WARNACO GROUP INC /DE/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - PRESS RELEASE DATED AUGUST 2, 2011

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8-K - FORM 8-K - WARNACO GROUP INC /DE/	warnaco8k.htm

Exhibit 99.1

	Investor Relations:		Deborah Abraham
			Vice President, Investor Relations
			(212) 287-8289

FOR IMMEDIATE RELEASE

WARNACO REPORTS SECOND QUARTER FISCAL 2011 RESULTS

______________________________________________________________________

NEW YORK – August 1, 2011 -- The Warnaco Group, Inc. (NYSE: WRC) today reported results for the second quarter ended July 2, 2011.

Highlights for the second quarter:

·	Net revenues increased 14%, to $591.4 million, compared to the prior year quarter

·	International net revenues increased 32% compared to the prior year quarter

·	Direct to consumer net revenues increased 38% compared to the prior year quarter

·	Income per diluted share from continuing operations was $1.01 compared to $0.65 in the prior year quarter

·	Income per diluted share from continuing operations on an adjusted, non-GAAP, basis was $0.82 compared to $0.71 in the prior year quarter (both of which exclude restructuring expenses, pension expenses, tax related items and other items)

·	The Company purchased approximately 1.1 million shares of its common stock for approximately $58.5 million pursuant to its share repurchase program

The accompanying tables provide a reconciliation of actual results to the adjusted, non-GAAP, results.

The Company believes it is valuable for users of the Company’s financial statements to be made aware of the adjusted financial information, as such measures are used by management to evaluate the operating performance of the Company’s continuing businesses on a comparable basis and to make operating and strategic decisions. In addition, the Company uses performance targets based, in part, on non-GAAP income from continuing operations and non-GAAP operating income as a component of the measurement of certain employee incentive compensation.

“We are pleased to report another solid quarter. Our second quarter results reflect the success of our growth strategies and the benefits of our global and diverse operating model,” said Joe Gromek, Warnaco’s President and CEO. “We continued to invest in our key growth initiatives, namely maximizing our Calvin Klein business, broadening our international footprint and expanding our direct to consumer business, which produced powerful topline results and delivered a 15% increase in adjusted income per share from continuing operations.”

“For the quarter, total Company net revenues grew double digits. Our global Calvin Klein business grew 19% in the quarter, benefiting from international and direct to consumer expansion, led once again by Latin America and Asia. Expanded square footage and a 7% increase in comparable store sales, contributed to a 38% increase in retail net revenues.”

“While consolidated net revenues were strong, wholesale results in certain U.S. and European businesses unfavorably affected our operating results,” added Gromek. “A more promotional environment and higher customer allowances adversely affected gross margin. We believe we have identified opportunities to drive improved performance in these markets and expect improved results as we move through the remainder of the year.”

“As we look ahead, we are committed to and have the balance sheet to support investments in our long-term growth strategies. In July, we made an important investment in India, expanding our Calvin Klein licenses in the territory and taking a controlling interest in a joint venture, with a goal of accelerating the development of our Calvin Klein portfolio in this dynamic market. We expect to continue to realize the benefits of our investments, in both net revenue and earnings growth, as we move through the remainder of fiscal 2011 and beyond.”

New Fiscal 2011 Outlook

For fiscal 2011, on an adjusted, non GAAP basis (excluding restructuring expense and assuming minimal pension expense) and based on recent foreign currency exchange rates, the Company now anticipates:

Net revenues will grow 10% - 12% compared to fiscal 2010, up from our prior guidance of 9% - 11% growth, and

Adjusted income per diluted share from continuing operations in the range of $4.00 - $4.15 compared to our prior guidance of $3.95 - $4.15.

Schedule 7 of the accompanying tables provides a reconciliation of expected income per diluted share from continuing operations, on a GAAP basis (assuming minimal pension expense and based on recent foreign currency exchange rates), of $3.89- $4.00, to the new fiscal 2011 outlook above.

Second Quarter Highlights

Total Company

Net revenues were up 14% to $591.4 million, compared to the prior year period.

All three of the Company’s segments (Sportswear, Intimates and Swimwear) reported growth, led by Sportswear and Intimates. The Company’s international net revenues rose more than 32%, compared to the prior year quarter, reflecting the powerful growth in the Calvin Klein and direct to consumer businesses, which more than offset a 4% decline in the U.S. net revenues. Worldwide Calvin Klein net revenues grew 19%, led by Asia and Latin America, each reporting growth in excess of 35%. The Company’s direct to consumer net revenues rose 38%, fueled by aggressive square footage expansion and a 7% increase in comparable store sales.

Gross profit increased 12% to $258.3 million compared to the prior year quarter and gross margin decreased 50 basis points to 44% of net revenues. Gross margins were adversely affected by a higher level of customer allowances, an unfavorable sales mix and increased product costs, primarily in the United States and certain European markets.

SG&A expense increased 18%, compared to the prior year quarter, to $202.9 million, or 34% of net revenues. The increase primarily relates to incremental selling and distribution costs ($25 million) mainly associated with the expansion of the Company’s direct to consumer business, incremental marketing costs ($4 million) primarily related to the global launch of ck one and incremental restructuring costs ($3 million), partially offset by a $3 million reduction in performance-based compensation expense and a $2 million benefit related to the sale of the Company’s Nancy Ganz® trademarks in Australia and New Zealand. The effects of fluctuations on foreign currencies resulted in a $13 million increase in SG&A expense.

Operating income was $52.6 million, or 9% of net revenues, compared to $55.3 million, or 11% of net revenues, in the prior year quarter. Declines in the U.S. and Europe were partially offset by the continued strength in the Company’s Asian and Latin American businesses. Income from continuing operations was $45.6 million, or $1.01 per diluted share, compared to $30.0 million, or $0.65 per diluted share, in the prior year quarter.

Income from continuing operations for the second quarter of fiscal 2011 includes a tax benefit of approximately $11.0 million associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as a result of receiving a favorable ruling from that country’s taxing authority in the quarter.

On an adjusted, non-GAAP basis (excluding restructuring expenses, pension expense, certain tax related items and other items), income from continuing operations was $ 37.0 million, or $0.82 per diluted share, compared to $32.7 million, or $0.71 per diluted share, in the prior year period.

The effective tax rate in the quarter was 9% and reflects the $11.0 million tax benefit described above. The Company’s adjusted non-GAAP effective tax rate in the quarter was approximately 32.5%.

The effect of fluctuations in foreign currency exchange rates for the quarter increased net revenues by $29.2 million compared to the prior year quarter and decreased income per diluted share from continuing operations by approximately $0.03 per diluted share. An additional discussion regarding the effects of fluctuations in foreign currency exchange rates on operating results can be found in the Company’s Form 10-Q, for the quarter ended July 2, 2011, which is being filed with the Securities and Exchange Commission.

Balance Sheet

Cash and cash equivalents at July 2, 2011 were $294.8 million compared to $172.9 million at July 3, 2010. During the quarter the Company used $58.5 million to purchase approximately 1.1 million shares of its common stock, under its 2010 share repurchase program. At quarter-end, the Company had approximately 2.4 million shares remaining under its 2010 share repurchase program.

Also during the quarter, the Company raised $200 million under a senior secured term loan facility, which matures June 2018. Notwithstanding the new facility, the Company ended the quarter net cash positive (cash net of short and long term debt).

Inventories at July 2, 2011 were $355.4 million up $77.8 million (or 28%) compared to $277.6 million at July 3, 2010 and down $8.9 million compared to the quarter ended April 2, 2011. The Company’s significant expansion in its direct to consumer business accounted for $37.0 million of the increase while $33.0 million related to the growth in Company’s wholesale businesses. The total increase in inventory includes approximately $15 million due to higher product costs, and $29 million due to fluctuations in foreign currency exchange rates. The Company remains comfortable with the quality of its inventory and expects the trend to improve in future quarters.

Conference Call Information

Stockholders and other persons are invited to listen to the second quarter fiscal 2011 earnings conference call scheduled for today, Monday, August 1, 2011, at 4:30 p.m. EDT. To participate in Warnaco’s conference call, dial (877) 692-2592 approximately five minutes prior to the 4:30 p.m. start time. The call will also be broadcast live over the Internet at www.warnaco.com. An online archive will be available following the call.

This press release was furnished to the SEC (www.sec.gov) and may also be accessed through the Company’s internet website: www.warnaco.com.

ABOUT WARNACO

The Warnaco Group, Inc., headquartered in New York, is a leading global apparel company engaged in the business of designing, sourcing, marketing and selling men’s, women’s and children’s sportswear and accessories, intimate apparel, and swimwear under such owned and licensed brands as Calvin Klein®, Speedo®, Chaps®, Warner's® and Olga®. For more information, visit www.warnaco.com.

FORWARD-LOOKING STATEMENTS

The Warnaco Group, Inc. notes that this press release, the conference call scheduled for August 1, 2011 and certain other written, electronic and oral disclosure made by the Company from time to time, may contain forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties and reflect, when made, the Company's estimates, objectives, projections, forecasts, plans, strategies, beliefs, intentions, opportunities and expectations. Actual results may differ materially from anticipated results, targets or expectations and investors are cautioned not to place undue reliance on any forward-looking statements. Statements other than statements of historical fact, including, without limitation, future financial targets, are forward-looking statements. These forward-looking statements may be identified by, among other things, the use of forward-looking language, such as the words "believe," "anticipate," "estimate," "expect," "intend," "may," "project," "scheduled to," "seek," "should," "will be," "will continue," "will likely result," “targeted”, or the negative of those terms, or other similar words and phrases or by discussions of intentions or strategies.

The following factors, among others and in addition to those described in the Company's reports filed with the SEC (including, without limitation, those described under the headings "Risk Factors" and "Statement Regarding Forward-Looking Disclosure," as such disclosure may be modified or supplemented from time to time), could cause the Company's actual results to differ materially from those expressed in any forward-looking statements made by it: the Company's ability to execute its repositioning and sale initiatives (including achieving enhanced productivity and profitability) previously announced; deterioration in global or regional or other macro-economic conditions that affect the apparel industry, including the recent turmoil in the financial and credit markets; the Company's failure to anticipate, identify or promptly react to changing trends, styles, or brand preferences; further declines in prices in the apparel industry and other pricing pressures; declining sales resulting from increased competition in the Company’s markets; increases in the prices of raw materials or costs to produce or transport products; events which result in difficulty in procuring or producing the Company's products on a cost-effective basis; the effect of laws and regulations, including those relating to labor, workplace and the environment; possible additional tax liabilities; changing international trade regulation, including as it relates to the imposition or elimination of quotas on imports of textiles and apparel; the Company’s ability to protect its intellectual property or the costs incurred by the Company related thereto; the risk of product safety issues, defects or other production problems associated with our products; the Company’s dependence on a limited number of customers; the effects of consolidation in the retail sector; the Company’s dependence on license agreements with third parties including, in particular, its license agreement with CKI, the licensor of the Company’s Calvin Klein brand name; the Company’s dependence on the reputation of its brand names, including, in particular, Calvin Klein; the Company’s exposure to conditions in overseas markets in connection with the Company’s foreign operations and the sourcing of products from foreign third-party vendors; the Company's foreign currency exposure; unanticipated future internal control deficiencies or weaknesses or ineffective disclosure controls and procedures; the effects of fluctuations in the value of investments of the Company’s pension plan; the sufficiency of cash to fund operations, including capital expenditures; the Company recognizing impairment charges for its long-lived assets, uncertainty over the outcome of litigation matters and other proceedings; the Company's ability to service its indebtedness, the effect of changes in interest rates on the Company's indebtedness that is subject to floating interest rates and the limitations imposed on the Company's operating and financial flexibility by the agreements governing the Company's indebtedness; the Company’s dependence on its senior management team and other key personnel; the Company’s reliance on information technology; the limitations on purchases under the Company's share repurchase program contained in the Company's debt instruments, the number of shares that the Company purchases under such program and the prices paid for such shares; the Company’s inability to achieve its financial targets and strategic objectives, as a result of one or more of the factors described above, changes in the assumptions underlying the targets or goals, or otherwise; the inability to successfully implement restructuring and disposition activities; the failure of acquired businesses to generate expected levels of revenues; the failure of the Company to successfully integrate such businesses with its existing businesses (and as a result, not achieving all or a substantial portion of the anticipated benefits of such acquisitions); and such acquired businesses being adversely affected, including by one or more of the factors described above and thereby failing to achieve anticipated revenues and earnings growth.

The Company encourages investors to read the section entitled "Risk Factors" and the discussion of the Company's critical accounting policies under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Discussion of Critical Accounting Policies" included in the Company's Annual Report on Form 10-K for the year ended January 1, 2011, as such discussions may be modified or supplemented by subsequent reports that the Company files with the SEC. The discussion in this press release is not exhaustive but is designed to highlight important factors that may affect actual results. Forward-looking statements speak only as of the date on which they are made, and, except for the Company's ongoing obligation under the U.S. federal securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Schedule 1

THE WARNACO GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Dollars in thousands, excluding per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010

Net revenues	$	591,387		$	519,334		$	1,253,548		$	1,107,498
Cost of goods sold		333,117			289,592			700,140			610,638
Gross profit		258,270			229,742			553,408			496,860
Selling, general and administrative expenses		202,854			171,860			425,491			356,833
Amortization of intangible assets		3,126			2,586			6,285			5,254
Pension income		(309	)		(22	)		(621	)		(43	)
Operating income		52,599			55,318			122,253			134,816
Other loss (income)		(215	)		5,730			(859	)		7,550
Interest expense		3,460			4,259			6,156			9,237
Interest income		(810	)		(487	)		(1,556	)		(1,493	)
Income from continuing operations before provision for income taxes		50,164			45,816			118,512			119,522
Provision for income taxes		4,598			15,789			28,414			41,183
Income from continuing operations		45,566			30,027			90,098			78,339
Loss from discontinued operations, net of taxes		(63	)		(93	)		(564	)		(430	)
Net income		45,503			29,934			89,534			77,909

Basic income per common share:
Income from continuing operations	$	1.03		$	0.67		$	2.03		$	1.72
Loss from discontinued operations		-			(0.01	)		(0.01	)		(0.01	)
Net income	$	1.03		$	0.66		$	2.02		$	1.71

Diluted income per common share:
Income from continuing operations	$	1.01		$	0.65		$	1.99		$	1.68
Loss from discontinued operations		-			-			(0.02	)		(0.01	)
Net income	$	1.01		$	0.65		$	1.97		$	1.67

Weighted average number of shares outstanding used in computing income per common share:
Basic		43,622,535			44,468,794			43,757,202			44,943,829
Diluted		44,458,373			45,426,632			44,698,317			45,936,496

Schedule 2

THE WARNACO GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

	July 2, 2011		January 1, 2011		July 3, 2010

ASSETS
Current assets:
Cash and cash equivalents	$	294,802	$	191,227	$	172,863
Accounts receivable, net		320,416		318,123		304,328
Inventories		355,384		310,504		277,565
Assets of discontinued operations		-		125		1,426
Other current assets		166,333		158,659		144,898
Total current assets		1,136,935		978,638		901,080

Property, plant and equipment, net		130,566		129,252		119,952
Intangible and other assets		596,787		545,382		495,019

TOTAL ASSETS	$	1,864,288	$	1,653,272	$	1,516,051

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt	$	12,673	$	32,172	$	65,203
Accounts payable and accrued liabilities		344,591		380,275		319,334
Taxes		23,589		38,219		30,679
Liabilities of discontinued operations		3,433		18,800		8,556
Total current liabilities		384,286		469,466		423,772
Long-term debt		210,631		-		-
Other long-term liabilities		232,448		211,200		191,661
Total stockholders' equity		1,036,923		972,606		900,618

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,864,288	$	1,653,272	$	1,516,051

CASH AND CASH EQUIVALENTS NET OF DEBT	$	71,498	$	159,055	$	107,660

Schedule 3

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY SEGMENT

(Dollars in thousands)

(Unaudited)

Net revenues:	Three Months Ended			Three Months Ended		Increase /			%		Constant $
	July 2, 2011			July 3, 2010		(Decrease)			Change		% Change (a)
Sportswear Group	$	286,289		$	244,044	$	42,245			17.3%		10.5%
Intimate Apparel Group		226,443			199,116		27,327			13.7%		8.2%
Swimwear Group		78,655			76,174		2,481			3.3%		1.2%
Net revenues	$	591,387		$	519,334	$	72,053			13.9%		8.3%

	Three Months Ended			% of Group		Three Months Ended			% of Group
	July 2, 2011			Net Revenues		July 3, 2010			Net Revenues
Operating income (loss):
Sportswear Group (b), (c)	$	15,957			5.6%	$	23,279			9.5%
Intimate Apparel Group (b), (c)		34,470			15.2%		33,668			16.9%
Swimwear Group (b), (c)		10,705			13.6%		8,954			11.8%
Unallocated corporate expenses (b), (c)		(8,533	)		na		(10,583	)		na
Operating income (d), (e)	$	52,599			na	$	55,318			na

Operating income as a percentage of total net revenues		8.9	%				10.7	%

(a) Reflects the percentage increase in net revenues for the Three Months Ended July 2, 2011, compared to the Three Months Ended July 3, 2010, assuming foreign based net revenues for the Three Months Ended July 2, 2011 are translated into U.S. dollars using the same foreign currency exchange rates that were used in the calculation of net revenues for the Three Months Ended July 3, 2010. See Schedule 6a.

(b) Amounts related to certain shared services expenses incurred in the U.S. during the Three Months Ended July 3, 2010 have been reclassified to the international operating units and reclassified within the U.S operating units resulting in a decrease (increase) in operating income of the Sportswear Group ($1,708), Intimate Apparel Group ($895), Swimwear Group (($130)) and Unallocated corporate expenses (($2,473)) in order to conform to the current period presentation. Shared services expenses included in the operating income of the business groups are as follows:

	Three Months Ended		Three Months Ended
	July 2, 2011		July 3, 2010
Sportswear Group	$	6,970	$	6,913
Intimate Apparel Group	$	4,992	$	4,825
Swimwear Group	$	2,435	$	2,428

	Three Months Ended		Three Months Ended
	July 2, 2011		July 3, 2010
Sportswear Group	$	1,974	$	549
Intimate Apparel Group		1,480		160
Swimwear Group		1,187		445
Unallocated corporate expenses		313		-
	$	4,954	$	1,154

(d) Includes a gain of $2,000 recorded during the Three Months Ended July 2, 2011 related to the sale and assignment of the Company's Nancy Ganz trademarks in Australia and New Zealand to the Company's former licensee for cash consideration of $2,000.

(e) Includes a gain of $1,600 recorded during the Three Months Ended July 2, 2011 related to the recovery of an insurance claim related to a fire in a warehouse in Peru.

Schedule 3a

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY SEGMENT

(Dollars in thousands)

(Unaudited)

Net revenues:	Six Months Ended			Six Months Ended		Increase /			%		Constant $
	July 2, 2011			July 3, 2010		(Decrease)			Change		% Change (a)
Sportswear Group	$	625,760		$	550,390	$	75,370			13.7%		9.6%
Intimate Apparel Group		447,437			393,058		54,379			13.8%		10.2%
Swimwear Group		180,351			164,050		16,301			9.9%		8.4%
Net revenues	$	1,253,548		$	1,107,498	$	146,050			13.2%		9.7%

	Six Months Ended			% of Group		Six Months Ended			% of Group
	July 2, 2011			Net Revenues		July 2, 2011			Net Revenues
Operating income (loss):
Sportswear Group (b), (c)	$	54,557			8.7%	$	72,525			13.2%
Intimate Apparel Group (b), (c)		65,007			14.5%		66,424			16.9%
Swimwear Group (b), (c)		24,773			13.7%		20,915			12.7%
Unallocated corporate expenses (b), (c)		(22,084	)		na		(25,048	)		na
Operating income (d), (e)	$	122,253			na	$	134,816			na


Operating income as a percentage of total net revenues		9.8	%				12.2	%

(a) Reflects the percentage increase in net revenues for the Six Months Ended July 2, 2011, compared to the Six Months Ended July 3, 2010, assuming foreign based net revenues for the Six Months Ended July 2, 2011 are translated into U.S. dollars using the same foreign currency exchange rates that were used in the calculation of net revenues for the Six Months Ended July 3, 2010. See Schedule 6b.

(b) Amounts related to certain shared services expenses incurred in the U.S. during the Six Months Ended July 3, 2010 have been reclassified to the international operating units and reclassified within the U.S operating units resulting in a decrease (increase) in operating income of the Sportswear Group ($3,404), Intimate Apparel Group ($1,757), Swimwear Group (($206)) and Unallocated corporate expenses (($4,955)) in order to conform to the current period presentation. Shared services expenses included in the operating income of the business groups are as follows:

	Six Months Ended		Six Months Ended
	July 2, 2011		July 3, 2010
Sportswear Group	$	13,843	$	13,804
Intimate Apparel Group	$	9,701	$	9,612
Swimwear Group	$	5,225	$	4,924

	Six Months Ended		Six Months Ended
	July 2, 2011		July 3, 2010
Sportswear Group	$	3,624	$	442
Intimate Apparel Group		2,922		113
Swimwear Group		4,264		714
Unallocated corporate expenses		633		844
	$	11,443	$	2,113

(d) Includes a gain of $2,000 recorded during the Six Months Ended July 2, 2011 related to the sale and assignment of the Company's Nancy Ganz trademarks in Australia and New Zealand to the Company's former licensee for cash consideration of $2,000.

(e) Includes a gain of $1,600 recorded during the Six Months Ended July 2, 2011 related to the recovery of an insurance claim related to a fire in a warehouse in Peru.

Schedule 4

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY REGION

(Dollars in thousands)

(Unaudited)

By Region:	Net Revenues
	Three Months Ended July 2, 2011			Three Months Ended July 3, 2010			Increase / (Decrease)			% Change		Constant $ % Change (a)
United States	$	250,645		$	261,964		$	(11,319	)		-4.3%		-4.3%
Europe		128,093			99,831			28,262			28.3%		14.1%
Asia		113,785			83,492			30,293			36.3%		28.5%
Mexico, Central and South America		62,132			44,181			17,951			40.6%		27.5%
Canada		36,732			29,866			6,866			23.0%		13.9%
Total	$	591,387		$	519,334		$	72,053			13.9%		8.3%


	Operating Income
	Three Months Ended July 2, 2011			Three Months Ended July 3, 2010 (b)			Increase / (Decrease)			% Change
United States	$	34,043		$	43,714		$	(9,671	)		-22.1%
Europe		(8,088	)		(2,308	)		(5,780	)		-250.4%
Asia		18,604			12,474			6,130			49.1%
Mexico, Central and South America		13,044			8,031			5,013			62.4%
Canada		3,529			3,990			(461	)		-11.6%
Unallocated corporate expenses		(8,533	)		(10,583	)		2,050			19.4%
Total	$	52,599		$	55,318		$	(2,719	)		-4.9%

(a) Reflects the percentage increase (decrease) in net revenues for the Three Months Ended July 2, 2011, compared to the Three Months Ended July 3, 2010, assuming foreign based net revenues for the Three Months Ended July 2, 2011 are translated into U.S. dollars using the same foreign currency exchange rates that were used in the calculation of net revenues for the Three Months Ended July 3, 2010. See Schedule 6a.

(b) In order to conform to the current period presentation of operating income, amounts related to certain shared services expenses incurred in the U.S. for the Three Months Ended July 3, 2010 have been reclassified to the international operating units.

Schedule 4a

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY REGION

(Dollars in thousands)

(Unaudited)

By Region:	Net Revenues
	Six Months Ended July 2, 2011			Six Months Ended July 3, 2010			Increase / (Decrease)			% Change		Constant $ % Change (a)
United States	$	535,788		$	532,714		$	3,074			0.6%		0.6%
Europe		296,562			257,133			39,429			15.3%		9.6%
Asia		240,561			180,565			59,996			33.2%		27.4%
Mexico, Central and South America		113,850			81,724			32,126			39.3%		27.9%
Canada		66,787			55,362			11,425			20.6%		12.5%
Total	$	1,253,548		$	1,107,498		$	146,050			13.2%		9.7%


	Operating Income
	Six Months Ended July 2, 2011			Six Months Ended July 3, 2010 (b)			Increase / (Decrease)			% Change
United States	$	76,153		$	90,541		$	(14,388	)		-15.9%
Europe		(2,512	)		18,568			(21,080	)		-113.5%
Asia		45,046			30,764			14,282			46.4%
Mexico, Central and South America		19,986			13,471			6,515			48.4%
Canada		5,664			6,520			(856	)		-13.1%
Unallocated corporate expenses		(22,084	)		(25,048	)		2,964			11.8%
Total	$	122,253		$	134,816		$	(12,563	)		-9.3%

(a) Reflects the percentage increase (decrease) in net revenues for the Six Months Ended July 2, 2011, compared to the Six Months Ended July 3, 2010, assuming foreign based net revenues for the Six Months Ended July 2, 2011 are translated into U.S. dollars using the same foreign currency exchange rates that were used in the calculation of net revenues for the Six Months Ended July 3, 2010. See schedule 6b.

(b) In order to conform to the current period presentation of operating income, amounts related to certain shared services expenses incurred in the U.S. for the Six Months Ended July 3, 2010 have been reclassified to the international operating units.

Schedule 5

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY CHANNEL

(Dollars in thousands)

(Unaudited)

By Channel:	Net revenues
	Three Months Ended July 2, 2011					Three Months Ended July 3, 2010					Increase / (Decrease)			% Change
Wholesale	$	417,251				$	392,918				$	24,333			6.2%
Retail		174,136					126,416					47,720			37.7%
Total	$	591,387				$	519,334				$	72,053			13.9%


	Operating Income
	Three Months Ended July 2, 2011			% of Net Revenues		Three Months Ended July 3, 2010			% of Net Revenues		Increase / (Decrease)			% Change
Wholesale (a)	$	42,387			10.2%	$	52,934			13.5%	$	(10,547	)		-19.9%
Retail (a)		18,745			10.8%		12,967			10.3%		5,778			44.6%
Unallocated corporate expenses		(8,533	)		na		(10,583	)		na		2,050			19.4%
Total	$	52,599			8.9%	$	55,318			10.7%	$	(2,719	)		-4.9%

(a) For the Three Months Ended July 2, 2011 and Three Months Ended July 3, 2010 wholesale operating income includes an intercompany profit of $4,730 and $4,133, respectively, related to certain inventories sold by the retail business to end consumers.

Conversely, for the Three Months Ended July 2, 2011 and Three Months Ended July 3, 2010 retail operating income includes an intercompany charge of $4,730 and $4,133, respectively, related to these inventories.

Schedule 5a

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY CHANNEL

(Dollars in thousands)

(Unaudited)

By Channel:	Net revenues
	Six Months Ended July 2, 2011					Six Months Ended July 3, 2010					Increase / (Decrease)			% Change
Wholesale	$	911,335				$	857,030				$	54,305			6.3%
Retail		342,213					250,468					91,745			36.6%
Total	$	1,253,548				$	1,107,498				$	146,050			13.2%


	Operating Income
	Six Months Ended July 2, 2011			% of Net Revenues		Six Months Ended July 3, 2010			% of Net Revenues		Increase / (Decrease)			% Change
Wholesale (a)	$	118,058			13.0%	$	138,837			16.2%	$	(20,779	)		-15.0%
Retail (a)		26,279			7.7%		21,027			8.4%		5,252			25.0%
Unallocated corporate expenses		(22,084	)		na		(25,048	)		na		2,964			11.8%
Total	$	122,253			9.8%	$	134,816			12.2%	$	(12,563	)		-9.3%

(a) For the Six Months Ended July 2, 2011 and Six Months Ended July 3, 2010 wholesale operating income includes an intercompany profit of $15,218 and $9,903 respectively, related to certain inventories sold by the retail business to end consumers.

Conversely, for the Six Months Ended July 2, 2011 and Six Months Ended July 3, 2010 retail operating income includes an intercompany charge of $15,218 and $9,903, respectively, related to these inventories.

Schedule 6

THE WARNACO GROUP, INC.

NON-GAAP MEASURES

(Dollars in thousands, excluding per share amounts)

(Unaudited)

The Company’s reported financial results are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The reported operating income, income from continuing operations and diluted earnings per share from continuing operations reflect certain items which affect the comparability of those reported results. Those financial results are also presented on a non-GAAP basis, as defined by Regulation S-K section 10(e) issued by the Securities and Exchange Commission to exclude the effect of these items. The Company’s computation of these non-GAAP measures may vary from others in its industry. These non-GAAP financial measures are not intended to be, and should not be, considered in isolation from or as a substitute for the most directly comparable GAAP financial measure to which they are reconciled, as presented in the following table:

	Three Months Ended*					Six Months Ended*
	July 2, 2011			July 3, 2010		July 2, 2011			July 3, 2010
	(Dollars in thousands, except per share amounts)

Operating income, as reported (GAAP)	$	52,599		$	55,318	$	122,253		$	134,816
Restructuring charges and pension income (a)		4,645			1,132		10,822			2,070
Operating income, as adjusted (non-GAAP) (d)	$	57,244		$	56,450	$	133,075		$	136,886

Income from continuing operations, as reported (GAAP)	$	45,566		$	30,027	$	90,098		$	78,339
Restructuring charges and pension, net of income tax (a)		3,218			858		7,339			1,340
Costs related to the redemption of debt, net of income tax (b)		-			1,354		-			2,368
Taxation (c)		(11,788	)		446		(10,137	)		1,554
Income from continuing operations, as adjusted (non-GAAP) (d)	$	36,996		$	32,685	$	87,300		$	83,601

Diluted earnings per share from continuing operations, as reported (GAAP)	$	1.01		$	0.65	$	1.99		$	1.68
Restructuring and pension, net of income tax (a)		0.07			0.02		0.16			0.03
Costs related to the redemption of debt, net of income tax (b)		-			0.03		-			0.05
Taxation (c)		(0.26	)		0.01		(0.22	)		0.04
Diluted earnings per share from continuing operations, as adjusted (non-GAAP) (d)	$	0.82		$	0.71	$	1.93		$	1.80

*see footnotes on following page

Schedule 6 (cont.)

THE WARNACO GROUP, INC.

NON-GAAP MEASURES

(Dollars in thousands, excluding per share amounts)

(Unaudited)

a) For all periods presented, this adjustment seeks to present operating income, income from continuing operations and diluted earnings per share from continuing operations without the effects of restructuring charges and pension income. Restructuring charges (on a pre-tax basis) were $4,954 and $11,443 for the Three and Six Months Ended July 2, 2011, respectively and $1,154 and $2,113 for the Three and Six Months Ended July 3, 2010, respectively. Pension income (on a pre-tax basis) was $309 and $621 for the Three and Six Months Ended July 2, 2011, respectively and $22 and $43 for the Three and Six Months Ended July 3, 2010, respectively. The income tax rates used to compute the income tax effect related to this adjustment correspond to the local statutory tax rates of the reporting entities that incurred restructuring charges or recognized pension income.

b) This adjustment seeks to present income from continuing operations and diluted earnings per share from continuing operations without the effect of the charges shown in the table above related to the repurchase of a portion of the Company's Senior Notes during the Three and Six Months Ended July 3, 2010. The income tax rates used to compute the income tax effect related to this adjustment correspond to the statutory tax rates in the United States.

c) For the Three and Six Months Ended July 2, 2011 and Three and Six Months Ended July 3, 2010, this adjustment reflects an amount required in order to present income from continuing operations and diluted earnings per share from continuing operations on an adjusted (non-GAAP) basis at the Company’s forecasted normalized tax rates for Fiscal 2011 (32.5%) and Fiscal 2010 (33.3%), respectively. This adjustment excludes the effects of certain tax adjustments related to either changes in estimates in prior period tax provisions or adjustments for certain discrete tax items. Adjustments for discrete items reflect the federal, state and foreign tax effects related to: 1) income taxes associated with legal entity reorganizations and restructurings; 2) tax provision or benefit resulting from statute expirations or the finalization of income tax examinations, and 3) other adjustments not considered part of the Company's core business activities. In addition, this adjustment for Fiscal 2011 excludes the effect of a benefit of $10.9 million recorded during the Three and Six Months Ended July 2, 2011 associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as a result of receiving a favorable ruling from that country's taxing authority during the Three Months Ended July 2, 2011.

d) The Company believes it is valuable for users of its financial statements to be made aware of the non-GAAP financial information, as such measures are used by management to evaluate the operating performance of the Company's continuing businesses on a comparable basis and to make operating and strategic decisions. Management believes such non-GAAP measures will also enhance users' ability to analyze trends in the Company's business. In addition, the Company uses performance targets based on non-GAAP operating income and diluted earnings per share as a component of the measurement of incentive compensation.

Schedule 6a

THE WARNACO GROUP, INC.

SUPPLEMENTAL SCHEDULE

NET REVENUES ON A CONSTANT CURRENCY BASIS

(Dollars in thousands)

(Unaudited)

	Three Months Ended July 2, 2011
	GAAP		Impact of Foreign		Non-GAAP (Note 1)
	As Reported		Currency Exchange		Constant Currency
By Segment:
Sportswear Group	$	286,289	$	16,627	$	269,662
Intimate Apparel Group		226,443		11,010		215,433
Swimwear Group		78,655		1,561		77,094
Net revenues	$	591,387	$	29,198	$	562,189


By Region:
United States	$	250,645	$	-	$	250,645
Europe		128,093		14,215		113,878
Asia		113,785		6,498		107,287
Mexico, Central and South America		62,132		5,782		56,350
Canada		36,732		2,703		34,029
Total	$	591,387	$	29,198	$	562,189

Note 1:

The Warnaco Group, Inc. is a global company that reports financial information in U.S. dollars in accordance with GAAP. Foreign currency exchange rate fluctuations affect the amounts reported by the Company from translating its foreign revenues into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results. As a supplement to the Company's reported operating results, the Company presents constant currency financial information, which is a non-GAAP financial measure. The Company uses constant currency information to provide a framework to assess how its businesses performed excluding the effects of changes in foreign currency translation rates. Management believes this information is useful to investors to facilitate comparisons of operating results and better identify trends in our businesses.

To calculate the increase in segment revenues on a constant currency basis, net revenues for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S.dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

These constant currency performance measures should be viewed in addition to, and not in isolation from, or as a substitute for, our operating performance measures calculated in accordance with GAAP. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

Schedule 6b

THE WARNACO GROUP, INC.

SUPPLEMENTAL SCHEDULE

NET REVENUES ON A CONSTANT CURRENCY BASIS

(Dollars in thousands)

(Unaudited)

	Six Months Ended July 2, 2011
	GAAP		Impact of Foreign		Non-GAAP*
	As Reported		Currency Exchange		Constant Currency
By Segment:
Sportswear Group	$	625,760	$	22,399	$	603,361
Intimate Apparel Group		447,437		14,189		433,248
Swimwear Group		180,351		2,444		177,907
Net revenues	$	1,253,548	$	39,032	$	1,214,516


By Region:
United States	$	535,788	$	-	$	535,788
Europe		296,562		14,652		281,910
Asia		240,561		10,522		230,039
Mexico, Central and South America		113,850		9,344		104,506
Canada		66,787		4,514		62,273
Total	$	1,253,548	$	39,032	$	1,214,516

* see Note 1 on schedule 6a.

Schedule 7

THE WARNACO GROUP, INC.

SUPPLEMENTAL SCHEDULE - FISCAL 2011 OUTLOOK

(Unaudited)

NET REVENUE GUIDANCE	Percentages

Estimated increase in net revenues in Fiscal 2011 compared to comparable Fiscal 2010 levels.		10.00	%	to		12.00	%



EARNINGS PER SHARE GUIDANCE	U.S. Dollars
Diluted Income per common share from continuing operations
GAAP basis (assuming minimal pension expense / income)	$	3.89		to	$	4.00
Restructuring charges (a)		0.37		to		0.41
Taxation (b)		(0.26	)			(0.26	)
As adjusted (Non-GAAP basis) (c)	$	4.00		to	$	4.15

(a)	Reflects between $16 million to $18 million of estimated restructuring charges (net of an income tax benefit of between $6 million and $8 million) primarily related to the consolidation of certain international operations in Fiscal 2011.

(b)	Primarily excludes the effect, among other items, of a benefit of $10.9 million associated with the recognition of pre-2004 net operating losses in a foreign jurisdiction as a result of receiving a favorable ruling from that country's taxing authority during the Three Months Ended July 2, 2011.

(c)	The Company believes it is useful for users of its financial statements to be made aware of the "As Adjusted" (non-GAAP) forecasted diluted income per common share from continuing operations as this is one of the measures used by management to evaluate the operating performance of the Company's continuing businesses on a comparable basis. The Company believes that this non-GAAP measure will also enhance users’ ability to analyze trends in the Company’s business. In addition, the Company uses performance targets based, in part, on this non-GAAP measure as a component of the measurement of employee incentive compensation. Management does not, nor should investors, consider this non-GAAP financial measure in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

WARNACO GROUP INC /DE/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - PRESS RELEASE DATED AUGUST 2, 2011 - August 1, 2011

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