 3, 2009 and December 29, 2007, respectively


(125,562
)


(105,030
)Total stockholders equity


787,687



772,896Total liabilities and stockholders equity

$
1,496,093


$
1,606,503    F-2




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (Dollars
    in thousands, excluding per share amounts)
  Fiscal 2008


Fiscal 2007


Fiscal 2006Net revenues

$
2,065,023


$
1,819,579


$
1,611,201Cost of goods sold


1,142,977



1,069,904



982,017Gross profit


922,046



749,675



629,184Selling, general and administrative expenses


740,452



601,656



500,030Amortization of intangible assets


9,629



13,167



12,269Pension expense (income)


31,644



(8,838
)


(2,356
)Operating income


140,321



143,690



119,241Other loss (income)


1,926



(7,063
)


(2,934
)Interest expense


29,519



37,718



38,527Interest income


(3,120
)


(3,766
)


(2,903
)Income from continuing operations before provision for income
    taxes and minority interest


111,996



116,801



86,551Provision for income taxes


60,469



29,892



20,074Income from continuing operations before minority interest


51,527



86,909



66,477Minority interest


1,347







Income from continuing operations


50,180



86,909



66,477Loss from discontinued operations, net of taxes


(2,926
)


(7,802
)


(15,727
)Net income

$
47,254


$
79,107


$
50,750Basic income per common share:Income from continuing operations

$
1.11


$
1.94


$
1.45Loss from discontinued operations


(0.07
)


(0.18
)


(0.34
)Net income

$
1.04


$
1.76


$
1.11Diluted income per common share:Income from continuing operations

$
1.07


$
1.86


$
1.42Loss from discontinued operations


(0.06
)


(0.16
)


(0.34
)Net income

$
1.01


$
1.70


$
1.08Weighted average number of shares outstanding used in computing
    income per common share:Basic


45,351,336



44,908,028



45,719,910Diluted


46,779,107



46,618,307



46,882,399    F-3




---



##### Table of Contents



THE
    WARNACO GROUP, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
    AND COMPREHENSIVE INCOME(Dollars in thousands)
  AccumulatedAdditional


Other


RetainedCommon


Paid-in


Comprehensive


Earnings


TreasuryStock


Capital


Income/(Loss)


(Deficit)


Stock


TotalBalance at December 31, 2005

$
461


$
533,565


$
4,668


$
91,846


$
(1,053
)

$
629,487Net income














50,750







50,750Foreign currency translation adjustments










29,572











29,572Other










(437
)










(437
)Comprehensive income






















79,885Adjustment to initially apply SFAS 158










(2,350
)










(2,350
)Stock issued in connection with stock compensation plans


9



7,285















7,294Compensation expense in connection with employee stock
    compensation plans






14,884















14,884Purchase of treasury stock related to stock compensation plans


















(2,408
)


(2,408
)Repurchases of common stock


















(43,878
)


(43,878
)Balance at December 30, 2006


470



555,734



31,453



142,596



(47,339
)


682,914Net income














79,107







79,107Foreign currency translation adjustments










36,533











36,533Change in post retirement plans










1,752











1,752Other










(155
)










(155
)Comprehensive income






















117,237Adjustment to initially adopt FIN 48














(941
)






(941
)Stock issued in connection with stock compensation plans


12



16,787















16,799Compensation expense in connection with employee stock
    compensation plans






14,578















14,578Purchase of treasury stock related to stock compensation plans


















(2,488
)


(2,488
)Repurchases of common stock


















(55,203
)


(55,203
)Balance at December 29, 2007


482



587,099



69,583



220,762



(105,030
)


772,896Net income














47,254







47,254Foreign currency translation adjustments










(57,412
)










(57,412
)Change in post retirement plans










764











764Loss on cash flow hedges










(328
)










(328
)Other










234











234Comprehensive (loss)






















(9,488
)Stock issued in connection with stock compensation plans


19



28,477















28,496Compensation expense in connection with employee stock
    compensation plans






15,496















15,496Other






819















819Purchase of treasury stock related to stock compensation plans


















(4,667
)


(4,667
)Repurchases of common stock


















(15,865
)


(15,865
)Balance at January 3, 2009

$
501


$
631,891


$
12,841


$
268,016


$
(125,562
)

$
787,687    F-4




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Dollars
    in thousands)
  Fiscal 2008


Fiscal 2007


Fiscal 2006Cash flows from operating activities:Net income

$
47,254


$
79,107


$
50,750Adjustments to reconcile net income to net cash provided by
    operating activities:Loss from discontinued operations


2,926



7,802



15,727Depreciation and amortization


46,337



65,332



47,599Stock compensation


15,189



14,286



13,650Amortization of deferred financing costs


2,636



2,793



2,568Provision for trade and other bad debts


6,028



4,555



1,892Inventory writedown


23,870



33,315



16,917Loss on repurchase of Senior Notes/refinancing of debt facilities


5,329







Provision (benefit) for deferred income tax


12,093



(11,202
)


(6,673
)Foreign exchange loss (gain)


1,024



(9,456
)


(14,195
)Other


793



6



1,381Change in operating assets and liabilities:Accounts receivable


(6,527
)


3,413



(15,525
)Inventories


(43,210
)


(17,494
)


(56,265
)Prepaid expenses and other assets


(34,020
)


(993
)


(18,972
)Accounts payable, accrued expenses and other liabilities


67,290



(35,704
)


28,003Accrued income taxes


4,875



(11,277
)


2,721Net cash provided by operating activities from continuing
    operations


151,887



124,483



69,578Net cash provided by (used in) operating activities from
    discontinued operations


(26,000
)


35,940



17,169Net cash provided by operating activities


125,887



160,423



86,747Cash flows from investing activities:Proceeds on disposal of assets and collection of notes receivable


354



2,709



6,218Purchase of property, plant and equipment


(42,314
)


(40,516
)


(34,673
)Business acquisitions, net of cash acquired


(2,356
)


(2,069
)


(208,661
)Proceeds from the sale of businesses, net


26,780



19,519



51,352Purchase of intangible asset


(26,727
)






Net cash used in investing activities from continuing operations


(44,263
)


(20,357
)


(185,764
)Net cash used in investing activities from discontinued
    operations






(443
)


(1,314
)Net cash used in investing activities


(44,263
)


(20,800
)


(187,078
)    F-5




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS (Continued)
 (Dollars
    in thousands)
  Fiscal 2008


Fiscal 2007


Fiscal 2006Cash flows from financing activities:Debt issued with business acquisitionTerm B Note

$



$



$
180,000Payment of debt assumed with business acquisition










(44,398
)Payment of deferred financing costs


(3,934
)


(480
)


(3,456
)Repayments of Senior Note due 2013


(46,185
)






(5,200
)Repayments of Term B Note


(107,300
)


(61,800
)


(10,900
)Proceeds from the exercise of employee stock options


28,496



16,149



7,294Purchase of treasury stock


(20,532
)


(57,691
)


(46,286
)Increase (decrease) in short-term notes payable


16,593



(17,493
)


21,021Borrowings under revolving credit facility


12,000







Proceeds from the sale and leaseback of store fixtures










1,607Other


170



(373
)


Net cash provided by (used in) financing activities from
    continuing operations


(120,692
)


(121,688
)


99,682Net cash used in financing activities from discontinued
    operations










Net cash provided by (used in) financing activities


(120,692
)


(121,688
)


99,682Translation adjustments


(5,223
)


6,993



3,438Increase (decrease) in cash and cash equivalents


(44,291
)


24,928



2,789Cash and cash equivalents at beginning of period


191,918



166,990



164,201Cash and cash equivalents at end of period

$
147,627


$
191,918


$
166,990    F-6




---



##### Table of Contents



THE
    WARNACO GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, excluding share and per share
    amounts)
  Note 1Nature
    of Operations and Summary of Significant Accounting
    Policies
  Organization:
  Nature of Operations: Calvin Klein shop-in-shop/concession Speedo Calvin Klein
  Sections 101-1330,
  Basis of Consolidation and Presentation:
    Note 3
    Use of Estimates:
 F-7




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Concentration of Credit Risk:
  Revenue Recognition:
  Cost of Goods Sold:
  Cash and Cash Equivalents:
  Accounts Receivable:
 F-8




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Inventories: first-in,
  Long-Lived Assets:
    Accounting for the
    Impairment or Disposal of Long-Lived
 F-9




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
      Goodwill and Other Intangible Assets: Goodwill and
    Other Intangible Assets
  Warners® Olga ® Body Nancy
    Ganz® Bodyslimmers ® Calvin Klein Calvin Klein Chaps ®
     F-10




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 10 of Notes to
    Consolidated Financial Statements.
  Property, Plant and Equipment:
  Buildings


20-40 yearsBuilding Improvements (including leasehold improvements)


2-20 yearsMachinery and equipment


3-10 yearsFurniture and fixtures (including store fixtures)


3-10 yearsComputer hardware


3-5 yearsComputer software


3-7 years     Computer Software Costs: SOP 98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use Capitalization of Interest Costs
 F-11




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Income Taxes:
  Accounting for
    Uncertainty in Income Taxesan Interpretation of
    SFAS No. 109 Accounting for Income
    Taxes Note 6 of Notes to Consolidated Financial Statements
  Pension Plans:
   F-12




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
          Employers Accounting for Pensions
  Employers Accounting for Defined Benefit Pension and
    Other Post Retirement Plans
   F-13




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 7 of Notes to Consolidated Financial Statements
  Stock-Based Compensation: Share-Based
    Payment
  
    In determining the stock price volatility assumption used, the
    Company considers the historical volatility of the stock prices
    of selected companies in the apparel industry, the nature of
    those companies, the Companys own historical stock price
    volatility since its emergence from bankruptcy and other
    factors. Historical volatilities are based upon daily quoted
    market prices of the Companys common stock on the New York
    Stock Exchange and, prior to May 15, 2008, on the NASDAQ
    Stock Market LLC, over a period equal to the expected term of
    the related equity instruments. The Company relies only on
    historical volatility since it provides the most reliable
    indication of future volatility. Future volatility is expected
    to be consistent with historical; historical volatility is
    calculated using a simple average calculation method; historical
    data is available for the length of the options expected
    term and a sufficient number of price observations are used
    consistently. Since the Companys stock options are not
    traded on a public market, the Company does not use implied
    volatility. A higher volatility input to the
    Black-Scholes-Merton model increases the resulting compensation
    expense.
    The Company based its Fiscal 2008, Fiscal 2007 and Fiscal 2006
    estimates of the expected life of a stock option of six years
    upon the average of the sum of the vesting period of
    36-42 months
    and the option term of ten years for issued and outstanding
    options in accordance with the simplified method as detailed in
    Staff Accounting Bulletin No. 110
    (SAB 110). A shorter expected term would result
    in a lower compensation expense.
    The Companys risk-free rate of return assumption for
    options granted in Fiscal 2008, Fiscal 2007 and Fiscal 2006 was
    equal to the quoted yield for U.S. treasury bonds as of the
    date of grant.   F-14




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Fiscal 2008

Fiscal 2007

Fiscal 2006Weighted average risk free rate of return

3.19%

4.43%

4.63%Dividend yield (a)





Expected volatility of the market price of the Companys
    common stock

36.1%

31.3%

27.0%Expected option life

6 years

6 years

6 years     (a)
    
    The terms of the Companys New
    Credit Agreements, Amended and Restated Credit Agreement and the
    indenture governing its
    87/8% Senior
    Notes due 2013 (each as defined below) limit the Companys
    ability to make certain payments, including dividends, and
    require the Company to meet certain financial covenants. The
    Company has not paid dividends on its common stock in any of the
    last three fiscal years. See Note 12.    Fiscal 2008


Fiscal 2007


Fiscal 2006Stock-based compensation expense before income taxes:Stock options

$
5,585


$
6,854


$
8,371Restricted stock grants


9,911



7,724



6,513Total (a)


15,496



14,578



14,884Income tax benefit:Stock options


1,949



2,428



2,966Restricted stock grants


1,556



2,737



2,307Total


3,505



5,165



5,273Stock-based compensation expense after income taxes:Stock options


3,636



4,426



5,405Restricted stock grants


8,355



4,987



4,206Total

$
11,991


$
9,413


$
9,611     (a)
    
    Stock-based compensation has been
    reflected in the Companys Consolidated Statement of
    Operations as follows:  Fiscal 2008


Fiscal 2007


Fiscal 2006Included in income from continuing operations before provision
    for income taxes

$
15,189


$
14,286


$
13,650Included in loss from discontinued operations, net of income
    taxes


307



292



1,234$
15,496


$
14,578


$
14,884     Advertising Costs:
 F-15




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Shipping and Handling Costs:
  Leases:
  Deferred Financing Costs:
  Derivative Financial Instruments:
  Accounting for
    Derivative Instruments and Hedging Activities Accounting for Certain Derivatives
    and Certain Hedging Activities
   F-16




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
            Note 12
  Translation of Foreign Currencies:
 F-17




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Recent Accounting Pronouncements: Business
    Combinations Business Combination
  Non-controlling Interests in Consolidated Financial
    Statements, an Amendment of ARB 51
  Fair Value Measurements
 F-18




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    No. 157-3 Determining the Fair Value of a Financial Asset in a Market
    That is Not Active (FSP 157-3). FSP 157-3 Fair Value
    Measurements, FSP 157-3 FSP 157-3
  The Fair Value
    Option for Financial Assets and Financial
    LiabilitiesIncluding an Amendment of FASB Statement
    No. 115 ( ) instrument-by-instrument
  Disclosures about Derivative Instruments and Hedging
    Activities an amendment of FASB Statement No. 133
    ( ).
  No. 142-3, Determination of the Useful Life of Intangible Assets (FSP 142-3). FSP 142-3
 F-19




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  FSP 142-3 FSP 142-3 FSP 142-3
  The
    Hierarchy of Generally Accepted Accounting Principles
  Employers Disclosures about
    Postretirement Benefit Plan Assets FAS 132R-1). FAS 132R-1 Employers Disclosures about Pensions and Other
    Postretirement Benefits , FAS 132R-1in Form 10-K
  Note 2Acquisitions
  Calvin Klein Jeans Business in Europe and Asia: Calvin Klein CK
    Calvin Klein
  Calvin Klein
 F-20




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 12Financing Agreements- Revolving
    Credit Facility; Amended and Restated Credit Agreement.
        Assets acquired:Accounts receivable

$
63,868Inventory


53,693Prepaid and other current assets


14,040Property, plant and equipment


14,477Licenses and other intangible assets (a)


208,550Goodwill (a)


90,328Other assets


3,478Total assets


448,434Liabilities assumed:Accounts payable, accrued liabilities and other current
    liabilities


57,302Accrued income taxes payable


16,864Third-party debt


45,023Related party debt (b)


44,518Deferred taxes


63,780Other noncurrent liabilities


13,556Total liabilities


241,043Purchase price, net of cash acquired of
    $16,578 (c)

$
207,391     a)
    
    See Note 10for
    additional disclosure regarding acquired intangible assets and
    goodwill.b)
    
    Repaid by the acquired entities
    simultaneously with the closing.c)
    
    Includes $1,901 paid in Fiscal 2005. F-21




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
     Fiscal 2006(All amounts unaudited)Net revenues

$
1,688,374Net income


54,707Net income per share  basic


1.20Net income per share  diluted


1.17       a)
    The write up to fair value of inventory as part of the purchase
    price allocation: $2,400 (recorded in cost of goods sold in the
    consolidated statement of operations);b)
    The amortization of sales order backlog: $1,600 (recorded in
    amortization of intangible assets in the consolidated statement
    of operations); and  c)
    A net exchange loss realized by the Company in connection with
    the consummation of the acquisition: $1,558 (recorded in other
    loss (income) in the consolidated statement of operations).  Calvin Klein
  Calvin Klein Calvin Klein Calvin Klein CK/Calvin Klein CK/Calvin Klein Calvin Klein
 F-22




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  (v) e-commerce Calvin Klein Calvin Klein Calvin Klein
    Retail Stores:
  Note 3
    Dispositions
    and Discontinued Operations  Designer Swimwear brands (except for Calvin Klein): OP Catalina Anne
    Cole Cole of California OP Catalina Anne Cole Cole of California OP OP OP Catalina Anne Cole Cole
    of California work-in-process Catalina Anne Cole Cole of
    California Nautica Michael Kors Nautica Michael Kors
  Lejaby Sale: Lejaby
 F-23




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Lejaby Lejaby Lejaby Lejaby Lejaby Lejaby
  OP Sale: OP OP OP OP
  J. Lo by Jennifer
    Lopez ® (JLO), Lejaby Rose Axcelerate and Speedo retail stores Lejaby Rose Axcelerate Speedo
    Fiscal 2008


Fiscal 2007


Fiscal 2006Net revenues

$
42,606


$
210,956


$
242,576Loss before provision for income taxes


(7,512
)


(13,901
)


(13,312
)Provision (benefit) for income taxes


(4,586
)


(6,099
)


2,415Loss from discontinued operations

$
(2,926
)

$
(7,802
)

$
(15,727
)  F-24




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    January 3, 2009 (a)


December 29, 2007 (b)Accounts receivable, net

$
5,396


$
21,487Inventories, net


23



28,167Prepaid expenses and other current assets


778



6,217Deferred tax assets


82



2,448Property, plant and equipment, net






3,001Intangible and other assets






6,351Other






260Assets of discontinued operations

$
6,279


$
67,931Accounts payable

$
356


$
14,867Accrued liabilities


9,735



21,693Deferred tax liabilities


104



942Other


1,860



5,064Liabilities of discontinued operations

$
12,055


$
42,566     (a)
    
    Includes assets and liabilities
    related to the businesses that were discontinued in 2008, 2007
    and 2006.(b)
    
    Includes assets and liabilities
    related to those businesses that were discontinued in both 2007
    and 2006.  Note 4
    Restructuring
    Expense      The Collection License Company Charge:
  Activities associated with managements initiatives to
    increase productivity and profitability in the Swimwear Group: Calvin Klein
 F-25




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    January 1, 2009 through December 31, 2009


15,800January 1, 2010 through December 31, 2010


16,600January 1, 2011 through June 30, 2011


8,400     The rationalization and consolidation of the Companys
    European operations:
  Reduction in force:
  Other:
 F-26




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Fiscal 2008


Fiscal 2007


Fiscal 2006Cost of goods sold

$
1,878


$
21,589


$
Selling, general and administrative expenses


33,382



10,771



411$
35,260


$
32,360


$
411Cash portion of restructuring items

$
33,471


$
17,479


$
Non-cash portion of restructuring items

$
1,789


$
14,881


$
411     TotalBalance at December 29, 2007

$
4,718Charges for Fiscal 2008


33,471Cash reductions for Fiscal 2008


(32,777
)Non-cash changes and foreign currency effects


513Balance at January 3, 2008(a)

$
5,925     (a)
    
    Includes approximately $4,655
    recorded in accrued liabilities (part of current liabilities)
    which amounts are expected to be settled over the next
    12 months and includes approximately $1,270 recorded in
    other long term liabilities which amounts are expected to be
    settled over the next five years.  Note 5
    Business
    Segments and Geographic Information  Business Segments:
  Calvin Klein Chaps ® Calvin Klein shop-in-shop/concession Calvin Klein
  Calvin Klein,
    Warners ® ,

    Olga ® Body Nancy
    Ganz/Bodyslimmers ® Calvin Klein shop-in-shop/concession Calvin Klein
  Speedo ® Lifeguard® Calvin Klein
 F-27




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Intimate








Corporate /Sportswear


Apparel


Swimwear





OtherGroup


Group


Group


Group Total


Items


TotalFiscal 2008Net revenues

$
1,102,771


$
702,252


$
260,000


$
2,065,023


$



$
2,065,023Operating income (loss)


88,656



126,133



11,478



226,267



(85,946
)


140,321Depreciation and amortization (a)


30,325



11,696



2,441



44,462



1,875



46,337Restructuring expense


27,820



1,267



3,944



33,031



2,229



35,260Capital expenditures


13,296



20,192



959



34,447



6,584



41,031Fiscal 2007Net revenues

$
939,147


$
627,014


$
253,418


$
1,819,579


$



$
1,819,579Operating income (loss)


97,946



108,343



(24,499
)


181,790



(38,100
)


143,690Depreciation and amortization


29,309



13,130



19,459



61,898



3,434



65,332Restructuring expense


118



2,142



29,821



32,081



279



32,360Capital expenditures


17,275



16,119



2,051



35,445



6,310



41,755Fiscal 2006Net revenues

$
791,634


$
545,151


$
274,416


$
1,611,201


$



$
1,611,201Operating income (loss)


58,421



78,273



20,292



156,986



(37,745
)


119,241Depreciation and amortization


21,745



9,355



10,533



41,633



5,966



47,599Restructuring expense


















411



411Capital expenditures


6,502



6,858



1,736



15,096



15,095



30,191Balance SheetTotal Assets:January 3, 2009

$
801,038


$
304,724


$
147,685


$
1,253,447


$
242,646


$
1,496,093December 29, 2007


758,311



359,508



166,862



1,284,681



321,822



1,606,503Property, Plant and Equipment:January 3, 2009

$
26,525


$
33,921


$
4,091


$
64,537


$
45,026


$
109,563December 29, 2007


24,187



26,112



4,613



54,912



57,004



111,916     (a)
    
    In connection with its estimate of
    depreciation expense, the Company recorded an additional
    depreciation charge of $1,084 during Fiscal 2008, which amount
    related to the correction of amounts recorded in prior periods.
    The amount was not material to any prior period.      Fiscal 2008


Fiscal 2007


Fiscal 2006Unallocated corporate expenses

$
50,402


$
43,412


$
34,189Pension expense (income)


31,440



(9,025
)


(2,821
)Restructuring expense


2,229



279



411Depreciation and amortization of corporate assets


1,875



3,434



5,966Corporate/other expenses

$
85,946


$
38,100


$
37,745  F-28




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Fiscal 2008


Fiscal 2007


Fiscal 2006Operating income by operating group

$
226,267


$
181,790


$
156,986Corporate/other items


(85,946
)


(38,100
)


(37,745
)Operating income


140,321



143,690



119,241Other (income) loss


1,926



(7,063
)


(2,934
)Interest expense


29,519



37,718



38,527Interest income


(3,120
)


(3,766
)


(2,903
)Income from continuing operations before provision for income
    taxes

$
111,996


$
116,801


$
86,551   Geographic Information:
  Fiscal 2008


%


Fiscal 2007


%


Fiscal 2006


%Net revenues:United States

$
942,205



45.6
%

$
927,152



50.9
%

$
931,904



57.8
%Europe


576,320



27.9
%


470,560



25.9
%


328,819



20.4
%Asia


321,228



15.6
%


249,680



13.7
%


191,756



11.9
%Canada


115,448



5.6
%


102,972



5.7
%


94,234



5.9
%Mexico, Central and South America


109,822



5.3
%


69,215



3.8
%


64,488



4.0
%$
2,065,023



100.0
%

$
1,819,579



100.0
%

$
1,611,201



100.0
%   January 3, 2009


December 29, 2007Property, plant and equipment, net:United States

$
57,265



52.3
%

$
63,282



56.5
%All other


52,298



47.7
%


48,634



43.5
%$
109,563



100.0
%

$
111,916



100.0
%   Information about Major Customers:
  Note 6
    Income
    Taxes    Fiscal 2008


Fiscal 2007


Fiscal 2006Income from continuing operations before provision (benefit) for
    income taxes:Domestic

$
6,676


$
(11,218
)

$
3,842Foreign


105,320



128,019



82,709Total

$
111,996


$
116,801


$
86,551  F-29




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Fiscal 2008


Fiscal 2007


Fiscal 2006Current:Federal

$
120


$
428


$
552State and local


3,163



5,141



177Foreign


45,093



35,461



26,018Total current tax provision

$
48,376


$
41,030


$
26,747Deferred:Federal

$
26,614


$
4,535


$
2,002State and local


(5,335
)


592



519Foreign


(11,207
)


(9,064
)


(7,268
)Valuation allowance increase (decrease)


2,021



(7,201
)


(1,926
)Total deferred tax provision (benefit)


12,093



(11,138
)


(6,673
)Provision for income taxes

$
60,469


$
29,892


$
20,074     Fiscal 2008


Fiscal 2007


Fiscal 2006Income from continuing operations before provision for income
    taxes

$
111,996


$
116,801


$
86,551Income tax expense computed at U.S. statutory rate

$
39,198


$
40,880


$
30,293State income taxes, net of federal benefit


(1,437
)


3,728



451Foreign taxes less than the U.S. statutory rate


(2,976
)


(18,472
)


(11,320
)Foreign income taxed in the U.S


19,370
(a)


5,607



1,029Non-deductible expenses related to foreign operations






3,500



Other, net


4,293



1,850



1,547Increase (decrease) in valuation allowance


2,021



(7,201
)


(1,926
)Provision for income taxes

$
60,469


$
29,892


$
20,074     (a)
    
    Includes, among other items,
    approximately $14,600 related to the repatriation to the U.S. of
    the net proceeds received in connection with the sale of the
    Lejaby business. F-30




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
     January 3, 2009


December 29, 2007Deferred tax assets:Inventory

$
6,441


$
13,765Pension and post-retirement benefits


12,337



2,360Advertising credits


13,368



13,628Reserves and accruals


44,256



51,483Net operating losses


64,893



73,622Other


24,321



21,870165,616



176,728Valuation allowance


(15,030
)


(11,850
)Subtotal


150,586



164,878Gross deferred tax liabilities:Depreciation and amortization


61,938



66,255Other






Subtotal


61,938



66,255Deferred tax assetnet

$
88,648


$
98,623   Realization
    of Deferred Tax Assets
      Business Combinations
 F-31




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Attribute
    Reduction and Limitations
        paid-in-capital
    Permanent
    Reinvestment of Foreign Earnings
  Lejaby Note 4) Lejaby
 F-32




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    FIN 48Accounting
    for Uncertainty in Income Taxes
    Tax Years Subject to Examination
  Classification of Interest and Penalties
  Tabular Reconciliation of Unrecognized Tax
    Benefit
  2008


2007Balance at the beginning of the fiscal year

$
81,705


$
72,564Increases:Tax Positions Taken  Current Year


9,037



5,301Tax Positions Taken  Prior Year


10,575



6,774Decreases:Tax Positions Taken  Current Year






Tax Positions Taken  Prior Year


(13,211
)


(1,632
)Settlements During Year


(2,138
)


(1,302
)Lapse of Statute of Limitations






Balance at end of the fiscal year

$
85,968



81,705   Anticipated Changes within Twelve Months
  Note 7
    Employee
    Retirement Plans   F-33




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
            Pension


PostretirementPlans


PlansOther long-term liabilities

$



$
2,350Total liabilities

$



$
2,350Accumulated other comprehensive income

$



$
(2,350
)Total stockholders equity

$



$
(2,350
)  F-34




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
      Pension Plans


Postretirement PlansJanuary 3,


December 29,


January 3,


December 29,2009


2007


2009


2007Change in projected benefit obligations:Benefit obligation at beginning of period

$
141,870


$
151,684


$
4,769


$
7,626Service cost










71



166Interest cost


9,498



8,997



267



409Actuarial (gain) (a)


(13,227
)


(8,345
)


(1,635
)


(2,804
)Benefits paid


(10,524
)


(10,466
)


(354
)


(628
)Benefit obligation at end of period

$
127,617


$
141,870


$
3,118


$
4,769     (a)
    
    The Pension Plans actuarial
    gain in Fiscal 2008 is due primarily to the gain related to the
    change in the discount rate ($16,200), partially offset by other
    actuarial losses ($3,000) during Fiscal 2008. The Pension
    Plans actuarial gain in Fiscal 2007 is due primarily to
    the gain related to the change in the discount rate ($11,800),
    partially offset by other actuarial losses ($3,500) during
    Fiscal 2007. The Postretirement Plans actuarial gain in
    Fiscal 2008 is primarily related to the change in the discount
    rate ($400) and other actuarial gains ($1,235). The
    Postretirement Plans actuarial gain in Fiscal 2007 is
    primarily related to a plan amendment ($1,800), the change in
    the discount rate ($500) and other actuarial gains ($500).    Pension Plans


Postretirement PlansJanuary 3,


December 29,


January 3,


December 29,2009


2007


2009


2007Fair value of plan assets at beginning of period

$
138,147


$
125,246


$



$
Actual return on plan assets


(35,169
)


9,677







Employers contributions


8,133



13,690



354



628Benefits paid


(10,524
)


(10,466
)


(354
)


(628
)Fair value of plan assets at end of period

$
100,587


$
138,147


$



$
Unfunded status

$
(27,030
)

$
(3,723
)

$
(3,118
)

$
(4,769
)Unrecognized net actuarial (gain)










(1,869
)


(372
)Net amount recognized / Retirement obligations (a)

$
(27,030
)

$
(3,723
)

$
(4,987
)

$
(5,141
)     (a)
    
    The net amount recognized for the
    Pension Plan as of January 3, 2009 is included in the
    Companys consolidated balance sheets in Accrued pension
    obligations. F-35




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
     Pension Plans


Postretirement PlansFiscal 2008


Fiscal 2007


Fiscal 2006


Fiscal 2008


Fiscal 2007


Fiscal 2006Service cost

$



$



$



$
71


$
166


$
201Interest cost


9,498



8,997



8,820



267



409



433Expected return on plan assets


(10,942
)


(10,184
)


(9,069
)










(Gain) loss on plan assets in






















excess of expected return


46,111



507



(1,521
)










Net actuarial (gain) loss (a)


(13,227
)


(8,345
)


(1,051
)


(166
)






165Amortization of loss














28



112



Net (benefit) cost (b)

$
31,440


$
(9,025
)

$
(2,821
)

$
200


$
687


$
799     (a)
    
    The Pension Plans actuarial
    gain in Fiscal 2008 is due primarily to the gain related to the
    change in the discount rate ($16,200), partially offset by other
    actuarial losses ($3,000) during Fiscal 2008. The Pension
    Plans net actuarial gain in Fiscal 2007 is primarily
    related to the change in the discount rate ($11,800), partially
    offset by other actuarial losses ($3,500, including a $500 loss
    on plan assets). The Pension Plans net actuarial gain in
    Fiscal 2006 is primarily related to the change in the discount
    rate, partially offset by other actuarial losses in Fiscal 2006.(b)
    
    The Pension Plans net benefit
    (income) cost does not include costs related to certain foreign
    defined benefit plans of $204, $187 and $464 in Fiscal 2008,
    Fiscal 2007 and Fiscal 2006, respectively.    Pension


PostretirementPlans


PlansInitial net asset (obligation)

$



$
Prior service cost






166Net loss






Total estimated amortization from Accumulated






Other Comprehensive Income for fiscal 2009

$



$
166     Targeted


January 3,


December 29,Asset Allocation


2009


2007Asset Category:Equity securities


40
%


33
%


41
%Debt securities


20
%


27
%


17
%Real estate


5
%


6
%


6
%Cash






20
%


Other


35
%


14
%


36
%Total


100
%


100
%


100
%    F-36




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
         F-37




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Pension


PostretirementPlans


Plans2009

$
10,600


$
3402010


10,600



3302011


10,600



3302012


10,800



3202013


10,800



3102014-2018


55,600



1,420     Fiscal 2008


Fiscal 2007


Fiscal 2006Discount rate used for determining projected benefit obligation


8.00
%


6.75
%


6.00
%Discount rate used for determining net benefit (income) cost


6.75
%


6.00
%


5.85
%Long-term rate of return on plan assets


8.00
%


8.00
%


8.00
%Average rate of compensation increase for determining projected
    benefit obligation


N/A



N/A



N/AAverage rate of compensation increase for determining net
    benefit (income) cost


N/A



N/A



N/A      F-38




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
        January 3,


December 29,2009


2007Health care cost trend rate assumed next year:Pre-65


8.0
%


8.5
%Post-65


7.0
%


9.0
%Rate at which the trend rate is assumed to decline (the ultimate
    trend rate)


4.5
%


5.0
%Year trend rate reaches the ultimate rate


2027



2012     One


OnePercentage


PercentagePoint


PointIncrease


DecreaseEffect on total of service and interest cost components

$
36


$
(30
)Effect on health care component of the accumulated
    post-retirement benefit obligation

$
264


$
(227
)      F-39




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
      Note 8
    Inventories  January 3,


December 29,2008


2007Finished goods

$
259,163


$
260,478Work in process / in transit


62,932



57,074Raw materials


4,202



15,100$
326,297


$
332,652     Note 9
    Property,
    Plant and Equipment  January 3,


December 29,2009


2007Land and land improvements

$
493


$
491Building, building improvements and leasehold improvements


55,992



48,697Furniture and fixtures


61,369



56,535Machinery and equipment


26,680



24,971Computer hardware and software


101,193



96,206Construction in progress


7,027



8,892$
252,754


$
235,792Less: Accumulated depreciation and amortization


(143,191
)


(123,876
)Property, plant and equipment, net

$
109,563


$
111,916    F-40




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 10
    Intangible
    Assets and Goodwill    January 3, 2009


December 29, 2007Gross








GrossCarrying


Accumulated





Carrying


AccumulatedAmount


Amortization


Net


Amount


Amortization


NetFinite-lived intangible assets:Licenses for a term  (Company as licensee)

$
281,800


$
36,894


$
244,906


$
271,634


$
29,525


$
242,109Other


16,204



6,729



9,475



16,912



4,469



12,443298,004



43,623



254,381



288,546



33,994



254,552Indefinite lived intangible assets:Trademarks


19,366







19,366



19,366







19,366Licenses in perpetuity


8,909







8,909



8,909







8,90928,275







28,275



28,275







28,275Intangible Assets

$
326,279


$
43,623


$
282,656


$
316,821


$
33,994


$
282,827   Licenses


Finite-livedin


IntangibleTrademarks


Perpetuity


Assets


Other


TotalBalance at December 30, 2006

$
120,153


$
43,243


$
295,986


$
13,004


$
472,386Amortization expense










(10,701
)


(2,466
)


(13,167
)Disposition of Catalina and Anne Cole (a)


(5,703
)


(2,946
)










(8,649
)Acquisition of Shanghai stores














500



500Transfer of Lejaby to discontinued operations (b)


(17,699
)














(17,699
)Recognition of deferred tax assets (c)


(77,385
)


(31,388
)


(69,322
)






(178,095
)Translation adjustments










26,146



1,405



27,551Balance at December 29, 2007


19,366



8,909



242,109



12,443



282,827Amortization expense










(7,369
)


(2,260
)


(9,629
)Acquisition of CK licenses (d)










24,700







24,700Renewal of Chaps license (e)










2,027







2,027Translation adjustments










(16,561
)


(708
)


(17,269
)Balance at January 3, 2009

$
19,366


$
8,909


$
244,906


$
9,475


$
282,656     (a)
    
    On December 28, 2007, the
    Company sold its Catalinaand Anne Cole
    businesses. See Note 3.(b)
    
    As of December 29, 2007, the
    Companys Lejabybusiness was classified as a
    discontinued operation. See Note 3.(c)
    
    During Fiscal 2007 reductions in
    valuation allowances (as a result of the Company recognizing
    certain deferred tax assets related to NOL carryovers in
    existence as of the Effective Date) of $188,557 were ratably
    applied against non-current intangible assets in existence as of
    the Effective Date as follows: $178,095 to intangibles of
    continuing operations, $10,401 to intangibles of discontinued
    operations and $61 to intangible that were sold during Fiscal
    2007. See Note 6for additional disclosure regarding
    deferred tax assets and reductions in valuation allowances. F-41




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
   (d)
    
    In connection with the purchase of
    the 2008 CK Licenses, the Company recorded intangible assets of
    $24,700 during Fiscal 2008 related to licenses for a term. See
    Note2. The Company expects to amortize the 2008 CK
    Licenses over a weighted average period of approximately
    37 years.(e)
    
    During Fiscal 2008, the Company
    paid $2,027 to renew its Chapslicense through
    December 31, 2013. The Company expects to amortize the
    rights associated with the Chaps renewal payment over a period
    of approximately five years.    Assigned Value as ofDate of


Weighted AverageAcquisition


Useful LifeLicenses acquired for a term

$
221,039


40 yearsFavorable leases, customer lists and other


13,800


9 years$
234,839     2009

$
9,7712010


9,0222011


8,4112012


8,2252013


8,130     Sportswear


Intimate ApparelGroup


Group


Swimwear Group


TotalGoodwill balance at December 30, 2006

$
100,150


$
359


$
642


$
101,151Adjustment:Income taxes (a)


(760
)










(760
)Translation adjustments


8,312



41







8,353Other (b)


(1,796
)










(1,796
)Goodwill balance at December 29, 2007


105,906



400



642



106,948Adjustment:Translation adjustments


(6,620
)


(24
)






(6,644
)Other (b)


(168
)










(168
)Goodwill balance at January 3, 2009

$
99,118


$
376


$
642


$
100,136     (a)
    
    Reflects adjustments for deferred
    taxes primarily related to the establishment of NOLs in
    existence as of the date of acquisition of the CKJEA business.(b)
    
    Primarily related to the reduction
    of certain reserves in the Companys CKJEA businesses that
    were in existence on the date of acquisition of the CKJEA
    business.  Calvin Klein Note 1 of Notes to Consolidated
    Financial StatementsSignificant Accounting Policies-
    Goodwill and Other Intangible Assets.
 F-42




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 11
    Accumulated
    Other Comprehensive Income    January 3,


December 29,2009


2007Foreign currency translation adjustments (a)

$
13,198


$
70,610Actuarial (losses), net related to post retirement medical plans


(29
)


(793
)(Loss) on cash flow hedges


(328
)Other






(234
)Total accumulated other comprehensive income

$
12,841


$
69,583     (a)
    
    The foreign currency translation
    adjustments reflect the change in the U.S. dollar relative to
    functional currencies where the Company conducts certain of its
    operations. The decrease of $57,412 in the gain related to
    foreign currency translation adjustments for Fiscal 2008
    compared to Fiscal 2007 reflects the decline in the strength of
    foreign currencies relative to the US dollar, coupled with the
    fact that approximately 60% of the Companys assets are
    based outside of the U.S.  Note 12
    Debt    January 3,


December 29,2009


2007Short-term debtCKJEA notes payable and other

$
67,893


$
54,315Revolving credit facilities


11,995



Current portion of Term B Note due 2012






1,80079,888



56,115Long-term debt87/8% Senior
    Notes due 2013


160,890



205,000Unrealized gain on swap agreements


2,904



Term B Note due 2012






105,500163,794



310,500Total Debt

$
243,682


$
366,615     Financing
    Agreements
  Senior
    Notes
  7 8
 F-43




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  7 8
    Interest
    Rate Swap Agreements
  7 8
  7 8
   F-44




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    January 3,


December 29,2009


2007Unrealized gain (loss):2003 Swap Agreement

$
1,972


$
1282004 Swap Agreement


932



(148
)Net unrealized gain (loss)

$
2,904


$
(20
)   New
    Credit Agreements
        per annum per annum
 F-45




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
             F-46




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    No. 98-14 Debtors Accounting for Changes in Line-of-Credit or
    Revolving Debt Arrangements (EITF 98-14), EITF 98-14
  Revolving
    Credit Facility; Amended and Restated Credit
    Agreement
     F-47




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
      OP OP
  Catalina Anne Cole Cole of California Catalina Anne Cole Cole of California Note 2
  Euro-Denominated
    CKJEA Notes Payable
    Foreign
    Revolving Credit Facility
  non-amortizing
 F-48




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Debt
    Covenants
    Interest
  7 8
  Note 13Stockholders
    Equity
  Preferred
    Stock
    Share
    Repurchase Program
     F-49




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
      2005
    Stock Incentive Plan
  split-ups, 1 3
  2003
    Stock Incentive Plan
  1 3 1 4 1 4
 F-50




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicOptions


Price


Life (Years)


ValueOutstanding as of December 29, 2007


3,369,348


$
18.76Granted


460,300



49.81Exercised


(1,582,071
)


18.02Forfeited / Expired


(98,765
)


28.74Outstanding as of January 3, 2009


2,148,812


$
25.50



6.9



5,603Options exercisable as of January 3, 2009


1,307,885


$
17.44



5.7



5,593     (a)
    
    456,635 options are expected to
    vest in fiscal 2009.    WeightedRestricted


Average GrantShares/Units


Date Fair ValueUnvested as of December 29, 2007


833,292


$
26.06Granted


251,540



48.15Vested


(347,013
)


25.59Forfeited


(72,863
)


29.46Unvested as of January 3, 2009


664,956


$
34.30     Fiscal 2008


Fiscal 2007


Fiscal 2006Weighted-average grant date fair value of options granted

$
20.21


$
10.78


$
8.52Intrinsic value of options exercised


28.35



14.23



10.85Total fair value of restricted shares/units vested


37.15



28.13



22.38  F-51




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    January 3, 2009


December 29, 2007Common Stock:Balance at beginning of year


48,202,442



46,985,925Shares issued upon exercise of stock options


1,582,071



922,314Shares issued upon vesting of restricted stock grants


347,013



273,403Shares issued to directors / other


(8,912
)


20,800Balance at end of year


50,122,614



48,202,442Treasury Stock:Balance at beginning of year


3,796,302



2,161,225Purchases of Common Stock (a)


1,069,099



1,635,077Balance at end of year


4,865,401



3,796,302     (a)
    
    Represents 943,000 and
    1,545,784 shares for Fiscal 2008 and Fiscal 2007,
    respectively, purchased under the Companys share
    repurchase programs and 126,099 and 89,293 shares for
    Fiscal 2008 and Fiscal 2007, respectively, surrendered by
    employees in satisfaction of certain payroll tax obligations
    associated with the vesting of restricted stock.  Note 1 of the Notes to Consolidated Financial
    StatementsStock-Based Compensation.
  Note 14
    Income
    per Common Share  Fiscal 2008


Fiscal 2007


Fiscal 2006Numerator for basic and diluted income per common share:Income from continuing operations

$
50,180


$
86,909


$
66,477Basic:Weighted average number of shares outstanding used in computing
    income per common share


45,351,336



44,908,028



45,719,910Income per common share from continuing operations

$
1.11


$
1.94


$
1.45Diluted:Weighted average number of shares outstanding


45,351,336



44,908,028



45,719,910Effect of dilutive securities:Employee stock options


998,110



1,250,616



833,412Unvested employees restricted stock


429,661



459,663



329,077Weighted average number of shares and share equivalents
    outstanding


46,779,107



46,618,307



46,882,399Income per common share from continuing operations

$
1.07


$
1.86


$
1.42Number of anti-dilutive out-of-the-money stock
    options outstanding (a)


441,700



4,400



1,673,095     (a)
    
    Options to purchase shares of
    common stock at an exercise price greater than the average
    market price for each period presented are anti-dilutive and
    therefore not included in the computation of diluted income per
    common share from continuing operations. F-52




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
   Note 15
    Lease and
    Other Commitments    Rental paymentsYear

Real Estate


Equipment2009

$
50,505


$
6,2242010


44,228



4,1502011


38,262



2,1472012


34,847



1,6022013


28,427



8942014 and thereafter


74,186



28       and/or
  Year

Minimum Royalty (a)2009

$
57,7912010


60,3972011


58,4192012


58,5202013


58,6242014 and thereafter


816,659     (a)
    
    Includes all minimum royalty
    obligations. Some of the Companys license agreements have
    no expiration date or extend beyond 20 years. The duration
    of these agreements for the purposes of this item are assumed to
    be 20 years. Variable based minimum royalty obligations are
    based upon payments for the most recent fiscal year. Certain of
    the Companys license agreements also require the Company
    to pay a specified percentage of net revenue (ranging from 1-4%)
    to the licensor for advertising and promotion of the licensed
    products (which amount is not included in minimum royalty
    obligations for purposes of this item).  Note 4 of Notes to Consolidated
    Financial Statements
   F-53




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 3
  Notes 1 and
    17 of Notes to Consolidated Financial Statements
  Managements Discussion and Analysis of Financial
    Condition and Results of OperationsContractual
    Obligations,
  Note 16
    Fair
    Value Measurement        Level 1 

Inputs are quoted prices in active markets for identical assets
    or liabilities.Level 2 

Inputs are quoted prices for similar assets or liabilities in an
    active market, quoted prices for identical or similar assets or
    liabilities in markets that are not active, inputs other than
    quoted prices that are observable and market-corroborated inputs
    which are derived principally from or corroborated by observable
    market data.Level 3 

Inputs are derived from valuation techniques in which one or
    more significant inputs or value drivers are unobservable.     7 8
   F-54




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    (Level 1)


(Level 2)


(Level 3)AssetsInterest rate swaps

$



$
2,904


$
Foreign currency exchange contracts

$



$
2,345


$
LiabilitiesForeign currency exchange contracts





$
5,484   Note 17
    Financial
    Instruments    Accounts Receivable:
  Accounts Payable:
  Short-term Revolving Credit Facilities:
  Senior Notes: 7 8
  Term B Note:
  Interest Rate Swaps:
  Letters of Credit:
  Foreign Currency Exchange Forward Contracts:
 F-55




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    January 3, 2009


December 29, 2007Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueAccounts receivable

$
251,886


$
251,886


$
267,450


$
267,450Pension Plan assets (a)


100,587



100,587



138,147



138,147Accounts payable


146,030



146,030



138,944



138,944Short-term revolving credit facilities


79,888



79,888



54,109



54,109Senior Notes


160,890



152,846



204,980



207,819Interest rate swaps  net loss


2,904



2,904



20



20Term B Notes










107,300



107,300Pension Plan liabilities (a)


127,617



127,617



147,097



147,097Letters of credit






81,113







58,956Open foreign currency exchange contracts  assets
    (liabilities)


(235
)


(235
)


(592
)


(592
)     (a)
    
    Pension Plan assets are not owned
    by the Company, they are owned by the Pension Plans. These
    Pension Plan assets are netted against the outstanding Pension
    Plan liabilities in the Companys Consolidated Balance
    Sheet. See Note 7.  Derivative
    Financial Instruments
  18-month and/or and/or 18-month Note 1 to Notes to
    Consolidated Financial Statements Derivative
    Financial Instruments
 F-56




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
    Asset Derivatives


Liability DerivativesAs of January 3, 2009


As of January 3, 2009Type (a)

Balance Sheet Location

Fair Value


Balance Sheet Location

Fair ValueDerivatives designated as hedging instruments under
    SFAS 133Foreign exchange contracts

CF

Other current assets





Other current liabilities

$
(328
)Interest rate swaps

FV

Other assets

$
2,904


Long-term debtTotal derivatives designated as hedging instruments under
    SFAS 133





$
2,904




$
(328
)Derivatives not designated as hedging instruments under
    SFAS 133(b)Foreign exchange contracts



Other current assets

$
2,345


Other current liabilities

$
(5,156
)Total derivatives not designated as hedging instruments under
    SFAS 133





$
2,345




$
(5,156
)Total derivatives





$
5,249




$
(5,484
)     (a)
    
    CF = cash flow hedge; FV = fair
    value hedge(b)
    
    See Note 1 of Notes to
    Consolidated Financial Statements for additional information on
    the Companys purposes for entering into derivatives not
    designated as hedging instruments and its overall risk
    management strategies.    Amount of Gain


Location of Gain

Amount of Gain (Loss)




Amount of Gain(Loss) Recognized


(Loss) Reclassified

Reclassified from


Location of Gain (Loss)

(Loss) Recognizedin OCI on


from Accumulated

Accumulated OCI


Recognized in Income

in Income onNature of Hedged

Derivatives


OCI into Income

into Income


on Derivative

DerivativeDerivatives in SFAS 133 Cash Flow Hedging Relationships

Transaction

(Effective Portion)


(Effective Portion)

(Effective Portion)


(Ineffective Portion)(c)

(Ineffective Portion)Foreign exchange contracts

Minimum royalty and
    advertising costs (a)

$
330


cost of goods sold

$
394


other income/loss

$
Foreign exchange contracts

Purchases of inventory (b)

$
(264
)

cost of goods sold





other income/lossTotal



$
66




$
394




$
     (a)
    
    At January 3, 2009, the amount
    hedged was $8,866; contracts expire September 2009.(b)
    
    At January 3, 2009, the amount
    hedged was $5,340; contracts expire October 2009.(c)
    
    No amounts were excluded from
    effectiveness testing  F-57




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Derivatives not










Location of Gain

Amount of Gaindesignated as










(Loss) Recognized

(Loss) Recognizedhedging instruments

Nature of Hedged



Amount




in Income on

in Incomeunder SFAS 133

Transaction

Instrument

Hedged


Maturity Date

Derivative

on DerivativeForeign exchange contracts(d)

Purchases of inventory

Forward contracts

$
34,373


November 2009  December 2009

other income/loss

$
1,711Foreign exchange contracts(e)

Intercompany sales of Forward contracts

Forward contracts


3,487


August 2009

other income/loss


467Foreign exchange contracts(f)

Minimum royalty and advertising costs

Forward contracts


10,000


October 2009

other income/loss


63Foreign exchange contracts

Intercompany loans

Zero-cost collars


21,100


November 2009  April 2010

other income/loss


(258
)Foreign exchange contracts

Intercompany payables

Zero-cost collars


50,000


February 2009  September 2009

selling, general and administrative


(4,691
)Total













$
(2,708
)   (d)
    
    Forward contracts used to offset
    50% of U.S. dollar-denominated purchases of inventory by the
    Companys foreign subsidiaries whose functional currencies
    were the euro and Canadian dollar, entered into by Warnaco Inc.
    on behalf of foreign subsidiaries and the euro, entered into by
    a European subsidiary.(e)
    
    Forward contracts used to offset
    50% of euro-denominated intercompany sales to a subsidiary whose
    functional currency Is the British pound.(f)
    
    Forward contracts used to offset
    payment of minimum royalties and advertising costs related to
    sales of inventory by the Companys foreign subsidiary
    whose functional currency was the euro, entered into by Warnaco
    Inc. on behalf of a foreign subsidiary.      Balance December 29, 2007

$
Derivative gains recognized


66Amount amortized to earnings


(394
)Balance January 3, 2009

$
(328
)  F-58




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 18
    Cash Flow
    Information    Fiscal 2008


Fiscal 2007


Fiscal 2006Cash paid (received) during the year for:Interest expense

$
28,114


$
33,810


$
32,052Interest income


(2,535
)


(2,910
)


(1,477
)Income taxes, net of refunds received


43,331



49,641



29,257Supplemental non-cash investing and financing activities:Accounts payable for purchase of fixed assets


3,707



4,990



3,751   Note 19
    Legal
    Matters  SECInquiry: Chaps
    OP Litigation
  Other
  Note 20
    Supplemental
    Consolidating Condensed Financial Information   F-59




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 12
  January 3, 2009The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedASSETSCurrent assets:Cash and cash equivalents

$



$
30,771


$
(2
)

$
116,858


$



$
147,627Accounts receivable, net






22,755



57,709



171,422







251,886Inventories






67,251



83,205



175,841







326,297Prepaid expenses and other current assets






59,586



23,786



73,405







156,777Assets of discontinued operations










5,381



898







6,279Total current assets






180,363



170,079



538,424







888,866Property, plant and equipment, net






51,220



6,045



52,298







109,563Investment in subsidiaries


1,035,085



551,617











(1,586,702
)


Other assets






80,644



51,408



365,612







497,664Total assets

$
1,035,085


$
863,844


$
227,532


$
956,334


$
(1,586,702
)

$
1,496,093LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Liabilities of discontinued operations

$



$



$
7,445


$
4,610


$



$
12,055Accounts payable, accrued liabilities, short-term debt and
    accrued taxes






84,286



47,619



270,352







402,257Total current liabilities






84,286



55,064



274,962







414,312Intercompany accounts


247,398



97,543



(480,490
)


135,549







Long-term debt






163,794















163,794Other long-term liabilities






45,814



2,648



81,838







130,300Stockholders equity


787,687



472,407



650,310



463,985



(1,586,702
)


787,687Total liabilities and stockholders equity

$
1,035,085


$
863,844


$
227,532


$
956,334


$
(1,586,702
)

$
1,496,093   F-60




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  December 29, 2007The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedASSETSCurrent assets:Cash and cash equivalents

$



$
76,174


$
197


$
115,547


$



$
191,918Accounts receivable, net










90,721



176,729







267,450Inventories






69,578



109,318



153,756







332,652Prepaid expenses and other current assets






76,689



10,576



113,877







201,142Total current assets






222,441



210,812



559,909







993,162Property, plant and equipment, net






56,639



6,644



48,633







111,916Investment in subsidiaries


1,044,573



551,617











(1,596,190
)


Other assets






20,640



125,482



355,303







501,425Total assets

$
1,044,573


$
851,337


$
342,938


$
963,845


$
(1,596,190
)

$
1,606,503LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable, accrued liabilities and accruedtaxes

$



$
74,987


$
54,171


$
275,993


$



$
405,151Total current liabilities






74,987



54,171



275,993







405,151Intercompany accounts


271,677



(41,887
)


(356,915
)


127,125







Long-term debt






310,500















310,500Other long-term liabilities






28,457



2,427



87,072







117,956Stockholders equity


772,896



479,280



643,255



473,655



(1,596,190
)


772,896Total liabilities and stockholders equity

$
1,044,573


$
851,337


$
342,938


$
963,845


$
(1,596,190
)

$
1,606,503   F-61




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Fiscal 2008The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedNet revenues

$



$
462,852


$
461,415


$
1,140,756


$



$
2,065,023Cost of goods sold






292,486



316,566



533,925







1,142,977Gross profit






170,366



144,849



606,831







922,046SG&A expenses (including amortization of intangible assets)






153,147



117,784



479,150







750,081Pension income






31,510







134







31,644Restructuring expense (income)






















Operating income (loss)






(14,291
)


27,065



127,547







140,321Equity in income of subsidiaries


(47,254
)














47,254



Intercompany






(14,661
)


(7,463
)


22,124







Other (income) loss






(7,344
)


(274
)


9,544







1,926Interest (income) expense, net






23,692



(2
)


2,709







26,399Income (loss) from continuing operations before provision for
    income taxes and minority interest


47,254



(15,978
)


34,804



93,170



(47,254
)


111,996Provision (benefit) for income taxes






(8,627
)


18,791



50,305







60,469Income (loss) from continuing operations before minority interest


47,254



(7,351
)


16,013



42,865



(47,254
)


51,527Minority interest














1,347







1,347Income (loss) from continuing operations


47,254



(7,351
)


16,013



41,518



(47,254
)


50,180Income (loss) from discontinued operations, net of income taxes






(274
)


(8,935
)


6,283







(2,926
)Net income (loss)

$
47,254


$
(7,625
)

$
7,078


$
47,801


$
(47,254
)

$
47,254   F-62




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Fiscal 2007The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedNet revenues

$



$
456,039


$
459,776


$
903,764


$



$
1,819,579Cost of goods sold






322,889



323,302



423,713







1,069,904Gross profit






133,150



136,474



480,051







749,675SG&A expenses (including amortization of intangible assets)






119,569



157,709



337,545







614,823Pension income






(9,024
)






186







(8,838
)Operating income (loss)






22,605



(21,235
)


142,320







143,690Equity in income of subsidiaries


(79,107
)














79,107



Intercompany






(11,777
)


(5,827
)


17,604







Other (income) loss






(95
)


(6
)


(6,962
)






(7,063
)Interest (income) expense, net






29,933



(8
)


4,027







33,952Income (loss) from continuing operations before provision for
    income taxes


79,107



4,544



(15,394
)


127,651



(79,107
)


116,801Provision (benefit) for income taxes






1,044



(2,672
)


31,520







29,892Income (loss) from continuing operations


79,107



3,500



(12,722
)


96,131



(79,107
)


86,909Income (loss) from discontinued operations, net of income taxes






(157
)


(14,828
)


7,183







(7,802
)Net income (loss)

$
79,107


$
3,343


$
(27,550
)

$
103,314


$
(79,107
)

$
79,107   F-63




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Fiscal 2006The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedNet revenues

$



$
451,084


$
479,573


$
680,544


$



$
1,611,201Cost of goods sold






335,316



308,956



337,745







982,017Gross profit






115,768



170,617



342,799







629,184SG&A expenses (including amortization of intangible assets)






132,639



134,656



245,004







512,299Pension income






(2,820
)






464







(2,356
)Operating income (loss)






(14,051
)


35,961



97,331







119,241Equity in income of subsidiaries


(50,750
)














50,750



Intercompany






(1,825
)


(16,206
)


18,031







Other (income) loss






(81
)


(1,161
)


(1,692
)






(2,934
)Interest (income) expense, net






120,132



(87,323
)


2,815







35,624Income (loss) from continuing operations before provision for
    income taxes


50,750



(132,277
)


140,651



78,177



(50,750
)


86,551Provision (benefit) for income taxes






(32,466
)


33,934



18,606







20,074Income (loss) from continuing operations


50,750



(99,811
)


106,717



59,571



(50,750
)


66,477Income (loss) from discontinued operations, net of income taxes






(2,325
)


(20,969
)


7,567







(15,727
)Net income (loss)

$
50,750


$
(102,136
)

$
85,748


$
67,138


$
(50,750
)

$
50,750   F-64




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Fiscal 2008The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedNet cash provided by (used in) operating activities from
    continuing operations

$
(8,134
)

$
125,561


$
18,875


$
15,585


$



$
151,887Net cash used in operating activities from discontinued
    operations






(1,553
)


(14,769
)


(9,678
)






(26,000
)Net cash provided by (used in) operating activities


(8,134
)


124,008



4,106



5,907







125,887Cash flows from investing activities:Proceeds on disposal of assets and collection of notes receivable






6







348







354Purchase of property, plant and equipment






(9,971
)


(1,875
)


(30,468
)






(42,314
)Proceeds from the sale of businesses, net










(2,430
)


29,210







26,780Business acquisitions, net of cash acquired














(2,356
)






(2,356
)Purchase of intangible assets






(2,027
)






(24,700
)






(26,727
)Net cash used in investing activities






(11,992
)


(4,305
)


(27,966
)






(44,263
)Cash flows from financing activities:Repayment of Term B Note






(107,300
)














(107,300
)Repurchase of Senior Notes due 2013






(46,185
)














(46,185
)Increase in short-term notes payable














28,593







28,593Proceeds from the exercise of employee stock options


28,496



















28,496Purchase of treasury stock


(20,532
)


















(20,532
)Payment of deferred financing costs






(3,934
)














(3,934
)Other


170



















170Net cash provided by (used in) financing activities


8,134



(157,419
)






28,593







(120,692
)Effect of foreign exchange rate changes on cash and cash
    equivalents














(5,223
)






(5,223
)Increase (decrease) in cash and cash equivalents






(45,403
)


(199
)


1,311







(44,291
)Cash and cash equivalents at beginning of period






76,174



197



115,547







191,918Cash and cash equivalents at end of period

$



$
30,771


$
(2
)

$
116,858


$



$
147,627   F-65




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Fiscal 2007The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedNet cash provided by (used in) operating activities from
    continuing operations

$
41,542


$
55,439


$
(25,965
)

$
53,467


$



$
124,483Net cash provided by (used) in operating activities from
    discontinued operations






3,834



29,948



2,158







35,940Net cash provided by (used in) operating activities


41,542



59,273



3,983



55,625







160,423Cash flows from investing activities:Proceeds on disposal of assets and collection of notes receivable






2,318







391







2,709Purchase of property, plant and equipment






(11,319
)


(2,862
)


(26,335
)






(40,516
)Business acquisitions, net of cash acquired






(677
)






(1,392
)






(2,069
)Proceeds from the sale of businesses, net






20,547



(1,028
)










19,519Net cash provided by (used in) investing activities from
    continuing operations






10,869



(3,890
)


(27,336
)






(20,357
)Net cash used in investing activities from discontinued
    operations














(443
)






(443
)Net cash provided by (used in) investing activities






10,869



(3,890
)


(27,779
)






(20,800
)Cash flows from financing activities:Debt issued with business acquisition






















Payment of debt assumed on business acquisition






















Payment of deferred financing costs






(480
)














(480
)Payment of Senior Notes due 2013






















Repayments of Term B Note






(61,800
)














(61,800
)Proceeds from the exercise of employee stock options


16,149



















16,149Purchase of treasury stock


(57,691
)


















(57,691
)Increase in short term CKJEA notes payable














(17,493
)






(17,493
)Proceeds from the sale and leaseback of store fixtures






















Other






57







(430
)






(373
)Net cash provided by (used in) financing activities


(41,542
)


(62,223
)






(17,923
)






(121,688
)Translation adjustments














6,993







6,993Increase (decrease) in cash and cash equivalents






7,919



93



16,916







24,928Cash and cash equivalents at beginning of period






68,255



104



98,631







166,990Cash and cash equivalents at end of period

$



$
76,174


$
197


$
115,547


$



$
191,918   F-66




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Fiscal 2006The Warnaco


Warnaco


Guarantor


Non-Guarantor


EliminationGroup, Inc.


Inc.


Subsidiaries


Subsidiaries


Entries


ConsolidatedNet cash provided by (used in) operating activities from
    continuing operations

$
38,992


$
23,499


$
(63,401
)

$
70,488


$



$
69,578Net cash provided by (used) in operating activities from
    discontinued operations






(1,485
)


13,692



4,962







17,169Net cash provided by (used in) operating activities


38,992



38,992



38,992



38,992







86,747Cash flows from investing activities:Proceeds on disposal of assets and collection of notes receivable






5,947







271







6,218Purchase of property, plant and equipment






(18,869
)


(1,688
)


(14,116
)






(34,673
)Business acquisitions, net of cash acquired






(208,658
)


(3
)










(208,661
)Proceeds from the sale of Ocean Pacific










51,352











51,352Net cash used in investing activities from continuing operations






(221,580
)


49,661



(13,845
)






(185,764
)Net cash provided by investing activities from discontinued
    operations










(429
)


(885
)






(1,314
)Net cash provided by (used in) investing activities






(221,580
)


49,232



(14,730
)






(187,078
)Cash flows from financing activities:Debt issued with business acquisition






180,000















180,000Payment of debt assumed on business acquisition














(44,398
)






(44,398
)Payment of deferred financing costs






(3,456
)














(3,456
)Payment of Senior Notes due 2013






(5,200
)














(5,200
)Repayments of debt issued with business acquisition






(10,900
)














(10,900
)Proceeds from the exercise of employee stock options


7,294



















7,294Purchase of treasury stock


(46,286
)


















(46,286
)Increase in short term notes payable














21,021







21,021Proceeds from the sale and leaseback of store fixtures






1,607















1,607Net cash provided by (used in) financing activities


(38,992
)


162,051







(23,377
)






99,682Translation adjustments














3,438







3,438Increase (decrease) in cash and cash equivalents






(37,515
)


(477
)


40,781







2,789Cash and cash equivalents at beginning of period






105,770



581



57,850







164,201Cash and cash equivalents at end of period

$



$
68,255


$
104


$
98,631


$



$
166,990  F-67




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Note 21Quarterly
    Results of Operations (Unaudited)
    Fiscal 2008First


Second


Third


FourthQuarter (a)


Quarter (a)


Quarter (a)


Quarter (a)Net revenues

$
567,658


$
503,304


$
548,139


$
445,922Gross profit


254,121



224,831



254,935



188,159Income (loss) from continuing operations


6,970



26,477



29,166



(12,433
)Income (loss) from discontinued operations, net of taxes


10,739



(7,113
)


(2,655
)


(3,897
)Net income (loss)


17,709



19,364



26,511



(16,330
)Basic income per common share:Income (loss) from continuing operations

$
0.16


$
0.58


$
0.64


$
(0.27
)Income (loss) from discontinued operations


0.24



(0.15
)


(0.06
)


(0.09
)Net income(loss)

$
0.40


$
0.43


$
0.58


$
(0.36
)Diluted income per common share:Income (loss) from continuing operations

$
0.15


$
0.57


$
0.62


$
(0.27
)Income (loss) from discontinued operations


0.23



(0.16
)


(0.06
)


(0.09
)Net income(loss)

$
0.38


$
0.41


$
0.56


$
(0.36
)     (a)
    
    During the first and second quarters of Fiscal 2008, the Company
    recorded expenses to correct prior periods of approximately
    $3,800 and $1,000, respectively, primarily associated with
    income taxes. During the third and fourth quarters of Fiscal
    2008, the Company recorded income to correct prior periods of
    approximately $900 and $2,600, respectively, primarily
    associated with income taxes.  F-68




---



##### Table of Contents



THE
    WARNACO GROUP, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands, excluding share and per share
    amounts)
  Fiscal 2007First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterNet revenues

$
468,657


$
411,819


$
472,638


$
466,465Gross profit


197,115



171,937



195,467



185,156Income from continuing operations


28,186



21,574



16,795



20,354Income (loss) from discontinued operations, net of taxes


9,789



(7,797
)


(12,384
)


2,590Net income


37,975



13,777



4,411



22,944Basic income per common share:Income from continuing operations

$
0.63


$
0.48


$
0.38


$
0.45Income (loss) from discontinued operations


0.21



(0.17
)


(0.28
)


0.06Net income

$
0.84


$
0.31


$
0.10


$
0.51Diluted income per common share:Income from continuing operations

$
0.61


$
0.46


$
0.36


$
0.44Income (loss) from discontinued operations


0.21



(0.16
)


(0.26
)


0.05Net income

$
0.82


$
0.30


$
0.10


$
0.49  F-69




---



##### Table of Contents



SCHEDULE II  THE
    WARNACO GROUP, INC.
    VALUATION & QUALIFYING ACCOUNTS &
    RESERVES
    (Dollars in thousands)
  AdditionsBalance at


ChargesBeginning of


to Cost and


Other Additions /





Balance atDescription

Period


Expenses(1)


Reclassification


Deductions


End of PeriodFiscal 2006Receivable allowances

$
51,417


$
203,979


$
(492
)

$
(167,840
)(2)

$
87,064Tax valuation allowance

$
159,965


$
2,238


$
(7,868
)(3)

$
(3,573
)

$
150,762Fiscal 2007Receivable allowances

$
87,064


$
181,551


$
(1,458
)(4)

$
(180,454
)(2)

$
86,703Tax valuation allowance

$
150,762


$
1,146


$
(131,711
)(3)

$
(8,347
)

$
11,850Fiscal 2008Receivable allowances

$
86,703


$
215,135


$
(1,963
)(4)

$
(212,500
)(2)

$
87,375Tax valuation allowance

$
11,850


$
2,021


$
1,159
(3)

$



$
15,030     (1)
    
    With respect to receivable
    allowances, includes bad debts, cash discounts, customer
    allowances and sales returns.(2)
    
    Credits issued and amounts
    written-off, net of recoveries.(3)
    
    Relates primarily to adjustments to
    the Companys valuation allowance resulting from changes in
    its deferred taxes due to: (a) basis differences resulting
    from the filing of the Companys U.S. corporate income tax
    return, (b) finalized assessments of the Companys
    foreign tax returns by local taxing authorities, (c) the
    realization of certain deferred tax assets that existed as of
    the date of the Companys emergence from bankruptcy and
    (d) currency translation adjustments.(4)
    
    Amounts include reserve balances
    for discontinued operations. A-1