The Warnaco Group, Inc. announced that it has agreed to acquire all of the shares of the companies that operate the licenses and related wholesale and retail businesses of Calvin Klein jeans and accessories in Europe and Asia as well as the CK Calvin Klein “bridge” line of sportswear and accessories in Europe from Fingen SPA, a holding company controlled by Corrado and Marcello Fratini of Florence, Italy, for €240 million ($286 million based on current exchange rates), subject to certain adjustments for working capital. Calvin Klein, Inc., the licensor of the businesses being acquired, is a minority shareholder of certain of the entities being acquired. Calvin Klein, Inc. is a wholly owned subsidiary of Phillips-Van Heusen Corporation. Warnaco will fund the acquisition using a combination of cash on hand and borrowings under a new committed credit facility. The acquired licenses between Warnaco and Calvin Klein, Inc. will have 40-year terms. Additionally, beginning in 2008 and continuing through December 2013, Warnaco will assume the license for Calvin Klein men's and women's Collection apparel and accessories worldwide from Fingen.

The transaction is expected to close in the first quarter of 2006, upon receipt of regulatory approval and satisfaction of certain other closing conditions. Warnaco anticipates that the transaction should be accretive in fiscal 2006.

“This acquisition is consistent with our strategic focus on developing powerful global brands within our core competencies,” commented Joe Gromek, president and CEO of Warnaco. “Combining under one roof the worldwide Calvin Klein jeans, underwear and swimwear businesses should enable us to maximize opportunities in existing geographies and access new markets in a powerful way. With Warnaco's existing Calvin Klein businesses and the addition of the jeans and accessories in Europe and Asia and men's and women's bridge sportswear licenses in Europe, Warnaco's Calvin Klein businesses are expected to generate over $900 million in revenue beginning in 2006, and Warnaco's international concentration will grow to approximately 38% from the current 28%.”

“We are proud that the Calvin Klein Collection business will be entrusted to Warnaco in 2008. We are committed to the global growth and development of Calvin Klein Collection, as it establishes an important umbrella for all of the Calvin Klein brands,” added Mr. Gromek.

The companies Warnaco will acquire are expected to generate revenue of approximately $240 million (based on current exchange rates) from the Calvin Klein jeans brand in Europe and Asia in fiscal 2005. Additionally, revenues from the spring 2006 introduction of the CK Calvin Klein bridge sportswear and accessories businesses in Europe and the acquired Calvin Klein jeans accessories businesses will be incremental.

Mr. Gromek continued, “The strong retail component of this acquisition will further enhance Warnaco's Calvin Klein direct-to-consumer business, and the combined companies will have over 350 directly managed freestanding stores and concession 'shop-in-shops' worldwide, with an additional network of over 90 doors operated by third-party partners.”

Tom Murry, president & COO of Calvin Klein, Inc., stated, “We are pleased to extend our partnership with Warnaco. Warnaco has a proven track record of successfully developing and distributing Calvin Klein products, including jeans, underwear, and swimwear, and we believe Warnaco will be able to grow these newly acquired Calvin Klein businesses by leveraging its international retail and wholesale network.” Murry continued, “We also feel very good about Warnaco assuming our men's and women's collection apparel and accessory businesses in 2008 and are pleased that Fabio Fusco will continue at the helm. We see strategic synergies created by consolidating the businesses for collection apparel and accessories, CK Calvin Klein bridge apparel and accessories, jeans, and underwear, with one partner.”

J.P. Morgan Securities Inc. acted as exclusive financial advisor to The Warnaco Group, Inc., in connection with this transaction. Citigroup Global Markets Inc. and JPMorgan have entered into agreements to provide financing for the transaction.