I would like to welcome everyone to The Warnaco Group, Inc. fourth quarter 2007 earnings conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Ms. Deborah Abraham, Vice President of Investor Relations.

This afternoon, Joe Gromek, Warnaco’s President and CEO, will begin with a business review; Larry Rutkowski, our CFO, will review the financials and our 2008 guidance; and our Group Presidents will take you through some segment highlights. Following our comments, there will be an opportunity for you to ask questions. Today’s comments are based on Warnaco’s adjusted results on a continuing basis, which excludes the results of the swim brands to be discontinued, pension income, certain tax related items, and restructuring expenses. The company believes it’s important for users of the company’s financial statements to be made aware of the adjusted financial information related to the company’s income from continuing operations; as such measures are used by management to evaluate the operating performance of the company’s continuing business on a comparable basis. A reconciliation of actual results to the adjusted results is available in the schedules accompanying today’s press release. Additionally, we remind you that, as in the past, our Group Presidents will discuss segment operating results, excluding the allocation of shared service expense. These allocation amounts can be found in the tables attached to our earnings release, as well as our Form 10-Q and 10-K. Finally, today’s conference call may include comments concerning the Warnaco Group’s future outlook and may contain forward-looking statements. Any forward-looking statements and all other statements that may be made on this call that are not based on historical fact are subject to risks and uncertainties. Actual results may differ materially. Information containing a number of factors that could cause actual results to differ materially from the information that will be discussed is available in Warnaco’s filings with the SEC, including Warnaco’s Form 8-K furnished today. Now let me turn the call over to Warnaco’s President and CEO, Joe Gromek.

Fiscal 2007 was a strong year for Warnaco as net revenues increased 13% to $1.8 billion and adjusted earnings per share grew 63% to $2.26. This significant revenue and EPS growth was fueled by our powerful global Calvin Klein business, the compelling performance of our international operations, the expansion of our direct-to-consumer footprint, and a disciplined operating approach toward all of our businesses. During the year, we also advanced our long-term strategic goals, positioning the company for the future, for future top-line and bottom-line growth. We have essentially completed the swimwear restructuring that we announced back in September, exiting the swim manufacturing operations and selling the Catalina, Anne Cole, and Cole of California brands. In addition, as we reported on February 15, we signed a definitive agreement to sell the Lejaby business, including the related manufacturing operations in France. Our success this year, in a challenging domestic environment, was clearly tied to our diversified, global business model. We strategically invested in our most powerful brands, continued to diversify our revenue base by geography and channel, and improved our focus and efficiency by divesting smaller non-core assets. Let me address some of our 2007 accomplishments; first, our total Calvin Klein revenues rose 24% to $1.2 billion and accounted for two-thirds of total company revenues. We continue to see tremendous opportunity to grow our Calvin Klein businesses through new categories, further geographic expansion, and our direct-to-consumer initiatives. As we have previously advised, we believe we can double our Calvin Klein business over the next five years. Within our Calvin Klein franchises, we achieved some important milestones. Calvin Klein underwear revenues exceeded our $500 million target. We believe that under Helen’s leadership, Calvin Klein underwear will double again over the next five years. Calvin Klein jeans also experienced significant growth, recording $700 million…

Turning to our results, for the fourth quarter on an adjusted continuing basis revenues rose 7% to $467 million. Gross margin increased 300 basis points to 42%. SG&A as a percent of net revenues rose to 34% from 30% in the prior year quarter. This is primarily the result of the mix in the growth of our international and direct-to-consumer businesses, foreign exchange, and $5 million of planned incremental marketing investment. Operating income was $34 million compared to $37 million in the prior year quarter, and it includes approximately $6 million of one-time expenses related to our exit from owned manufacturing. Our effective tax rate in the quarter of 25% was based on the normalized rate for the year, which excludes the impact of restructuring discontinued operation along with certain tax-related items and compares to 23% in the prior year quarter. As a reminder, the 2006 tax rate benefited from the previously disclosed Netherlands tax ruling. On a go forward basis, we expect an effective tax rate between 25% to 27%. After-tax income from continuing operations was $20 million or $0.43 per diluted share compared to $22 million or $0.47 per diluted share in the prior year quarter. Turning to our annual results; again, on an adjusted continuing basis, revenues were up 13% to $1.8 billion. Gross margin increased 330 basis points to 42% of net revenues. SG&A was up 150 basis points to 32% of net revenues, again driven by the mix of international and direct-to-consumer business, foreign exchange, and a planned increase of $10 million of marketing investment. Operating income increased 42% to 167 million, achieving over 9% operating margin and income from continuing operations was $106 million or $2.26 per diluted share, up from $65 million or $1.39 per diluted share. Looking at our financial position, we…

I’ll start with intimate apparel. 2007 was an outstanding year and exceeded our expectations. For the fourth quarter, our trend continued with revenue and operating income up 16%, yielding and operating margin of nearly 20%. All businesses, Calvin Klein underwear, Warner’s and Olga, and all geographies contributed to the increase. For the year, revenue at $629 million was up 16% and operating margin was over 20%. Breaking it down by segment, we’re very pleased with the performance of our core intimate business. Total year revenue increased modestly, but operating income grew by 14% achieving our 10% operating margin target. Both Warner’s and Olga gained market share with retail sales increases that significantly outpaced the flat, moderate, bra market. Importantly, Warner’s recaptured distribution with a major national chain after a four-year absence. This is a validation of the strength and success of our product strategy and a differentiation that we offer versus our competition. Looking ahead, while we expect the moderate bra market will continue to face challenges, we’re optimistic given our momentum retail as we enter 2008. We believe in our strategy and expect to realize continued improved performance in the upcoming year. Moving on to Calvin Klein underwear, I’m particularly proud of our results and accomplishments in 2007. Benefiting from significant international volume and a very successful launch of Calvin Klein’s Steel, revenue for the year grew by 20% and it exceeded our expectations in every geography. Through increased penetration in higher margin segments like direct retail and Europe, favorable currency rates, strong retail sell-through on fashion and new products, and continued sourcing benefit, gross margin increased by 380 basis points to over 50%. As a result, operating profit increased to nearly 24% of revenue. We successfully executed our strategies this past year, and we believe Calvin Klein underwear…

I’ll start by discussing consolidated worldwide sportswear results for the fourth quarter and the year, and then comment on the performance of the Chaps and Calvin Klein jeans brands. Fourth quarter revenues for sportswear increased by 10% to $246 million with operating income of $22 million a decrease of $1.7 million compared to last year. Increased selling expense related to planned Calvin Klein jeans retail expansion in Europe, $4.5 million of the incremental marketing investment, and a shift in timing in certain higher margin businesses impacted quarterly operating income. However, total year results for sportswear were outstanding. Revenues rose 19% to $939 million while operating income increased by 47% to $120 million. Powered by a 510 basis point increase in gross margin, the Sportswear Group achieved a 12.8% operating margin. Beginning with the Chaps brand, net revenue for the quarter declined 2% and operating margins were 9.7%, on par with the prior year quarter. Full year results met our expectations of restoring Chaps to double-digit profit margins. While revenues declined a modest 3%, operating margin exceeded our target increasing to 10.5% versus 5.6% in the prior year. In a highly competitive, moderate men’s sportswear arena, the Chaps brand performed admirably as the team focused on delivering trend right product while incorporating the aesthetics and quality associated with the Chaps brand. Chaps has benefited from category and door expansion in the mid-tier, department store growth, however, is more challenging. In order to maximize both revenue and profit opportunities, we continue to develop competitively priced key items within our core categories, maintain inventory levels in proportion to sales, and develop compelling point of sale presentations. Turning to Calvin Klein jeans global results, fourth quarter revenues increased 16% to $183 million, driven by a 38% rise in international revenues. Operating margin for the…

That concludes our prepared remarks.

(Operator Instructions) Our first question comes from Todd Slater - Lazard.

Could you just review the operating rates for the major divisions again? It seems like most of them were in the double digits. I just want to make sure I got that right. The sportswear was 12.8%, is that correct?

That sounds correct. Let me just give you a rundown real quick. Hold on. In terms of the operating margin full-year jeans was 15.4%, but the overall Sportswear Group was 13%, Swimwear Group was 9.9%, and the Intimate Group was 20.3%, where Calvin Klein underwear was 23%.

And is the international business a higher margin business than the domestic?

Yes.

Much so, Todd, much so.

So, I guess, I’m having difficulty reconciling. Maybe you can explain where the margins right now are under 10% in ‘07, or maybe just above that base in your guidance in ‘08. If all these businesses operate at these much higher margins for the most part, except for swim, which was right around the 10%, what am I missing?

All of those numbers, Todd, exclude the corporate allocation and shared service expenses.

What does that come to, roughly?

Well, the total amount for the company of the corporate expense is approximately $97 million, around 4.5% of the total.

Also in the same vein, I’m assuming that exiting the manufacturing for Lejaby and for swimwear and also exiting the underperforming businesses will generate an improvement in the operating margin. What was the sort of the effect of those? How much did that depress the margins?

Well, Todd, we’ve broken out each of those discontinued businesses and we’ve included tables that show that those businesses had been a drain and that helped get us over the 9% operating margin for 2007 on an adjusted basis.

Todd, I think the big news for us is that on an all-in basis for ‘07, we were north of 9%, and clearly for 2008 we’re marching towards the 10% goal.

Clearly, that’s what the number suggests. The international growth, if you look at the 9%, can you sort of break it down, international, domestic?

Well, I think if we look back first at 2007, we were flat to plus or minus one domestically. So the growth was all coming from outside of the U.S. And we would expect the same kind of growth in ‘08. We’re planning the domestic business basically flat.

And now that you’ve got much more improved flexibility, the balance sheet is obviously in much better shape. Have you begun to entertain acquisitions, and if so, what types of things would you be looking at?

Well, first, Todd, I think the real positive for Warnaco at this point is that we believe that our Calvin Klein franchise, at this point, has much room to grow. We think we’ve got a premier brand that has lots of white space around the globe and we’re really focusing on driving that business. And as we said, we think over the next five years, we could double that Calvin Klein business from $1.2 billion to north of $2.4 billion. So that’s clearly a number one focus. Having said that, our criteria for acquisitions moving forward are global lifestyle brands, and that’s what we would focus on.

Our next question comes from Jeff Edelman - UBS.

Larry, my first question is for you. Could you give us a sense how much currency impacted end-of-quarter sales, gross margin, and then the bottom line?

We detailed in the press release that currency benefited the revenue by $19.8 million and about just over $3 million in operating income. We haven’t detailed out the gross margin, but there is a sizeable piece that has negatively impacted with rising currency in SG&A, as you can imagine.

Secondly, could you give us some sense on the European sales growth? How much of that was a function of getting into new doors and how much was increased penetration, where you are and what can we look for that breakdown roughly in the New Year?

I think, Jeff, it’s a combination of factors. When we look at the growth rate in Europe, I believe it was north of 40% last year. And in Asia our growth rate was north of 30%. In terms of comp store sales in our own units, we were running up 10% comp. So in our own retail operations, we’re doing quite nicely. And candidly, yes we added 80,000 to get it to 350,000, so we grew more than our objective of 20%. So we’re getting quite a bit of growth from all factors, and I think it’s relatively a good mix right now.

Our next question comes from Shawn Martin - Piper Jaffray.

First, on the Chaps business, sounds like you were able to generate some low double-digit operating margin even though sales were down slightly. How are you planning that business for the coming year? I think you’ve said before it’s going to be relatively flat, but what are the opportunities there in terms of operating margin expansion, store count expansion, or potentially higher ASPs in that business?

Well, we have an interesting business there. We have a very aggressive expansion plan going on in the mid-tier based on the company we have partnered with as they begin to roll out stores. Having said that, we also have some constriction in the department store arena. The combination of the two is putting us in a position to be somewhat conservative with our top line revenue expectations for the year. Having said that, we’re also exploring some new accounts that we may bring the brand to that would afford us some opportunity in the second half of ‘08, but right now we’re looking at the Chaps brand as a operating income improvement opportunity for the year.

And then, secondly on the Calvin Klein business, it sounds like most your direct-to-retail doors are doing comps around 10%, or that was the average which is obviously great. But is there any way you can break that down a little bit further on the comp line for intimates versus the sportswear side? And then, potentially any geographic break down that you’re comfortable with on the European or Asian side of the business?

I think the numbers that we’ve seen to date, we’re operating in the underwear business at about an 18% comp. It is the smaller of the two. So we’re in low single-digit at this point in comp on the jeans business.

In terms of Europe, is there any specific country that you may be having some pushback in, the levered consumer kind of in Spain or some of the potential economic impact in Italy, are any of those impacting the intimates business today or the sportswear business that you’ve seen?

Sean, we’ve been watching this very closely and we monitor these sales on a weekly basis, and candidly we’re surprised right now, positively surprised. We have a very large business in Italy and we continue to experience positive growth in Italy. Spain is our second largest market and I know the economy there is struggling there somewhat, but our gains continue to be very solid. And we’re more than holding our own in the U.K. So we’re feeling positive about our European business and we continue to experience really dramatic growth in Eastern Europe as well.

Our next question comes from Susan Sansbury - Miller Tabak.

My question relates to the forward guidance of 250 to 260 in relation to what you accomplished last year. Correct me if I’m wrong, Joe, but I think your earnings came in above your latest guidance in mid January when you were at the ICR. But the forward guidance hasn’t changed here. Are you being conservative? Is that less than 15%? Are you being conservative or is there something I’m missing here in terms of currency, substantially lower expected performance out of swim wear or someplace else? Because if your Calvin Klein business continues to grow at 15% to 20%, I would think that your bottom line growth would be potentially more robust than this forward guidance would indicate.

Susan, first, this is the first and only time we’ve really given you a forward look at 2008 in terms of guidance. So the 250 to 260 range, this is the first time we’ve announced it. We really had not spoken about it at prior conferences. We believe that this range is prudent for us. We believe that, certainly, our Calvin Klein businesses, that we’ve suggested that revenue growth would be in the mid-teens and we’re very comfortable with that. And we think we’re being prudent in a very unusual and difficult climate. So we think that at this moment in time, with our best thinking, this guidance makes sense.

Any wisdom with respect to the current quarter or the quarterly cadence.

Well, we don’t really give quarterly guidance. Having said that, we’re feeling very good about the beginning of the year. We believe we’ve been off to a very strong start. And in terms of the cadence, we think that it will flow comparable to the way it had in 2007.

Our next question comes from David Glick - Buckingham Research.

I just wanted to touch on the implied operating margin. If I did the quick math correctly, it looks like it will be in the mid 9% range, maybe a little bit above that, which is, obviously, less than 10% goal that is out there for ‘08. And I guess it’s kind of similar to Susan’s question, are you being a little conservative on the operating margin? Do you still think you can break through that barrier sheer given what you’re seeing out there today?

David, the only thing I could tell you, is that our internal plans suggest that we’ll hit double digit by year end.

Larry, on Q4, just wanted to make sure I understand the puts and takes under this year/last year basis. You said that operating increase was $34 million versus $37 million. But that $34 million was reduced by $6 million in one-time expenses. So, excluding that on more of an apples-to-apples basis, it was $40 million versus $37. Is that the right way of looking at it?

If you were to add back those $6 million, yes. You’d take the $34 up to $40. So, it’d be $40 this year versus $37 last year.

And in addition to that, you have an incremental $5 million of marketing expense that I guess you can look at as an investment in your business, further suppressing that number. Is that correct?

That is correct as well, David.

Our next question comes from Alessandra Rosenfeld - Brean Murray.

I just have a quick question about expansion in Asia. Is that something that the company is going to be focused on in ‘08-’09?

Yes. We certainly are focused on expansion in Asia. We might be a bit unique in that, our largest penetration by geography in Asia right now is in Korea. And our business in Korea is north of $150 million U.S. And even at that scale, that business continues to show double digit [inaudible]. Our business in Hong Kong continues to be quite strong. And obviously, we’re having an excellent time in China. So, in terms of percentage of growth, China is clearly the largest.

How many stores do you have in China right now?

Well, worldwide we’re about 770, 740. In China specifically, I believe we’re north of 40. Some of them are owned primarily. And we have a few that are licensed as well. While we’re on the China subject, I think this past year, our revenue was north of $30 million. And we expect to be in the $50 million range for ‘08.

Is there a specific strategy in terms of stores that are going to be franchised versus operated stores? How do you decide how that’s going to be divided?

Well, our approach to-date has been to focus on key cities. So, Tier 1 cities, we will operate ourselves; Tier 2 cities, we will operate some ourselves and some with partners; and in Tier 3 cities, we typically let partners operate those, where it’s a little bit more difficult and a little bit more challenging based on the lack of scale.

In terms of the partners, do they have the kind of franchise contract where they have to pay a minimum fee, regardless of the sales?

We really don’t operate that way. And I think our partners are not pushed for revenue in that regard. We try to find the best people by city, and we negotiate fairly with them.

Our next question comes from Steven Hill - First Investors.

Any visibility on the timing of the club business in 2008, is it looking back half loaded or front-end loaded, or is it just too early to tell? And then a quick follow-up question on the conversion of Phillips-Van Heusen factory stores. I may be a bit out of date on that, but I thought they were going to convert a few stores in 2007 and in 2008 to Calvin Klein stores, and I just wanted to see how that was coming along, if that’s correct.

First question on club timing, that’s really up to our customers when they want to receive the goods. At this point in time, we’re comfortable that our bookings are within a normal scheme of how they fell out in prior years. So we don’t see anything dramatic at this point in time. In terms of the Phillips-Van Heusen question, are you speaking specifically of Calvin Klein underwear stores that they’re operating for us?

Yes.

At this point, they’ve taken over the three or four that we had opened 18 months ago, and they’re rolling out some stores as we speak. And they have a plan, and hopefully they’re following that plan.

Do they have any other stores other than underwear? Are they looking at jeanswear or is it just underwear that they’re looking at?

Well, I think right now there are eight underwear stores that they are operating. And in terms of their major business, candidly, is in the sportswear end, which includes jeans. And, again, that’s not my business, but the number is well north of 70 stores.

Our next question comes from Carla Casella – JP Morgan. Carla Casella – JP Morgan: You mentioned adding an additional moderate retailer for the intimates business. When would that shipment begin? Or did it already begin in the fourth quarter?

It already began, actually, in the third quarter. Carla Casella – JP Morgan: And then the only women’s line that you mentioned, that we’ll be hearing more details about later, have you already started showing that to retail or have you started taking any orders on that or is that all to come?

We have shown it. We presented this past market. We’re in the process of taking orders right now. The preliminary projections are very, very encouraging. So we’re excited. We’re getting good response around the globe on it. Carla Casella – JP Morgan: And one housekeeping item, depreciation and amortization for the quarter, do you report that?

We do report that, it’s in our filings. The amortization for the quarter was just over $3 million. Our normalized depreciation per quarter is approximately $9 million. Carla Casella – JP Morgan: And then on the swim, you mentioned capacity utilization being down a bit this quarter. Where do you stand on, I guess, a go forward basis? Where would you say your capacity utilization is today? And are you comfortable with that level?

The capacity utilization was a comment on the full year. In the fourth quarter, we actually exited manufacturing. So there won’t be any capacity utilization issues going forward. Carla Casella – JP Morgan: Your bonds are callable this year. Any thoughts on whether you would consider taking those out or leaving them in for long-term as long-term financing?

Well, as we mentioned, we have a very strong balance sheet playing throughout a lot of cash fund 2008. And some of the proceeds from Lejaby, we’ll be using to reduce debt. And we’ll be opportunistic on looking at both, the bonds as well as in terms of paying off the Term B as well as share repurchases.

We have a follow-up question from Todd Slater - Lazard.

With respect to the $97 million corporate overhead line in ‘07 was that continuing?

Yes. That is part of the continuing. There are some reductions with us scaling back, getting rid of some of the discontinued ops, but most of that is in that range, slightly down.

Can you talk about how you plan to manage that line in ’08, and if there’s any way to leverage it?

Our goal is to keep leveraging that. In terms of our businesses, we keep finding ways to leverage shared service. We have a program underway, for instance, in Europe to continue to integrate and leverage that platform where in the past we’ve had accounting done in each individual country by each of the businesses. We’ve been centralizing those as well as other shared service and support functions.

It sounds like there’s some opportunity to leverage that?

Yes, absolutely.

And then, moving over to Calvin Klein jeans, I think your business at Macy’s, I realize it’s not a big piece, but can you just talk about how it’s performing and what might be the plan when Tommy or what you think about Tommy coming in there in the fall as an exclusive?

Well, if you look at the fourth quarter results for department stores and Calvin Klein jeans, our department store business was actually up 17%; on a comparable basis it was up 8%. So we had a very strong fourth quarter and really on par with what happened during the course of the year. On a go-forward basis, we’ve already booked our first half of ‘08. And we’ve had great response from our retail partners. And have booked on a comparable basis on our fashion product well above 10%, closer to 15% comparable increase. So we’re very comfortable with the way our partners are responding to the Calvin Klein jeans product based on historical performance and based on the value of the product on a go-forward basis. As it relates to our competition, I really haven’t viewed their lines specifically, but like anything else in our business, good competition always makes you better. So we’re happy that we have appropriate competition, but are very excited about what we have to offer the customer. And believe we have a very big opportunity for growth through the course of the year.

But have they given any indication as to what they’re thinking in terms of fall receipt plans?

No. We haven’t opened the market. Our market opens in the middle of March, first week of March, and we’ll have a better handle on what that will be then.

And how much does Macy’s represent in the Calvin Klein business now? How big is it or small is it or manageable is it?

Well, for total company, Todd, no account represents 10% of our business. I think all department stores represent about 15%. Having said all that, Macy’s and Calvin Klein have had a phenomenal relationship, and as you can recall, the September event where every window at Macy’s and every awning was converted to Calvin Klein and Calvin Klein product. So the relationship, I think, could not be stronger. And we’re really thriving in that environment with Macy’s right now. So it’s a great partnership. They’re doing everything they can to drive Calvin Klein business. And I think together we’re doing our utmost to maximize the opportunities.

We also have a follow-up question from Steven Hill from First Investors.

Larry, the FIFO sourcing benefits, is there a chance those might continue beyond the first half of 2008? Is there a chance that will happen, or is it too soon to tell?

Well, as we’ve said, the sourcing benefits that we’ve received in ‘07 that because of the way we account for the inventory, we’ll still see those benefits in the early portion of 2008 just because of, as you’ve mentioned, the FIFO basis we’re on. We still see some additional opportunities for leverage sourcing, but it is getting much more difficult. We are still looking for improvements in gross margin between sourcing the international growth and the direct to consumer growth. So we’ll see gross margin continue, and that will help us achieve that double-digit operating margin in ‘08 and forward.

You’re planning to consolidate distribution centers in Europe down to one. If I’ve got that right, when would that start?

We are currently under evaluation of the timing of such. It does take some time to plan and organize such. And so we’ll keep you posted on that front.

Not sure we’re getting down to one we were operating four. And I think that we don’t have one large enough for us right now. So, but, clearly, there’s synergies to be had.

And our last question comes from Susan Sansbury from Miller Tabak.

I think I missed something from Frank’s recent comment with respect to bookings in the first half for Calvin Klein jeans. Frank, did you say they were up 15% to 16%?

Yes. I’d like to put that in perspective for you. Our fashion denim business books the first half, books upfront in market. And those fashion bookings, which are 50% of our business, were up by 15% in both men’s and women’s business combined.

So just by simple use of math the total bookings would be up 7%, 8. What about the other half of backlog?

The other half is a combination of replenishment product and fashion insertions that we put in during the course of the season.

To the best of your knowledge, was that also booked up?

Well, the replenishment happens on a weekly basis.

But you consider continue to experience positive sales growth?

Yes.

My question relates to swimwear. As you’re reporting it, you lost money last year, I believe Larry, $33.3 million? Is the swimwear growth expected to breakeven or make money in 2008?

I think Susan that you’re including all the restructuring and various items. As we’ve said, if you look on a continued basis for the full year, the swimwear group’s operating margin was approximately 9.9% to 10%.

So you expect to at least make that same type of margin even though you’re going to spend money on marketing, incremental marketing money on the Olympics.

Yes. We still have opportunities. Despite the incremental spend on marketing we still have opportunity to improve just the way we execute in swimwear to turn out a better operating margin on the bottom line.

What type of top line growth do you think is reasonable to assume for swimwear, Helen?

Very low single digit.

That ends our Q&A session. I’d like to turn the floor back over to management for any closing comments.

Thanks for joining us this afternoon. We look forward to updating you on our progress when we report first quarter results. Thanks. Have a great evening.