Agreement to Provide Warnaco with Worldwide Rights for Calvin Klein
Jeans NEW YORK, Dec. 20 /PRNewswire-FirstCall/ -- The Warnaco
Group, Inc. (NASDAQ:WRNC) today announced that it has agreed to
acquire 100% of the shares of the companies that operate the
licenses and related wholesale and retail businesses of Calvin
Klein(R) jeans and accessories in Europe and Asia and 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 euro 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 [NYSE: PVH]. 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 Chief Executive Officer 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 &
Chief Operating Officer 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. Warnaco will host a conference call Wednesday,
December 21, 2005 at 9:00 a.m. Eastern Standard Time to discuss the
transaction. Interested parties can access the call by dialing
(800) 240-2134 or (303) 205-0066 for international callers. To
listen to the live broadcast over the internet, please log on to
http://www.warnaco.com/, go to "Investor Info" and then click on
the link, "Calvin Klein jeans (Europe & Asia) Acquisition
Conference Call." A replay of the call will be available shortly
after the broadcast through midnight eastern standard time,
December 28, 2005, at (800) 405-2236, or (303) 590-3000 for
international callers, pass code 11049138, and will be available on
the Warnaco website at the same location as the live webcast. 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(R), Olga(R), Lejaby(R), Body
Nancy Ganz(tm), Speedo(R), Anne Cole(R), Op(R), Ocean Pacific(R),
Cole of California(R) and Catalina(R) as well as Chaps(R)
sportswear and denim, J. Lo by Jennifer Lopez(R) lingerie,
Nautica(R) swimwear, Michael Kors(R) swimwear and Calvin Klein(R)
men's and women's underwear, men's, women's, junior women's and
children's jeans and women's and juniors' swimwear. ABOUT CALVIN
KLEIN, INC. Calvin Klein, Inc. is one of the leading fashion design
and marketing studios in the world. It designs and markets women's
and men's designer collection apparel and a range of other products
that are manufactured and marketed through an extensive network of
licensing agreements and other arrangements worldwide.
Brands/lifestyles include Calvin Klein Collection, ck Calvin Klein,
Calvin Klein, Calvin Klein Jeans and Choice Calvin Klein. Product
lines under the various Calvin Klein brands include apparel,
accessories, shoes, underwear, sleepwear, hosiery, socks, swimwear,
eyewear, watches, jewelry, coats, and fragrances, as well as
products for the home. ABOUT PHILLIPS-VAN HEUSEN Phillips-Van
Heusen Corporation is one of the world's largest apparel companies.
It owns and markets the Calvin Klein brand worldwide. It is the
world's largest shirt company and markets a variety of goods under
its own brands, Van Heusen, Calvin Klein, IZOD, Arrow, and G.H.
Bass & Co., and its licensed brands Geoffrey Beene, Kenneth
Cole New York, Kenneth Cole Reaction, BCBG Max Azria, BCBG
Attitude, MICHAEL Michael Kors, Sean Jean, Chaps, and Donald J.
Trump Signature Collection. FORWARD-LOOKING STATEMENTS This press
release, as well as certain other written, electronic and oral
disclosure made by the Company from time to time, contains
"forward-looking statements" within the meaning of Rule 3b-6 under
the Securities Exchange Act of 1934, as amended, Rule 175 under the
Securities Act of 1933, as amended, and relevant legal decisions.
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, both with respect to its existing
businesses and the businesses it has agreed to acquire. 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 heading
"Statement Regarding Forward-Looking Disclosure," as it may be
modified or supplemented from time to time, in such reports), 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 dependence
on a limited number of customers; the Company's dependence on the
reputation of its brand names; 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
internal control deficiencies or weaknesses or ineffective
disclosure controls and procedures; the sufficiency of cash to fund
operations, including capital expenditures; 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; because fiscal year 2005 is not complete, the businesses
the Company has agreed to acquire not generating the level of
revenues described in this press release; the Company failing 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 the acquisition; and such
businesses being adversely affected by one or more of the factors
relating to the apparel industry described above and thereby
failing to achieve anticipated revenues and earnings growth. In
addition, the Company encourages investors to read 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" contained
in the Company's Annual Report on Form 10-K for the year ended
January 1, 2005, as such discussion 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. DATASOURCE: The Warnaco Group, Inc. CONTACT: Deborah
Abraham, Director, Investor Relations of The Warnaco Group, Inc.,
+1-212-287-8289; or Media Inquiries - Jennifer Rissi of Weber
Shandwick for The Warnaco Group, Inc., +1-212-445-8224 Web site:
http://www.warnaco.com/
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