EX-99.1 2 file2.htm PRESS RELEASE






Investor Relations:

Deborah Abraham

Vice President, Investor Relations

(212) 287-8289



FOR IMMEDIATE RELEASE



WARNACO REPORTS SECOND QUARTER 2007 RESULTS

Second quarter revenues up 4.4%

Net income increased to $0.30 per diluted share

Company raises fiscal 2007 EPS guidance to $1.90-$2.00 per diluted share

______________________________________________________________________



NEW YORK -- August 7, 2007 -- The Warnaco Group, Inc. (NASDAQ: WRNC) today reported results for the second quarter ended June 30, 2007.


·

Net revenues rose 4.4% over the prior year quarter

·

Gross margin increased 320 basis points to 38.5% of net revenues

·

Operating margin increased 100 basis points to 4.8% of net revenues

·

Net income per diluted share increased by $0.23 to $0.30



“The results reported today reflect continued positive momentum in our business,” stated Joe Gromek, Warnaco’s President and Chief Executive Officer.  “Our worldwide Calvin Klein revenues were up more than 15% over the prior year, driving the improved results at both our Sportswear and Intimate Apparel Groups and more than offsetting the Swimwear Group’s declines.  International revenues for the quarter represented 42% of our total business and our direct-to-consumer revenues were 17%, and were the key drivers of the 320 basis point increase in gross margin along with improvements in Chaps.  We are pleased with these results, which led to a 33% improvement in operating income and a significant improvement in diluted earnings per share.”


Mr. Gromek concluded, “We remain focused on developing our global platform and growing our business worldwide.  We believe this approach will continue to differentiate Warnaco within the apparel industry and provide increased value for all Warnaco stakeholders.  As we enter the second half of the year, we continue to see organic revenue opportunities and believe fiscal 2007 is shaping up to be a year of substantial growth for our Company.”






1





Second Quarter Highlights


Total Company


Net revenues rose 4.4% to $465.1 million compared to $445.6 million in the prior year period and gross profit margin increased to 38.5% compared to 35.3% in the prior year quarter.  Selling, general and administrative expenses, as a percentage of net revenues, rose to 33.1% from 30.7% in the prior year quarter, driven by the mix in business (favoring international and direct to consumer), as well as increased marketing and other investments.  Operating income rose 32.7% to $22.2 million, or 4.8% of net revenues, from $16.7 million, or 3.8% of net revenues, in the second quarter of fiscal 2006.


Income from continuing operations was $13.7 million, or $0.29 per diluted share, compared to $5.5 million, or $0.12 per diluted share, in the prior year quarter and net income increased to $13.8 million, or $0.30 per diluted share, from $3.4 million, or $0.07 per diluted share, in the prior year quarter.   


The quarter benefited from $6.3 million, or approximately $0.10 per diluted share (after-tax), of other income related primarily to net gains on the current portion of intercompany loans denominated in currency other than that of the foreign subsidiaries’ functional currency.  In addition, this quarter’s results include approximately $3.3 million, or $0.05 per diluted share (after-tax), of restructuring charges related primarily to the previously announced initiatives undertaken in the Company’s Swimwear Group.   


The tax rate for the second quarter was 31.0%, due in part to the correction of errors in prior period income tax provisions in the amount of $1.6 million associated with the Company’s foreign subsidiaries.  These errors were not material to any prior period. The Company continues to anticipate an effective tax rate for 2007 of approximately 29.0%.


The translation of foreign currencies, primarily as a result of a stronger euro and Canadian dollar, increased second quarter 2007 net revenues, gross profit and operating income by approximately $8.8 million, $4.3 million and $0.6 million, respectively, compared to the second quarter of fiscal 2006.

 


Sportswear


Revenues for the Sportswear Group increased 15.1% to $192.9 million and operating income increased to $19.0 million, or 9.8% of Sportswear Group net revenues.  The Calvin Klein jeans businesses exceeded the Company’s expectations at retail and wholesale and the Chaps business, reversing a $4.6 million operating loss in the prior year quarter, reported operating profit of $2.8 million.  For the acquired Calvin Klein jeans businesses, net revenues grew 23.2% and operating profit was $3.1 million, or 3.9% of net revenues, up from a loss in last year’s second quarter.  At Chaps, product improvement and lower dilution resulted in stronger gross profit margins, which drove the improvement in profitability.     




2






Intimate Apparel


The Intimate Apparel Group’s revenues rose 6.1% to $160.5 million and operating income increased to $21.8 million, or 13.6% of Intimate Apparel Group net revenues.  Global growth in the Company’s Calvin Klein Underwear business and continued momentum in Warner’s® drove the gains in both revenues and operating profit, offsetting declines at the Company’s other domestic intimate apparel brands and Lejaby®.  


Swimwear


Swimwear Group revenues were $111.8 million, a decline of 11.8% from the prior year quarter, with an operating loss of $5.5 million.  The Swimwear Group’s operating loss included $3.2 million of restructuring expenses related to the previously announced initiatives to improve profitability.  Speedo’s core competitive and accessories businesses continued to perform well; however, softness in the mid-tier and mass channels negatively affected revenues and profitability.  Within its designer swim division, the Company continues to evaluate opportunities to improve productivity and profitability, including an ongoing review of its manufacturing operations.


Balance Sheet


Cash and cash equivalents at June 30, 2007 were $163.1 million compared to $138.4 million at July 1, 2006.  During the quarter, the Company used $30.5 million to repurchase 911,548 shares of the Company’s common stock.  


Inventories were $357.1 million at June 30, 2007, up from $311.0 million at July 1, 2006.  The 14.8% increase is primarily related to the launch of Steel (the new Calvin Klein Underwear offering) as well as additional inventories to ensure appropriate service levels for the Company’s customers.



Fiscal 2007 Outlook


In light of the Company’s continued strong performance, for fiscal 2007, the Company now expects net revenues to grow 7% - 9% over fiscal 2006 levels and diluted earnings per share in the range of $1.90 - $2.00 (assuming minimal pension expense).


Conference Call Information


Stockholders and other persons are invited to listen to the second quarter earnings conference call scheduled for today, Tuesday, August 7, 2007, at 9:00 a.m. EDT.  To participate in Warnaco’s conference call, dial (877) 692-2592 approximately five to ten minutes prior to the 9:00 a.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.




3





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 apparel company engaged in the business of designing, marketing and selling intimate apparel, menswear, jeanswear, swimwear, men's and women's sportswear and accessories under such owned and licensed brands as Warner's®, Olga®, Lejaby®, Body Nancy Ganz®, Speedo®, Anne Cole®, Cole of California® and Catalina® as well as Chaps® sportswear and denim, Ocean Pacific® swimwear, Nautica® swimwear, Michael Kors® swimwear and Calvin Klein® men's and women's underwear, men’s and women’s bridge apparel and accessories, men's and women's  jeans and jeans accessories, junior women's and children's jeans and men’s and women's swimwear.


FORWARD-LOOKING STATEMENTS

The Warnaco Group, Inc. notes that this press release, the conference call scheduled for August 7, 2007, 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 or expectations and investors are cautioned not to place undue reliance on any forward-looking statements. Statements other than statements of historical fact 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," 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: economic conditions that affect the apparel industry; 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; declining sales resulting from increased competition in the Company’s markets; increases in the prices of raw materials; 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; 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 Company’s



4





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; 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; the Company’s history of insufficient disclosure controls and procedures and internal controls and restated financial statements; 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'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; disruptions in the Company's operations caused by difficulties with the new systems infrastructure; 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 strategic objectives, including gross margin, SG&A and operating profit goals, as a result of one or more of the factors described above or otherwise; 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.



5


Schedule 1

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

 

 

 

Second Quarter
of Fiscal 2007

 

Second Quarter
of Fiscal 2006

 

(Unaudited)

(Unaudited)

Net revenues

 

$

465,118

 

$

445,562

 

Cost of goods sold

 

 

285,953

 

 

288,385

 

Gross profit

 

 

179,165

 

 

157,177

 

Selling, general and administrative expenses

 

 

153,727

 

 

136,572

 

Amortization of intangible assets

 

 

3,617

 

 

3,825

 

Pension expense (income)

 

 

(407

)

 

33

 

Operating income (a)

 

 

22,228

 

 

16,747

 

Other income

 

 

(6,323

)

 

(771

)

Interest expense

 

 

9,542

 

 

10,501

 

Interest income

 

 

(778

)

 

(1,084

)

Income from continuing operations before
provision for income taxes

 

 

19,787

 

 

8,101

 

Provision for income taxes

 

 

6,129

 

 

2,599

 

Income from continuing operations

 

 

13,658

 

 

5,502

 

Income (loss) from discontinued operations, net of taxes

 

 

119

 

 

(2,079

)

Net income

 

$

13,777

 

$

3,423

 

 

Basic income per common share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.30

 

$

0.12

 

Income (loss) from discontinued operations

 

 

0.01

 

 

(0.05

)

Net income

 

$

0.31

 

$

0.07

 

 

Diluted income per common share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.29

 

$

0.12

 

Income (loss) from discontinued operations

 

 

0.01

 

 

(0.05

)

Net income

 

$

0.30

 

$

0.07

 

 

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

 

 

 

 

 

 

 

Basic

 

 

45,146,246

 

 

46,082,333

 

Diluted

 

 

46,534,530

 

 

46,935,529

 

 

(a)

Includes restructuring charges of $3,319 for the Second Quarter of Fiscal 2007 primarily related to the closure of a goggle manufacturing facility located in Canada and the rationalization of the Company’s swimwear workforce in Mexico and California.

 

 


Schedule 2

THE WARNACO GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Dollars in thousands, excluding per share amounts)

 

 

 

Six Months Ended
June 30, 2007

 

Six Months Ended
July 1, 2006

 

 

 

(Unaudited)

 

(Unaudited)

 

Net revenues (a)

 

$

1,012,315

 

$

898,744

 

Cost of goods sold

 

 

608,539

 

 

569,284

 

Gross profit

 

 

403,776

 

 

329,460

 

Selling, general and administrative expenses

 

 

311,759

 

 

268,762

 

Amortization of intangible assets

 

 

7,051

 

 

7,043

 

Pension expense (income)

 

 

(493

)

 

5

 

Operating income (b), (c)

 

 

85,459

 

 

53,650

 

Other expense (income)

 

 

(6,926

)

 

1,079

 

Interest expense

 

 

18,897

 

 

18,882

 

Interest income

 

 

(1,075

)

 

(1,521

)

Income from continuing operations before provision for income taxes

 

 

74,563

 

 

35,210

 

Provision for income taxes

 

 

22,817

 

 

11,516

 

Income from continuing operations

 

 

51,746

 

 

23,694

 

Income (loss) from discontinued operations, net of taxes

 

 

6

 

 

(6,389

)

Net income

 

$

51,752

 

$

17,305

 

 

Basic income per common share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.15

 

$

0.51

 

Loss from discontinued operations

 

 

 

 

(0.13

)

Net income

 

$

1.15

 

$

0.38

 

 

Diluted income per common share:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.11

 

$

0.50

 

Loss from discontinued operations

 

 

 

 

(0.13

)

Net income

 

$

1.11

 

$

0.37

 

 

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

 

 

 

 

 

 

 

Basic

 

 

45,058,976

 

 

46,114,751

 

Diluted

 

 

46,482,664

 

 

46,999,123

 

 

 

(a)

For the Six Months Ended June 30, 2007 and the Six Months Ended July 1, 2006, includes $201,796 (inclusive of $34,411 for January 2007) and $124,125, respectively, related to the international Calvin Klein jeans (“CKJEA”) business which was acquired on January 31, 2006.

(b)

For the Six Months Ended June 30, 2007 and the Six Months Ended July 1, 2006, includes $18,583 (inclusive of $4,145 for January 2007) and $5,039, respectively, related to the CKJEA business which was acquired on January 31, 2006.

(c)

Includes restructuring charges of $4,161 for the Six Months Ended June 30, 2007 primarily related to the closure of a goggle manufacturing facility located in Canada and the rationalization of the Company’s swimwear workforce in Mexico and California.

 

 


Schedule 3

THE WARNACO GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

 

 

 

 

June 30, 2007

 

December 30, 2006

 

July 1, 2006

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

163,054

 

$

166,990

 

$

138,372

 

Accounts receivable, net

 

 

278,570

 

 

294,993

 

 

278,748

 

Inventories

 

 

357,073

 

 

407,617

 

 

310,956

 

Assets of discontinued operations

 

 

4,532

 

 

5,657

 

 

 

Other current assets

 

 

57,830

 

 

72,943

 

 

75,763

 

Total current assets

 

 

861,059

 

 

948,200

 

 

803,839

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

118,317

 

 

122,628

 

 

131,389

 

Intangible and other assets

 

 

604,058

 

 

610,147

 

 

609,543

 

TOTAL ASSETS

 

$

1,583,434

 

$

1,680,975

 

$

1,544,771

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Short-term debt

 

$

45,360

 

$

108,739

 

$

43,554

 

Accounts payable and accrued liabilities

 

 

275,279

 

 

336,883

 

 

253,765

 

Liabilities of discontinued operations

 

 

1,678

 

 

7,527

 

 

 

Accrued income taxes payable

 

 

15,892

 

 

41,174

 

 

43,863

 

Total current liabilities

 

 

338,209

 

 

494,323

 

 

341,182

 

Long-term debt

 

 

331,402

 

 

332,458

 

 

382,750

 

Other long-term liabilities

 

 

189,977

 

 

171,280

 

 

161,196

 

Total stockholders’ equity

 

 

723,846

 

 

682,914

 

 

659,643

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

1,583,434

 

$

1,680,975

 

$

1,544,771

 

 

 


Schedule 4

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY BUSINESS GROUP

(Dollars in thousands)

(Unaudited)

Net revenues:

 

Second Quarter
of Fiscal 2007

 

Second Quarter
of Fiscal 2006

 

Increase /
(Decrease)

 

%
Change

 

Sportswear Group

 

$

192,890

 

$

167,622

 

$

25,268

 

15.1%

 

Intimate Apparel Group

 

 

160,475

 

 

151,262

 

 

9,213

 

  6.1%

 

Swimwear Group

 

 

111,753

 

 

126,678

 

 

(14,925

)

-11.8%

 

Net revenues

 

$

465,118

 

$

445,562

 

$

19,556

 

  4.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter
of Fiscal 2007

 

 

% of Group
Net Revenues

 

 

Second Quarter
of Fiscal 2006

 

% of Group
Net Revenues

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Sportswear Group (a), (b)

 

$

18,981

 

 

9.8%

 

$

2,498

 

  1.5%

 

Intimate Apparel Group (a), (b)

 

 

21,796

 

 

13.6%

 

 

18,723

 

12.4%

 

Swimwear Group (a), (b)

 

 

(5,506

)

 

(4.9)%

 

 

3,811

 

  3.0%

 

Unallocated corporate expenses

 

 

(13,043

)

 

na

 

 

(8,285

)

na

 

Operating income

 

$

22,228

 

 

na

 

$

16,747

 

na

 

Operating income as a percentage of total net revenues

 

 

4.8%

 

 

 

 

 

3.8%

 

 

 

 

(a) Includes an allocation of shared services expenses as follows:

 

 

 

Second Quarter
of Fiscal 2007

 

 

Second Quarter
of Fiscal 2006

 

 

 

 

 

 

Sportswear Group

 

$

4,942

 

$

5,194

 

 

 

 

 

 

Intimate Apparel Group

 

$

3,807

 

$

3,335

 

 

 

 

 

 

Swimwear Group

 

$

6,432

 

$

4,739

 

 

 

 

 

 

(b) Includes restructuring charges as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter
of Fiscal 2007

 

 

Second Quarter
of Fiscal 2006

 

 

 

 

 

 

Sportswear Group

 

$

21

 

$

 

 

 

 

 

 

Intimate Apparel Group

 

 

19

 

 

 

 

 

 

 

 

Swimwear Group

 

 

3,279

 

 

 

 

 

 

 

 

 

 

$

3,319

 

$

 

 

 

 

 

 

 

 


Schedule 5

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY BUSINESS GROUP

(Dollars in thousands)

(Unaudited)

 

Net revenues:

 

 

Six Months Ended
June 30, 2007

 

Six Months Ended
July 1, 2006

 

Increase /
(Decrease)

 

%
Change

 

Sportswear Group (a)

 

$

428,321

 

$

335,494

 

$

92,827

 

27.7%

Intimate Apparel Group

 

 

335,451

 

 

302,221

 

 

33,230

 

11.0%

Swimwear Group

 

 

248,543

 

 

261,029

 

 

(12,486

)

-4.8%

Net revenues

 

$

1,012,315

 

$

898,744

 

$

113,571

 

12.6%


 

(a)

For the Six Months Ended June 30, 2007 and the Six Months Ended July 1, 2006, includes $201,796 (inclusive of $34,411 for January 2007) and $124,125, respectively, related to the CKJEA business which was acquired on January 31, 2006.

 

 

 

Six Months Ended
June 30, 2007

 

% of Group
Net Revenues

 

Six Months Ended
July 1, 2006

 

% of Group
Net Revenues

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

Sportswear Group (a), (b), (c)

 

$

46,595

 

10.9%

$

10,440

 

3.1%

Intimate Apparel Group (a), (c)

 

 

51,271

 

15.3%

 

35,166

 

11.6%

Swimwear Group (a), (c)

 

 

13,447

 

5.4%

 

22,977

 

8.8%

Unallocated corporate expenses

 

 

(25,854

)

na

 

 

(14,933

)

na

 

Operating income

 

$

85,459

 

na

 

$

53,650

 

na

 

Operating income as a percentage of total net revenues

 

 

8.4%

 

 

 

6.0%

 

 


 

(a)

Includes an allocation of shared services expenses as follows:

 

 

 

Six Months Ended
June 30, 2007

 

Six Months Ended
July 1, 2006

 

         

Sportswear Group

 

$

9,881

 

$

10,353

 

         

Intimate Apparel Group

 

$

7,617

 

$

6,646

 

         

Swimwear Group

 

$

12,864

 

$

9,357

 

         

 

 

 

 

 

 

 

 

         

(b)

For the Six Months Ended June 30, 2007 and the Six Months Ended July 1, 2006, includes $18,583 (inclusive of $4,145 for January 2007) and $5,039, respectively, related to the CKJEA business which was acquired on January 31, 2006.

 

(c)

Includes restructuring charges as follows:

 

 

 

Six Months Ended
June 30, 2007

 

Six Months Ended
July 1, 2006

 

         

Sportswear Group

 

$

119

 

$

 

         

Intimate Apparel Group

 

 

120

 

 

 

         

Swimwear Group

 

 

3,945

 

 

 

         

Unallocated corporate expenses

 

 

(23

)

 

 

         

 

 

$

4,161

 

$

 

         

 

 


Schedule 6

 

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY REGION & CHANNEL

(Dollars in thousands)

(Unaudited)

 

By Region:

 

Net Revenues

 

 

 

Second
Quarter of
Fiscal 2007

 

 

Second
Quarter of
Fiscal 2006

 

Increase /
(Decrease)

 

% Change

 

United States

 

$

271,161

 

$

270,199

 

$

962

 

0.4%

Europe

 

 

100,587

 

 

89,585

 

 

11,002

 

12.3%

Asia

 

 

50,764

 

 

43,301

 

 

7,463

 

17.2%

Canada

 

 

27,312

 

 

26,103

 

 

1,209

 

4.6%

Central and South America

 

 

15,294

 

 

16,374

 

 

(1,080

)

-6.6%

Total

 

$

465,118

 

$

445,562

 

$

19,556

 

4.4%

 

 

 

Operating Income 

 

 

 

Second
Quarter
of Fiscal 2007

 

Second
Quarter of
Fiscal 2006

 

Increase /
(Decrease)

 

% Change

 

United States

 

$

16,497

 

$

8,738

 

$

7,759

 

88.8%

Europe

 

 

5,822

 

 

1,397

 

 

4,425

 

316.8%

Asia

 

 

6,749

 

 

5,961

 

 

788

 

13.2%

Canada

 

 

4,180

 

 

6,045

 

 

(1,865

)

-30.9%

Central and South America

 

 

2,023

 

 

2,891

 

 

(868

)

-30.0%

Unallocated corporate expenses

 

 

(13,043

)

 

(8,285

)

 

(4,758

)

57.4%

Total

 

$

22,228

 

$

16,747

 

$

5,481

 

32.7%

 

By Channel:

 

Net Revenues 

 

 

 

Second
Quarter
of Fiscal 2007

 

Second
Quarter of
Fiscal 2006

 

Increase

 

% Change

 

Wholesale

 

$

385,227

 

$

382,396

 

$

2,831

 

0.7%

Retail

 

 

79,891

 

 

63,166

 

 

16,725

 

26.5%

Total

 

$

465,118

 

$

445,562

 

$

19,556

 

4.4%

 

 

 

Operating Income

 

 

 

Second
Quarter of Fiscal 2007

 

Second
Quarter of Fiscal 2006

 

Increase / (Decrease)

 

% Change

 

Wholesale

 

$

20,134

 

$

15,957

 

$

4,177

 

26.2%

Retail

 

 

15,137

 

 

9,075

 

 

6,062

 

66.8%

Unallocated corporate expenses

 

 

(13,043

)

 

(8,285

)

 

(4,758

)

57.4%

Total

 

$

22,228

 

$

16,747

 

$

5,481

 

32.7%

 

 


Schedule 7

THE WARNACO GROUP, INC.

NET REVENUES AND OPERATING INCOME BY REGION & CHANNEL

(Dollars in thousands)

(Unaudited)

 

By Region:

 

Net Revenues 

 

 

 

Six Months
Ended June 30,
2007

 

Six Months
Ended July 1,
2006

 

Increase

 

% Change

 

United States

 

$

554,104

 

$

545,133

 

$

8,971

 

1.6%

Europe (a)

 

 

259,853

 

 

188,056

 

 

71,797

 

38.2%

Asia (b)

 

 

113,502

 

 

84,422

 

 

29,080

 

34.4%

Canada

 

 

52,063

 

 

50,054

 

 

2,009

 

4.0%

Central and South America

 

 

32,793

 

 

31,079

 

 

1,714

 

5.5%

Total

 

$

1,012,315

 

$

898,744

 

$

113,571

 

12.6%


 

(a)

Includes $106,463 (inclusive of $18,011 for January 2007) and $58,044 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.

(b)

Includes $95,333 (inclusive of $16,400 for January 2007) and $66,081 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.

 

 

 

Operating Income

 

 

 

Six Months
Ended June 30,
2007

 

Six Months
Ended July 1,
2006

 

Increase /
(Decrease)

 

% Change

 

United States

 

$

46,956

 

$

26,396

 

$

20,560

 

77.9%

Europe (a)

 

 

33,308

 

 

12,357

 

 

20,951

 

169.5%

Asia (b)

 

 

16,550

 

 

13,447

 

 

3,103

 

23.1%

Canada

 

 

9,093

 

 

11,612

 

 

(2,519

)

-21.7%

Central and South America

 

 

5,406

 

 

4,771

 

 

635

 

13.3%

Unallocated corporate expenses

 

 

(25,854

)

 

(14,933

)

 

(10,921

)

73.1%

Total

 

$

85,459

 

$

53,650

 

$

31,809

 

59.3%


 

(a)

Includes income of $8,602 (inclusive of $1,358 for January 2007) and a loss of $3,086 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.

(b)

Includes $9,981 (inclusive of $2,787 for January 2007) and $8,125 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.

 

By Channel:

 

Net Revenues 

 

 

 

Six Months
Ended June 30,
2007

 

Six Months
Ended July 1,
2006

 

Increase

 

% Change

 

Wholesale (a)

 

$

854,162

 

$

788,254

 

$

65,908

 

8.4%

Retail (b)

 

 

158,153

 

 

110,490

 

 

47,663

 

43.1%

Total

 

$

1,012,315

 

$

898,744

 

$

113,571

 

12.6%


 

(a)

Includes $106,877 (inclusive of $19,560 for January 2007) and $61,538 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.

(b)

Includes $94,919 (inclusive of $14,851 for January 2007) and $62,587 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.

 

 

 

Operating Income 

 

 

Six Months
Ended June 30, 2007

 

Six Months
Ended July 1,
2006

 

Increase /
(Decrease)

 

% Change

Wholesale (a)

 

$

85,403

 

$

53,195

 

$

32,208

 

60.5%

Retail (b)

 

 

25,910

 

 

15,388

 

 

10,522

 

68.4%

Unallocated corporate expenses

 

 

(25,854

)

 

(14,933

)

 

(10,921

)

73.1%

Total

 

$

85,459

 

$

53,650

 

$

31,809

 

59.3%


 

(a)

Includes income of $7,290 (inclusive of $2,057 for January 2007) and a loss of $1,208 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.

(b)

Includes $11,293 (inclusive of $2,088 for January 2007) and $6,247 for the Six Months Ended June 30, 2007 and Six Months Ended July 1, 2006, respectively, related to the CKJEA business which was acquired on January 31, 2006.