Restructuring and other items in the current year include the costs of (i) exiting the wholesale footwear business and relocating the Company's retail footwear operations, (ii) closing underperforming retail outlet stores and (iii) debt extinguishment associated with the Company's debt refinancing in February, 2004. Restructuring and other items in the prior year include (i) the operating losses of certain Calvin Klein businesses which the Company has closed or licensed, and associated costs in connection therewith and (ii) the costs of certain duplicative personnel and facilities incurred during the integration of various logistical and back office functions.

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The 42% improvement in first quarter net income, excluding restructuring and other items, was due to earnings increases in both of the Company's operating segments. Operating earnings in the Apparel and Related Products segment increased 37% over the prior year as each of the Company's divisions registered earnings improvement. The Company's wholesale apparel business continued its strong sales and earnings growth, aided by excellent performance in dress shirts. Positive comp store performance across the Company's retail businesses for the quarter continued the favorable trends begun during last year's Christmas season and, coupled with clean inventories, yielded operating income improvement. Operating earnings in the Calvin Klein Licensing segment increased 7% over the prior year as the Company's growth initiatives for that brand began to take hold. (Please see Consolidated Income Statements and Segment Data below for a reconciliation of GAAP amounts to non-GAAP financial measures.)

Total revenues in the first quarter decreased 1% to $381.3 million from $383.7 million in the prior year. The prior year's first quarter includes $20.5 million of revenues from the wholesale footwear business and $6.0 million from the Calvin Klein wholesale collection apparel business. These businesses were exited as of the end of fiscal 2003. Excluding these businesses, revenues from ongoing operations increased 7% over the prior year. This increase was driven by revenue growth in the Company's wholesale apparel, retail outlet and Calvin Klein licensing businesses.

Commenting on these results, Bruce J. Klatsky, Chairman and Chief Executive Officer, noted that "We are extremely pleased with our first quarter results. The continued strong revenue and earnings growth exhibited by our wholesale apparel and Calvin Klein licensing businesses, combined with earnings increases in our retail outlet businesses, enabled our earnings to be well ahead of our previous earnings guidance. In addition, we ended the quarter with a $78 million improvement in our net debt position over the prior year as our strategic initiatives, which include exiting the wholesale footwear business and the closing of underperforming outlet stores across our retail chains, helped contribute to a 15% decrease in receivables and a 23% decrease in inventories compared with the prior year."

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Mr. Klatsky continued, "Our focus remains on maximizing the growth opportunities of the Calvin Klein brands and our existing wholesale dress shirt and sportswear businesses. The Calvin Klein better women's sportswear line, licensed to a joint venture formed by Kellwood and GAV, has received excellent response and sales have been strong since its launch in March. Similarly, our bookings for the launch of the Calvin Klein men's better sportswear line for Fall 2004 continue to exceed our initial plans. We are also excited about our three new dress shirt licensing arrangements with BCBG Max Azria, MICHAEL Michael Kors and Chaps which will all principally begin shipping in late 2004."

Mr. Klatsky concluded, "Given our first quarter results, we are raising our 2004 earnings per share guidance (excluding restructuring and other items) to a range of $1.13 to $1.18, with second quarter earnings in the range of $0.24 to $0.25 per share. Including restructuring and other items, we anticipate that GAAP earnings per share in 2004 will be in the range of $0.53 to $0.58, with second quarter earnings in the range of $0.17 to $0.18 per share. Total revenues in 2004 are expected to be $1.610 billion to $1.625 billion, or an increase of approximately 1.75% - 2.75% over 2003. Revenues for 2004 are being impacted by the exiting of the wholesale footwear business and the retail store closing program." (Please see reconciliation of GAAP to non-GAAP earnings per share estimates at the end of this press release.)

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1. The Company believes presenting its results excluding restructuring and other items provides useful information to investors because many investors make decisions based on the ongoing operations of an enterprise. The Company believes that investors often look at ongoing operations as a measure of assessing performance and as a basis for comparing past results against future results. The Company uses its results excluding restructuring and other items to discuss its business with investment institutions, the Company's Board of Directors and others. Such results are also the basis for certain incentive compensation calculations.

2. The Company computed its basic and diluted net income (loss) per common share as follows:

(In thousands, except per share data)

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3. EBITDA is a "non-GAAP financial measure" which represents net income (loss) before net interest expense, income taxes, depreciation and amortization. EBITDA is provided because the Company believes it is an important measure of liquidity. The Company uses EBITDA in connection with certain covenants relating to the Company's outstanding debt. You should not construe EBITDA as an alternative to net income (loss) as an indicator of the Company's operating performance, or as an alternative to cash flows from operating activities as a measure of the Company's liquidity, as determined in accordance with generally accepted accounting principles. The Company may calculate EBITDA differently than other companies. Net income (loss) is reconciled to EBITDA as follows:

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The Company's 2004 full year EBITDA estimate is $152.0-$156.0 million, excluding restructuring and other items relating to licensing the Bass brand for wholesale distribution to Brown Shoe Company and exiting the wholesale footwear business and relocating the Company's retail footwear operations, closing underperforming retail outlet stores and debt extinguishment costs associated with its recent bond refinancing. EBITDA is a "non-GAAP financial measure" which represents net income (loss) before net interest expense, income taxes, depreciation and amortization. EBITDA is provided because the Company believes it is an important measure of liquidity. The Company uses EBITDA in connection with certain covenants relating to the Company's outstanding debt. EBITDA should not be construed as an alternative to net income (loss) as an indicator of the Company's operating performance, or as an alternative to cash flows from operating activities as a measure of the Company's liquidity, as determined in accordance with generally accepted accounting principles. The Company may calculate EBITDA differently than other companies. Set forth below is the Company's reconciliation of net income (loss) to EBITDA of $154.0 million which is the midpoint of the range provided. It is not possible to provide a reconciliation for the entire range without unreasonable effort due to the number of elements which comprise EBITDA, including net income (loss), income taxes, net interest expense and depreciation and amortization, each of which is subject to a range of estimates.

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