Kellwood Co · 10-K · For 2/3/07

Filed On 3/22/07 4:15pm ET   ·   SEC File 1-07340   ·   Accession Number 1068800-7-804

Annual Report   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         72    400K 
 2: EX-10.7     Material Contract                                      7     27K 
 3: EX-10.21    Material Contract                                     13     38K 
 4: EX-21       Subsidiaries of the Registrant                         1      6K 
 5: EX-23       Consent of Experts or Counsel                          1      5K 
 6: EX-24       Power of Attorney                                      1      6K 
 7: EX-31.1     Certification per Sarbanes-Oxley Act (Section 302)     2±     8K 
 8: EX-31.2     Certification per Sarbanes-Oxley Act (Section 302)     2±     8K 
 9: EX-32       Certification per Sarbanes-Oxley Act (Section 906)     1      5K 

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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

FORM 10-K 

X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES         
---    EXCHANGE ACT OF 1934                                                     

For the fiscal year ended February 3, 2007                        
OR  
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---    EXCHANGE ACT OF 1934                                                     

For the transition period from               to                   
                          -------------    -------------

Commission File Number: 1-7340                                                  

KELLWOOD COMPANY  
------------------------------------------------------------------------------- 
(Exact name of registrant as specified in its charter)  

 DELAWARE                                 36-2472410
-------------------------------------     ------------------------------------- 
(State or other jurisdiction                      (IRS Employer         
of incorporation or organization)               Identification Number)      

600 KELLWOOD PARKWAY, P.O. BOX 14374, ST. LOUIS, MO                       63178 
---------------------------------------------------                  ---------- 
    (Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code               (314) 576-3100 

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:                     

                                   Name of each exchange
Title of each class                        on which registered          
-------------------------------            -----------------------      
Common Stock, par value $0.01              New York Stock Exchange      
Preferred Stock Purchase Rights            New York Stock Exchange      

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  None               

Indicate by check mark if the registrant is a well-known seasoned issuer, as    
defined in Rule 405 of the Securities Act. Yes [ ] No [X]                       

Indicate by check mark if the registrant is not required to file reports        
pursuant to Section 13 of Section 15(d) of the Exchange Act. Yes [ ] No [X]     

Indicate by check mark whether the registrant (1) has filed all reports         
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months (or for such shorter period that the        
registrant was required to file such reports), and (2) has been subject to      
such filing requirements for the past 90 days. Yes [X] No [ ]                   

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-K is not contained herein, and will not be contained, to the    
best of registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-K or any amendment to     
this Form 10-K. [ ]                                                             

Indicate by check mark whether the registrant is a large accelerated filer, an  
accelerated filer or a non-accelerated filer. See definition of "accelerated    
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check    
one):                                                                           

Large Accelerated Filer [ ]   Accelerated Filer [X]    Non-Accelerated Filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined    
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]                              

The estimated aggregate market value of the Common Stock held by nonaffiliates  
on July 29, 2006 (based upon the closing price of these shares on the New York  
Stock Exchange) was approximately $685,275,914.                                 

Number of shares of Common Stock, par value $0.01, outstanding at March 10,     
2007: 25,913,470.                                                               

DOCUMENTS INCORPORATED BY REFERENCE                                             
Certain portions of the registrant's Proxy Statement for Annual Meeting of      
Shareowners to be held on June 7, 2007 are incorporated in Part III of this     
Form 10-K.                                                                      

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                                          KELLWOOD COMPANY                                           
                            FORM 10-K FOR THE YEAR ENDED FEBRUARY 3, 2007                            
                                          TABLE OF CONTENTS                                          

                                                                                                     
PART I                                                                                               

       Item 1.    Business..........................................................................3
       Item 1A.   Risk Factors......................................................................6
       Item 1B.   Unresolved Staff Comments........................................................11
       Item 2.    Properties.......................................................................12
       Item 3.    Legal Proceedings................................................................12
       Item 4.    Submission of Matters to a Vote of Security Holders..............................12

PART II                                                                                              

       Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer      
                    Purchases of Equity Securities.................................................13
       Item 6.    Selected Financial Data..........................................................14
       Item 7.    Management's Discussion and Analysis of Financial Condition and Results            
                    of Operations..................................................................15
       Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.......................32
       Item 8.    Financial Statements and Supplementary Data......................................34
                    Report of PricewaterhouseCoopers LLP, Independent Registered Public              
                      Accounting Firm on Consolidated Financial Statements and                       
                      on Internal Control over Financial Reporting.................................35
                    Consolidated Statements of Operations..........................................37
                    Consolidated Balance Sheets....................................................38
                    Consolidated Statements of Cash Flows..........................................39
                    Consolidated Statements of Stockholders' Equity................................40
                    Notes to Consolidated Financial Statements.....................................41
       Item 9.    Changes in and Disagreements with Accountants on Accounting and                    
                    Financial Disclosure...........................................................64
       Item 9A.   Controls and Procedures..........................................................64
       Item 9B.   Other Information................................................................65

PART III                                                                                             

       Item 10.   Directors, Executive Officers, and Corporate Governance..........................65
       Item 11.   Executive Compensation...........................................................66
       Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related         
                    Stockholder Matters............................................................66
       Item 13.   Certain Relationships and Related Transactions and Director Independence.........66
       Item 14.   Principal Accountant Fees and Services...........................................66

PART IV                                                                                              

       Item 15.   Exhibits and Financial Statement Schedules.......................................67

SIGNATURES.........................................................................................71

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PART I                                                                          
------                                                                          

ITEM 1.  BUSINESS                                                               
We are marketers of women's and men's sportswear, infant apparel and            
recreational camping products. We market branded as well as private label       
products and market to all channels of distribution with product specific to    
the particular channel.                                                         

Our fiscal year ends on the Saturday nearest January 31. References to our      
fiscal years represent the following:                                           

FISCAL YEAR                   REPRESENTS THE 52 WEEKS ENDED         
-----------                   -----------------------------         
2004                          January 29, 2005                      
2005                          January 28, 2006                      

FISCAL YEAR                   REPRESENTS THE 53 WEEKS ENDED         
-----------                   -----------------------------         
2006                          February 3, 2007                      

(a) We and our subsidiaries are marketers of apparel and consumer soft goods.   
We specialize in branded as well as private label products, and market to all   
channels of distribution with product specific to a particular channel. Most    
of our products are purchased from foreign contract manufacturers. Our Smart    
Shirts operation, discussed below, manufactures its own products.               

Kellwood Company was founded in 1961 as the successor by merger of fifteen      
independent suppliers to Sears. Beginning in 1985, we implemented a business    
strategy to expand our branded label products, broaden our customer base,       
increase our channels of distribution and further develop our global product    
sourcing capability. As a result of this strategy, we have redirected our       
focus from primarily the manufacturing of private label apparel and home        
fashions for Sears to a marketing-driven emphasis on branded apparel and        
related soft goods. Our strategy has expanded our branded label products,       
diversified our customer base, broadened our channels of distribution and       
further developed our global product sourcing capabilities. Also as part of     
this strategy, we have acquired 26 domestic companies or businesses since       
1985. The following companies were acquired since 2001:                         

  COMPANY NAME                                       DATE OF ACQUISITION
  --------------------------------------             -------------------
o  HOLLYWOULD, Inc.                                December 2006    
o  CRL Group, LLC (Vince)                          October 2006     
o  Phat Fashions, LLC/Phat Licensing, LLC          February 2004    
o  Briggs New York Corp.                           February 2003    
o  Gerber Childrenswear, Inc.                      June 2002        

These companies are principally marketers of branded apparel. In addition to    
our domestic acquisitions, in the early 1980's, we acquired Smart Shirts        
Limited (Smart Shirts) of Hong Kong, a leading shirt manufacturer in the Far    
East. Since its acquisition, Smart Shirts has diversified its manufacturing     
capabilities from its principal base of Hong Kong to China, Sri Lanka and the   
Philippines.                                                                    

(b) The information required by this Item constitutes part of our 2006          
Consolidated Financial Statements, under the caption "Industry Segment and      
Geographic Area Information," in Note 14 to Consolidated Financial Statements,  
which information is included in Item 8 to this Form 10-K, which information    
is incorporated herein by reference.                                            

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(c) We and our subsidiaries are principally engaged in the apparel and related  
soft goods industry. Our products are manufactured primarily in Asia.           

  (i)    Our divisions are aggregated into three major consumer market
           product groupings along with General Corporate, which represent
           our four reportable segments. The three major consumer segments
are as follows:                                     

             o      WOMEN'S SPORTSWEAR designs, merchandises and sells women's
                   sportswear sold through leading retailers in all channels
                  of distribution. Product lines include blazers, dresses,
                 sweaters, blouses, vests, other tops, skirts, pants and
                     skorts. The business is primarily branded goods sold at the
                popular-to-moderate price points, but the segment does
                 include some better-to-bridge lines - upper price point
                  women's sportswear sold principally to specialty stores,
                 department stores and catalog houses. A partial list of
                    such brands we own are Sag Harbor(R), Koret(R), Dorby(TM),
                   My Michelle(R), Briggs New York(R) (Briggs) and Vince(R).
                    Calvin Klein, XOXO(R), Liz Claiborne(R) Dresses and Suits,
                    O Oscar and David Meister(R) are Women's Sportswear brands
           sold under licensing agreements. Sales of Women's
          Sportswear accounted for 62%, 58% and 56% of our
                  consolidated revenue from continuing operations in 2004,
2005 and 2006, respectively.          

         o      MEN'S SPORTSWEAR designs, manufactures and sells men's
                woven and knit shirts, pants and jeans sold to leading
                    department stores, catalog houses and national chains. The
                 business is primarily private label but also includes a
               number of branded programs such as Slates(R) business
                    casual shirts, sweaters and tops, Nautica(R), Claiborne(R)
                   and Dockers(R) dress shirts and Phat Farm(R) and Northern
                  Isles(R) sportswear. Sales of Men's Sportswear accounted
               for 24%, 26% and 27% of our consolidated revenue from
                     continuing operations in 2004, 2005 and 2006, respectively.

          o      OTHER SOFT GOODS designs, merchandises and sells infant
                apparel and recreation products (tents, sleeping bags,
                    backpacks and related products). The business is primarily
                    branded goods including Kelty(R) and Sierra Designs(R) for
                     recreation products and Gerber(R) for infant apparel. Sales
                   of Other Soft Goods accounted for 14%, 16% and 17% of our
                  consolidated revenue from continuing operations in 2004,
2005 and 2006, respectively.          

    (ii)   We anticipate no significant change in products or new industry
         segments, which would require a material investment. However,
  business acquisitions and new brands (either developed
         internally or through license agreements) within all three of
          our consumer market segments are continually being considered.
         Overall, it is anticipated that external and internal demands
         will generate increasing requirements for capital investment.

    In 2003 and 2004 we entered into several major licensing
   agreements, including Calvin Klein and IZOD for women's
           sportswear, XOXO(R) for junior's sportswear and dresses and Liz
            Claiborne(R) for women's dresses and suits. In 2004, we acquired
            Phat Fashions, LLC and Phat Licensing, LLC (together referred to
      as Phat). Phat is a licensor of apparel for men, women and
     children, athletic shoes and accessories through the Phat
            Farm(R) and Baby Phat(R) brands. Part of the purchase was Phat's
          option to buyout the license from the menswear licensee, which
        we exercised shortly after the purchase. In 2006, we did the
       following: entered into an amended agreement under which we
           extended the Calvin Klein women's better sportswear license for
          North America; were granted the ck Calvin Klein women's bridge
       sportswear license for North America; agreed to re-launch O
    Oscar, an Oscar de la Renta Company, as a better women's
     sportswear collection exclusively at Macy's; extended the
    XOXO(R) license for junior's sportswear and dresses; and
    discontinued the New Campaign and IZOD operations, which
            resulted in the termination of the related licensing agreements.

    (iii)  We purchase finished goods from numerous contract manufacturers
       and to a lesser extent raw materials directly from numerous
        textile mills and yarn producers and converters. We have not
     experienced difficulty in obtaining finished goods or raw
      materials essential to our business in any of our business
segments.                                           

       (iv)   We are the owner of certain trade names essential to our business.
       We also license certain trade names in each of our business
        segments having various terms, which expire at various times
          through 2012. Further information about our trade names is set
          forth in our 2006 Consolidated Financial Statements, under the
          caption "Industry Segment and Geographic Area Information," in
              Note 14 to Consolidated Financial Statements, which information is
included in Item 8 to this Form 10-K.               
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(v)    Although our various product lines are sold on a year-round
      basis, the demand for specific styles is seasonal. Women's
           Sportswear products are generally sold at the beginning of each
            of the retail selling seasons including spring, summer, fall and
            holiday. Sales of Men's Sportswear and Other Soft Goods are also
         dependent, although to a lesser extent, on the retail selling
seasons.                                            

   (vi)   Consistent with the seasonality of specific product offerings,
          we carry necessary levels of inventory to meet the anticipated
delivery requirements of our customers.             

(vii)  Customers that accounted for more than ten percent of our  
            consolidated net sales during 2006 and the related sales amounts
are as follows:                                     

                   Percent of Sales            Net Sales
                    ------------------         -------------
    Wal-Mart                12%                $     222,893
    Kohl's                  11%                $     201,493

       Sales to Wal-Mart occurred in our Women's Sportswear, Men's
     Sportswear and Other Soft Goods segments. Sales to Kohl's
   occurred in our Women's Sportswear and Men's Sportswear
           segments. We believe that the relationship with these customers
will continue into the foreseeable future.          

 (viii) We do not believe that backlog is a meaningful or a material
          indicator of sales that can be expected for any period. All of
            our backlog is expected to be filled within 12 months, but there
          can be no assurance that the backlog at any point in time will
     translate into sales in any particular subsequent period.

    (ix)   Contracts or subcontracts with the government are not material.

    (x)    We have substantial competition from numerous manufacturers and
          marketers, but accurate statistics relative to the competitive
      position of our products and brands are not available. Our
         ability to compete depends principally on styling, service to
        the retailer, continued high regard for our brands and trade
         names and price. Our competitors include, among others, Jones
            Apparel Group Inc., Liz Claiborne Inc., Polo Ralph Lauren Corp.,
Tommy Hilfiger Group and V.F. Corporation.          

  (xi)   We have a continuing program for the purpose of improving our
      production machinery and products, which includes consumer
        research and advertising programs. We are not engaged in any
          material customer-sponsored research and development programs.
          The amount spent on research and development activities during
2004, 2005 and 2006 was not material.               

   (xii)  In the opinion of management, there will be no material effect
            on us resulting from compliance with any federal, state or local
         provisions, which have been enacted or adopted regulating the
    discharge of materials into the environment or otherwise
relating to the protection of the environment.      

(xiii) At the end of 2006, we had approximately 30,000 employees. 
    Substantially all of the work force is non-union, and we
         consider our relations with our employees to be satisfactory.

(d)    Our Smart Shirts operations in the Men's Sportswear segment operate a    
   number of foreign manufacturing operations. We have no other material
foreign manufacturing operations and our foreign customers are not
  material. The sales, operating profit and net assets attributable to
each segment are set forth under the caption "Industry Segment and
   Geographic Area Information" in Note 14 to the Consolidated Financial
    Statements, which information is included in Item 8 to this Form 10-K.
   Smart Shirts' operations are included in the Men's Sportswear segment
 and comprise 84% of sales and 87% of net assets from the continuing
     operations of this segment for 2004; 84% of sales and 85% of net assets
 from the continuing operations of this segment for 2005; and 85% of
sales and 97% of net assets from the continuing operations of this
  segment for 2006. Almost all of Smart Shirts' net assets are located
     outside of the United States. Almost all of Smart Shirts' sales were in
the United States in 2004, 2005 and 2006. Diversification of Smart
   Shirts' manufacturing capacity to various countries helps to mitigate
these risks.                                                      

Because approximately 77% of our products are sourced from contract             
manufacturers, primarily in the Eastern Hemisphere, we established Kellwood     
Global Limited (KGL) in 2002, a Far Eastern sourcing infrastructure based in    
Hong Kong. KGL provides sourcing only to Kellwood divisions and does not have   
significant assets.                                                             

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(e) We maintain a company website at www.kellwood.com. We make available, free  
of charge through the website, our annual report on Form 10-K, quarterly        
reports on Form 10-Q, and current reports on Form 8-K and amendments to those   
reports as soon as reasonably practicable after such reports are filed with or  
furnished to the Securities and Exchange Commission (SEC). Information          
relating to our corporate governance, including the Corporate Governance        
Committee Charter, Compensation Committee Charter, Audit Committee Charter and  
Corporate Governance Principles, is available at our website within the "About  
Kellwood" section, under the caption "Corporate Governance" and is also         
available in print to any shareowner who requests it.                           

ITEM 1A.  RISK FACTORS                                                          

CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS                     
-----------------------------------------------------------                     
This Form 10-K contains statements which, to the extent they are not            
statements of historical or present fact, constitute "forward-looking           
statements" within the meaning of the Securities Act of 1933, the Securities    
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.  
These forward-looking statements represent our expectations or beliefs          
concerning future events and are based on various assumptions and subject to a  
wide variety of risks and uncertainties. Although we believe that our           
expectations reflected in the forward-looking statements are reasonable, we     
cannot and do not give any assurance that such expectations will prove to be    
correct.                                                                        

The reader is also directed to our periodic filings with the Securities and     
Exchange Commission for additional factors that may impact our results of       
operations and financial condition.                                             

The words "believe", "expect", "will", "estimate", "project", "forecast",       
"planned", "should", "anticipate" and similar expressions may identify          
forward-looking statements. Additionally, all statements other than statements  
of historical facts included in this Form 10-K are forward-looking.             

Forward-looking statements are not guarantees, as actual results could differ   
materially from those expressed or implied in forward-looking statements. We    
specifically disclaim any obligation to publicly update, modify, retract or     
revise any forward-looking statements, whether as a result of new information,  
future events or otherwise. All forward-looking statements contained herein,    
the entire contents of our website, and all subsequent written and oral         
forward-looking statements attributable to us or persons acting on our behalf,  
are expressly qualified in their entirety by this cautionary statement.         

Our forward-looking statements are based on certain assumptions, and our        
operations are subject to various risks and uncertainties. Any one of these     
factors or any combination of these factors could materially affect the         
results of our operations and cause actual results to differ materially from    
our expectations.                                                               

Our financial condition and performance are subject to various risks and        
uncertainties, including the risk factors described below. We may amend or      
supplement the risk factors from time to time by other reports that are filed   
with the SEC in the future.                                                     

INTENSE COMPETITION IN THE APPAREL INDUSTRY COULD REDUCE OUR SALES AND          
PROFITABILITY.                                                                  

As an apparel company, we face competition on many fronts including the         
following:                                                                      

o      establishing and maintaining favorable brand recognition;  

o      developing products that appeal to consumers;              

o      pricing products appropriately; and                        

o      obtaining access to and sufficient floor space in retail   
outlets.                                            

Competition in the apparel industry is intense and is dominated by a number of  
very large brands, many of which have greater financial, technical and          
marketing resources, greater manufacturing capacity and more extensive and      
established customer relationships than we do. The competitive responses        
encountered from these larger, more established apparel companies may be more   
aggressive and comprehensive than anticipated, and we may not be able to        
compete effectively. The aggressive and competitive nature of the apparel       
industry may result in lower prices for our products and decreased gross        
profit margins, either of which may materially adversely affect sales and       
profitability.                                                                  

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OUR BUSINESS WILL SUFFER IF WE FAIL TO CONTINUALLY ANTICIPATE FASHION TRENDS    
AND CUSTOMER TASTES.                                                            

Customer tastes and fashion trends can change rapidly. We may not be able to    
anticipate, gauge or respond to these changes within a timely manner. If we     
misjudge the market for products or product groups or if we fail to identify    
and respond appropriately to changing consumer demands and fashion trends, we   
may be faced with unsold finished goods inventory, which could materially       
adversely affect expected operating results and decrease sales, gross margins   
and profitability.                                                              

The apparel industry has relatively long lead times for the design and          
production of products. Consequently, we must in some cases commit to           
production in advance of orders based on forecasts of customer and consumer     
demand. If we fail to forecast demand accurately, we may under-produce or       
over-produce a product and encounter difficulty in filling customer orders or   
in liquidating excess inventory. Additionally, if we over-produce a product     
based on an aggressive forecast of demand, retailers may not be able to sell    
the product and cancel future orders or require retrospective price             
adjustments. These outcomes could have a material adverse effect on sales and   
brand image and seriously affect sales and profitability.                       

OUR REVENUES AND PROFITS ARE SENSITIVE TO CONSUMER CONFIDENCE AND SPENDING      
PATTERNS.                                                                       

The apparel industry has historically been subject to cyclical variations,      
recessions in the general economy or uncertainties regarding future economic    
prospects that affect consumer spending habits which could negatively impact    
our business overall, the carrying value of our tangible assets, intangible     
assets and goodwill and specifically sales, gross margins and profitability.    
The success of our operations depends on consumer spending. Consumer spending   
is impacted by a number of factors, including actual and perceived economic     
conditions affecting disposable consumer income (such as unemployment, wages,   
energy costs, etc.), business conditions, interest rates, availability of       
credit and tax rates in the general economy and in the international, regional  
and local markets where our products are sold. Any significant deterioration    
in general economic conditions or increases in interest rates could reduce the  
level of consumer spending and inhibit consumers' use of credit. In addition,   
war, terrorist activity or the threat of war and terrorist activity may         
adversely affect consumer spending, and thereby have a material adverse effect  
on our financial condition and results of operations.                           

THE CONCENTRATION OF OUR CUSTOMERS COULD ADVERSELY AFFECT OUR BUSINESS.         

Our twenty largest customers accounted for approximately 76% of sales in        
fiscal 2006, with the largest customer accounting for 12% of total fiscal 2006  
sales. We do not have long-term contracts with any customers, and sales to      
customers generally occur on an order-by-order basis and are subject to         
certain rights of cancellation and rescheduling by the customer.                

A decision by any of our major customers, whether motivated by competitive      
conditions, financial difficulties or otherwise, to decrease significantly the  
amount of merchandise purchased from us, or to change their manner of doing     
business with us, could substantially reduce revenues and materially adversely  
affect our profitability.                                                       

CONSOLIDATION AND CHANGE IN THE RETAIL INDUSTRY MAY ELIMINATE EXISTING OR       
POTENTIAL CUSTOMERS.                                                            

A number of apparel retailers have experienced significant changes and          
difficulties over the past several years, including consolidation of            
ownership, increased centralization of buying decisions, restructurings,        
bankruptcies and liquidations. During past years, various apparel retailers,    
including some of our customers, have experienced financial problems that have  
increased the risk of extending credit to those retailers. Financial problems   
with respect to any of our customers could cause us to reduce or discontinue    
business with those customers or require us to assume more credit risk          
relating to those customers' receivables, either of which could have a          
material adverse effect on our business, results of operations and financial    
condition.                                                                      

There has been and continues to be merger, acquisition and consolidation        
activity in the retail industry. Future consolidation could reduce the number   
of our customers and potential customers. A smaller market for our products     
could have a material adverse impact on our business and results of             
operations. In addition, it is possible that the larger customers, which        
result from mergers or consolidations, could decide to perform many of the      
services that we currently provide. If that were to occur, it could cause our   
business to suffer.                                                             

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With increased consolidation in the retail industry, we are increasingly        
dependent upon key retailers whose bargaining strength and share of our         
business is growing. Accordingly, we face greater pressure from these           
customers to provide more favorable trade terms. We could be negatively         
affected by changes in the policies or negotiating positions of our customers.  
Our inability to develop satisfactory programs and systems to satisfy these     
customers could adversely affect operating results in any reporting period.     

LOSS OF KEY PERSONNEL COULD DISRUPT OUR OPERATIONS.                             

Our continued success is dependent on the ability to attract, retain and        
motivate qualified management, administrative and sales personnel to support    
existing operations and future growth. Competition for qualified personnel in   
the apparel industry is intense and we compete for these individuals with       
other companies that in many cases have greater financial and other resources.  
The loss of the services of any members of senior management, or the inability  
to attract and retain other qualified personnel could have a material adverse   
effect on our business, results of operations and financial condition.          

THE EXTENT OF OUR FOREIGN SOURCING AND MANUFACTURING MAY ADVERSELY AFFECT OUR   
BUSINESS.                                                                       

For fiscal 2006, approximately 93% of our products were manufactured outside    
the United States. As a result of the magnitude of our foreign sourcing and     
manufacturing, our business is subject to the following risks:                  

     o      uncertainty caused by the elimination of import quotas in China.
       Such quotas have been replaced by safeguard provisions that
          continue to provide limits on importation of apparel on China.
       The operation and effects of these safeguard provisions are
            uncertain and could result in delays in imports and supplies. As
        a result, we will have to monitor and manage our sourcing of
          products and develop alternative sourcing plans, if necessary,
          to alleviate the impact of any anticipated impact of safeguard
provisions;                                         

o      political and economic instability in countries, including 
         heightened terrorism and other security concerns, which could
    subject imported or exported goods to additional or more
    frequent inspections, leading to delays in deliveries or
impoundment of goods;                               

o      imposition of regulations and quotas relating to imports,  
            including quotas imposed by bilateral textile agreements between
the United States and foreign countries;            

o      imposition of increased duties, taxes and other charges on 
imports;                                            

o      significant fluctuation of the value of the dollar against 
foreign currencies;                                 

o      restrictions on the transfer of funds to or from foreign   
countries;                                          

     o      political instability, military conflict, or terrorism involving
     the United States, or any of the many countries where our
   products are manufactured, which could cause a delay in
         transportation, or an increase in transportation costs of raw
materials or finished product;                      

     o      disease epidemics and health related concerns, such as SARS, mad
          cow or hoof and mouth disease outbreaks in recent years, which
          could result in closed factories, reduced workforces, scarcity
            of raw materials and scrutiny or embargoing of goods produced in
infected areas;                                     

     o      reduced manufacturing flexibility because of geographic distance
         between our foreign manufacturers and us, increasing the risk
         that we may have to mark down unsold inventory as a result of
 misjudging the market for a foreign-made product; and

  o      violations by foreign contractors of labor and wage standards
and resulting adverse publicity.                    

If these risks limit or prevent us from selling or manufacturing products in    
any significant international market, prevent us from acquiring products from   
foreign suppliers, or significantly increase the cost of our products, our      
operations could be seriously disrupted until alternative suppliers are found   
or alternative markets are developed, which could negatively impact our         
business.                                                                       

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THE SUCCESS OF OUR LICENSES DEPENDS ON THE VALUE OF THE LICENSED BRANDS.        

Many of our products are produced under license agreements with third parties.  
Similarly, we license some of our brand names to other companies. Our success   
depends on the value of the brands and trademarks that we license and sell.     
Brands that we license from third parties are integral to our business as is    
the implementation of our strategies for growing and expanding these brands     
and trademarks. We market some of our products under the names and brands of    
recognized designers. Our sales of these products could decline if any of       
those designer's images or reputations were to be negatively impacted.          
Additionally, we rely on continued good relationships with both licensees and   
licensors, of certain trademarks and brand names. Adverse actions by any of     
these third parties could damage the brand equity associated with these         
trademarks and brands, which could have a material adverse effect on our        
business, results of operations and financial condition.                        

OUR PROFITABILITY AND EARNINGS COULD BE NEGATIVELY AFFECTED IF SALES OF         
CERTAIN PRODUCTS ARE NOT SUFFICIENT TO OFFSET THE MINIMUM ROYALTY PAYMENTS WE   
MUST PAY WITH RESPECT TO THESE PRODUCTS.                                        

Many of the license agreements we have require significant minimum royalty      
payments. Our ability to generate sufficient sales and profitability to cover   
these minimum royalty requirements is not guaranteed and if sales of such       
products are not sufficient to generate these minimum payments, it could have   
a material adverse effect on our business, results of operations and financial  
condition.                                                                      

OUR COMPETITIVE POSITION COULD SUFFER, IF OUR INTELLECTUAL PROPERTY RIGHTS ARE  
NOT PROTECTED.                                                                  

We believe that our trademarks, patents, technologies and designs are of great  
value. From time to time, third parties have challenged, and may in the future  
try to challenge, our ownership of our intellectual property. We are            
susceptible to others imitating our products and infringing our intellectual    
property rights. Our licensing agreements with more recognized designers may    
cause us to be more susceptible to infringement of our intellectual property    
rights, as some of our brands enjoy significant worldwide consumer recognition  
and generally higher pricing thus creating additional incentive for             
counterfeiters and infringers. Imitation or counterfeiting of our products or   
infringement of our intellectual property rights could diminish the value of    
our brands or otherwise adversely affect our revenues. We cannot assure the     
reader that the actions we have taken to establish and protect our trademarks   
and other intellectual property rights will be adequate to prevent imitation    
of our products by others or to prevent others from seeking to invalidate our   
trademarks or block sales of our products as a violation of the trademarks and  
intellectual property rights of others. In addition, we cannot assure the       
reader that others will not assert rights in, or ownership of, our trademarks   
and other intellectual property rights or in similar marks or marks that we     
license and/or market or that we will be able to successfully resolve these     
conflicts to our satisfaction. We may need to resort to litigation to enforce   
our intellectual property rights, which could result in substantial costs and   
diversion of resources.                                                         

FLUCTUATIONS IN THE PRICE, AVAILABILITY AND QUALITY OF RAW MATERIALS COULD      
CAUSE DELAYS AND INCREASE COSTS.                                                

Fluctuations in the price, availability and quality of the fabrics or other     
raw materials used in our manufactured apparel could have a material adverse    
effect on cost of sales or our ability to meet customer demands. The prices     
for fabrics depend largely on the market prices for the raw materials used to   
produce them, particularly cotton. The price and availability of the raw        
materials and, in turn, the fabrics used in our apparel may fluctuate           
significantly, depending on many factors, including crop yields, weather        
patterns and changes in oil prices. We may not be able to pass higher raw       
materials prices and related transportation costs on to our customers.          

OUR RELIANCE ON INDEPENDENT MANUFACTURERS COULD CAUSE DELAYS AND DAMAGE         
CUSTOMER RELATIONSHIPS.                                                         

We use independent manufacturers to assemble or produce a substantial portion   
of our products. We are dependent on the ability of these independent           
manufacturers to adequately finance the production of goods ordered and         
maintain sufficient manufacturing capacity. The use of independent              
manufacturers to produce finished goods and the resulting lack of direct        
control could subject us to difficulty in obtaining timely delivery of          
products of acceptable quality. We generally do not have long-term contracts    
with any independent manufacturers. Alternative manufacturers, if available,    
may not be able to provide us with products or services of a comparable         
quality, at an acceptable price or on a timely basis. There can be no           
assurance that there will not be a disruption in the supply of our products     
from independent manufacturers or, in the event of a disruption, that we would  
be able to substitute suitable alternative manufacturers in a timely manner.    
The failure of any independent manufacturer to perform or the loss of any       
independent manufacturer could have a material adverse effect on our business,  
results of operations and financial condition.                                  

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Additionally, we require our manufacturers to operate in compliance with        
applicable laws, rules and regulations regarding working conditions,            
employment practices and environmental compliance. We also sometimes impose     
upon our business partners operating guidelines that require additional         
obligations in those areas in order to promote ethical business practices, and  
our staff periodically visits and monitors the operations of our independent    
manufacturers to determine compliance. However, we do not control our           
independent manufacturers or their labor and other business practices. If one   
of our manufacturers violates labor or other laws or implements labor or other  
business practices that are generally regarded as unethical in the United       
States, the shipment of finished products could be interrupted, orders could    
be cancelled, relationships could be terminated and our reputation could be     
damaged. Any of these events could have a material adverse effect on our        
revenues and, consequently, our results of operations.                          

ACQUISITIONS HAVE ACCOUNTED FOR A SIGNIFICANT PORTION OF OUR PAST SALES         
GROWTH, AND WE MAY NOT FIND SUITABLE ACQUISITION CANDIDATES IN THE FUTURE.      

Acquisitions have accounted for a significant portion of our sales growth in    
the past, and we expect to continue to generate a significant portion of our    
sales growth through acquisitions in the future. Our sales growth may be        
adversely affected if we are unable to find suitable acquisition candidates at  
reasonable prices, we are not successful in integrating any acquired            
businesses in a timely manner, or such acquisitions do not achieve anticipated  
results. In addition, future acquisitions could use substantial portions of     
our available cash for all or a portion of the purchase price. We could also    
issue additional securities as consideration for these acquisitions, which      
could cause our stockholders to suffer significant dilution.                    

ACQUISITIONS MAY CREATE TRANSITIONAL CHALLENGES.                                

Our business strategy includes growth through strategic acquisitions. That      
strategy depends on the availability of suitable acquisition candidates at      
reasonable prices and our ability to quickly resolve challenges associated      
with integrating these acquired businesses into our existing business. These    
challenges include:                                                             

 o      integration of product lines, sales forces and manufacturing
facilities;                                         

     o      decisions regarding divestitures, inventory write-offs and other
charges;                                            

o      employee turnover, including key management and creative   
personnel of the acquired businesses;               

o      disruption in product cycles;                              

o      loss of sales momentum;                                    

  o      maintenance of acceptable standards, controls, procedures and
policies;                                           

o      potential disruption of ongoing business and distraction of
management;                                         

   o      impairment of relationships with employees and customers, as a
result of integrating new personnel;                

o      inability to maintain relationships with customers of the  
acquired business;                                  

 o      failure to achieve the expected benefits of the acquisition;

o      expenses of the acquisition; and                           

o      potential unknown liabilities and unanticipated expenses   
associated with the acquired businesses.            

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW AND CERTAIN PROVISIONS IN   
OUR CERTIFICATE OF INCORPORATION AND BY-LAWS MAY DELAY, DEFER OR PREVENT A      
CHANGE IN CONTROL THAT OUR STOCKHOLDERS MIGHT CONSIDER TO BE IN THEIR BEST      
INTERESTS.                                                                      

We are subject to Section 203 of the Delaware General Corporation Law, which,   
subject to certain exceptions, prohibits "business combinations" between a      
publicly-held Delaware corporation and an "interested stockholder" which is     
generally defined as a stockholder who becomes a beneficial owner of 15% or     
more of a Delaware corporation's voting stock during the three-year period      
following the date that such stockholder became an interested stockholder.      
Section 203 could have the effect of delaying, deferring or preventing a        
change in control of the Company that our stockholders might consider to be in  
their best interests.                                                           

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Our certificate of incorporation and bylaws contain provisions that are         
intended to deter coercive takeover practices and inadequate takeover bids by   
making them unacceptably expensive to the raider and to encourage prospective   
acquirers to negotiate with our board of directors rather than to attempt a     
hostile takeover. These provisions include, among others:                       

o      a board of directors that is divided into two classes with 
staggered terms;                                    

  o      elimination of the right of our shareowners to act by written
consent;                                            

o      rules regarding how shareowners may present proposals or   
   nominate directors for election at shareowner meetings;

 o      the right of our board of directors to issue preferred stock
without shareowner approval;                        

   o      a supermajority vote of shareholders for business combinations
              involving a holder of 25% or more of our outstanding common stock;

 o      a supermajority vote of shareowners to remove directors; and

   o      a supermajority vote of shareowners to amend these provisions.

We also have a rights agreement permitting under certain circumstances each     
holder of common stock, other than potential acquirers, to purchase one         
one-hundredth of a share of a newly created series of our Series A              
Junior Preferred Stock at a purchase price of $100 or to acquire additional     
shares of our common stock 50% of the current market price. The rights are not  
exercisable or transferable until a person or group acquires 20% or more of     
our outstanding common stock. The rights are not exercisable, if the            
acquisition is pursuant to a qualified offer for all outstanding shares. The    
agreement is reviewed by our independent directors at least every three years   
to consider whether the maintenance of the agreement continues to be in the     
best interests of our shareowners and us.                                       

We believe these provisions protect our shareowners from coercive or otherwise  
unfair takeover tactics by requiring potential acquirers to negotiate with our  
board of directors and by providing our board of directors with more time to    
assess any acquisition proposal. The provisions are not intended to make        
us immune from takeovers. However, these provisions apply even if the           
offer may be considered beneficial by some shareowners and could delay or       
prevent an acquisition that our board of directors determines is not in the     
best interests of our shareowners and us.                                       

ITEM 1B.  UNRESOLVED STAFF COMMENTS                                             
None.                                                                           

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ITEM 2.  PROPERTIES                                                             
At February 3, 2007, we operated 27 distribution or production facilities       
worldwide. Our operating facilities are primarily owned or leased under         
operating leases that generally contain renewal options. We also operated 83    
retail stores at February 3, 2007, primarily in the Women's Sportswear          
segment. Our retail space is leased under operating leases. We lease our        
corporate office space in St. Louis County, Missouri and New York City, as      
well as showrooms and division office space, a substantial portion of which is  
in New York City.                                                               

WOMEN'S SPORTSWEAR                                                              
This segment currently operates seven warehousing and distribution centers      
totaling approximately 2.1 million square feet including:                       

   o      A 533,000 square foot warehouse and distribution center in the
Los Angeles area;                                   
  o      A multi-tiered 880,000 square foot warehouse and distribution
center in Trenton, Tennessee; and                   
o      A 400,000 square foot warehouse and distribution center in 
Chico, California.                                  

These facilities serve multiple divisions, thereby generating economies of      
scale in warehousing and distribution activities.                               

MEN'S SPORTSWEAR                                                                
This segment currently operates one warehouse and distribution center and       
fourteen manufacturing facilities totaling approximately 1.5 million square     
feet. All of these facilities are operated by our Smart Shirts subsidiary.      
Smart Shirts' subsidiaries manage operations in Hong Kong, Sri Lanka,           
Philippines and China.                                                          

Additionally, this segment shares the warehousing and distribution center in    
Trenton, Tennessee with the Women's Sportswear segment.                         

OTHER SOFT GOODS                                                                
This segment operates four domestic warehousing and distribution facilities     
and one warehousing and distribution facility in Canada totaling approximately  
725,000 square feet.                                                            

In management's opinion, our current facilities generally are well maintained   
and provide adequate capacity for future operations. However, management        
continues to evaluate the need to reposition our portfolio of businesses and    
facilities to meet the needs of the changing markets we serve and to reflect    
the international business environment.                                         

ITEM 3.  LEGAL PROCEEDINGS                                                      
We are currently party to various legal proceedings. While management           
currently believes that the ultimate outcome of these proceedings,              
individually and in the aggregate, will not have a material adverse impact on   
our financial position, cash flows or results of operations, litigation is      
subject to inherent uncertainties.                                              

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    
No matters were submitted to a vote of security holders during the last         
quarter of the year covered by this report.                                     

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PART II                                                                         
-------                                                                         

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND  
ISSUER PURCHASES OF EQUITY SECURITIES                           

                                                        [Enlarge/Download Table]

COMMON STOCK DATA                                                                       
                                   2005                                2006             
                   ----------------------------------  ---------------------------------
                      Stock Price          Dividends     Stock Price         Dividends  
                     High      Low           Paid        High     Low          Paid     
                   --------  --------    ------------  -------- --------   -------------
                                                                                        
First Quarter       $30.55    $24.88        $0.16       $32.69   $23.69        $0.16    
Second Quarter       28.42     23.75         0.16        34.57    24.80         0.16    
Third Quarter        26.11     21.94         0.16        31.98    24.46         0.16    
Fourth Quarter       24.84     21.83         0.16        34.84    29.02         0.16    

Common stock of Kellwood Company is traded on the New York Stock Exchange,      
ticker symbol KWD. At March 10, 2007, there were approximately 2,510            
shareowners of record.                                                          

In July 2005, we announced a stock repurchase program (Stock Repurchase         
Program). The Board of Directors authorized us to repurchase, at our            
discretion, up to ten percent of the outstanding shares of our common stock     
through open market or privately negotiated transactions. The Board of          
Directors has approved the investment of up to $75,000,000 for this purpose.    
During fiscal year 2005, we repurchased 2,218,200 shares at an average price    
of $24.99 per share, totaling $55,430,070. During fiscal year 2006, we          
repurchased 173,600 shares at an average price of $28.83 per share, totaling    
$5,005,669. We made no repurchases during the fourth quarter of 2006. Payments  
made under the Stock Repurchase Program are recorded in Treasury Stock on the   
Consolidated Balance Sheets.                                                    

PERFORMANCE GRAPH                                                               
The following graph compares the performance of Kellwood common shares with     
that of the S&P 500 and S&P 500 Apparel, Accessories & Luxury Goods Indices.    
The graph plots the growth in value of an initial $100 investment over the      
indicated time periods ended January 31, with dividends reinvested.             

                                                        [Enlarge/Download Table]
                                         [GRAPH]                                               

-----------------------------------------------------------------------------------------------
                                                  1/02    1/03    1/04    1/05    1/06    1/07 
-----------------------------------------------------------------------------------------------
                                                                                               
Kellwood Co.                                      $100    $101    $177    $128    $109    $151 
S&P 500 Index                                     $100     $77    $104    $110    $121    $139 
S&P 500 Apparel, Accessories & Luxury Goods                                                    
  Index                                           $100     $85     $99    $126    $138    $177 
-----------------------------------------------------------------------------------------------

<FN>                                                                                           
Note:  Total return assumes reinvestment of dividends                                          

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ITEM 6.  SELECTED FINANCIAL DATA                                                

This section presents our selected historical financial data and certain        
additional information.                                                         

In June 2002, we acquired Gerber Childrenswear, Inc., a manufacturer of baby    
apparel as well as bath and bedding products. In February 2003, we acquired     
Briggs New York Corp., a manufacturer of women's apparel. In February 2004, we  
acquired Phat Fashions, LLC and Phat Licensing, LLC, manufacturers of men's     
apparel. In October 2006, we acquired a women's apparel manufacturer named CRL  
Group, LLC, which we refer to as Vince. In December 2006, we acquired           
HOLLYWOULD, Inc., a manufacturer of women's apparel, shoes and accessories.     

The selected financial data below for the last five fiscal years presents       
consolidated financial information of Kellwood Company and subsidiaries and     
have been derived from our audited consolidated financial statements (dollars   
in thousands, except per share data).                                           

                                                        [Enlarge/Download Table]

                                               2002(1)         2003            2004          2005(3)         2006(3)  
                                           -------------  --------------  -------------  --------------  -------------
                                                                                                                      
Fiscal year ended                             2/1/2003       1/31/2004       1/29/2005      1/28/2006      2/3/2007   

Net sales                                  $   1,706,006  $    1,925,491  $   2,115,252  $    1,962,039  $   1,961,750

Net earnings from                                                                                                     
   continuing operations                          34,861          66,720         62,221          18,756         21,083
Net earnings (loss) from                                                                                              
   discontinued operations (2), (4), (5)           7,149             671          4,115         (57,169)        10,319
                                           -------------  --------------  -------------  --------------  -------------
Net earnings (loss)                        $      42,010  $       67,391  $      66,336  $      (38,413) $      31,402
                                           =============  ==============  =============  ==============  =============

Earnings (loss) per share:                                                                                            
   Basic:                                                                                                             
     Continuing operations                 $        1.42  $         2.52  $        2.26  $         0.70  $        0.82
     Discontinued operations (2), (4), (5)          0.29            0.03           0.15           (2.12)          0.40
                                           -------------  --------------  -------------  --------------  -------------
     Net earnings (loss)                   $        1.71  $         2.54  $        2.41  $        (1.42)         $1.22
                                           =============  ==============  =============  ==============  =============
   Diluted:                                                                                                           
     Continuing operations                 $        1.40  $         2.46  $        2.22  $         0.69  $        0.82
     Discontinued operations (2), (4), (5)          0.29            0.02           0.15           (2.11)          0.40
                                           -------------  --------------  -------------  --------------  -------------
     Net earnings (loss)                   $        1.69  $         2.49  $        2.37  $        (1.42) $        1.21
                                           =============  ==============  =============  ==============  =============

Cash dividends declared per share          $        0.64  $         0.64  $        0.64  $         0.64  $        0.64

Cash                                       $     209,514  $      154,466  $     249,391  $      406,706  $     341,072
Working capital                                  600,161         584,746        720,909         686,378        642,452
Total assets                                   1,251,801       1,282,343      1,569,803       1,512,144      1,514,576

Long-term debt                                   278,115         271,877        469,657         492,028        486,627
Short-term debt                                   26,596           2,743            149          16,349         19,556
Total debt                                       304,711         274,620        469,806         508,377        506,183

Stockholders' Equity                             565,853         636,240        713,524         609,367        635,126
Equity per Diluted Share                           22.75           23.48          25.45           22.49          24.55

<FN>                                                                                                                  
(1) During 2002, we made the decision to implement realignment actions. These                                         
actions decreased 2002 earnings by $14,083 before tax ($9,112 after tax) or                                           
$0.37 per basic share ($0.37 per diluted share).                                                                      

(2) During fiscal 2003, we discontinued our True Beauty by Emme(R) operations                                         
and sold our domestic and European Hosiery operations. As such, these                                                 
operations have been reflected as discontinued operations for all periods                                             
presented.                                                                                                            

(3) During 2005, we announced a Restructuring Plan (the 2005 Restructuring                                            
Plan). The costs associated with the 2005 Restructuring Plan decreased net                                            
earnings from continuing operations and net loss from discontinued operations                                         
for the fiscal year ended January 28, 2006 by $50,366 ($35,508 after tax) or                                          
$1.32 per basic share ($1.31 per diluted share) and $71,948 ($50,508 after                                            
tax) or $1.87 per basic share ($1.86 per diluted share), respectively. Of the                                         
total costs mentioned above for continuing operations, $2,450 ($1,727 after                                           
tax) was a decrease to net sales. The costs (income) associated with the 2005                                         
Restructuring Plan decreased net earnings from continuing operations for the                                          
fiscal year ended February 3, 2007 by $33,632 ($21,423 after tax) or $0.83 per                                        
basic share ($0.83 per diluted share) and increased net earnings from                                                 
discontinued operations for the fiscal year ended February 3, 2007 by $1,852                                          
($1,180 after tax) or $0.05 per basic share ($0.05 per diluted share),                                                
respectively. See Note 2 to Consolidated Financial Statements for further                                             
information.                                                                                                          

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(4) During fiscal 2005, we discontinued our Kellwood New England, several                                             
labels at our Oakland Operation, Private Label Menswear operations and                                                
Intimate Apparel, as part of the 2005 Restructuring Plan. As such, these                                              
operations have been reflected as discontinued operations for all periods                                             
presented. See Note 4 to Consolidated Financial Statements for further                                                
information.                                                                                                          

(5) During fiscal 2006, we discontinued our New Campaign and IZOD operations.                                         
As such, these operations have been reflected as discontinued operations for                                          
all periods presented. See Note 4 to Consolidated Financial Statements for                                            
further information.                                                                                                  

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND        
     RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

FINANCIAL REVIEW                                                                
----------------                                                                
The following discussion is a summary of the key factors management considers   
necessary in reviewing our results of operations, liquidity, capital resources  
and operating segment results. The amounts and disclosures included in          
management's discussion and analysis of financial condition and results of      
operations, unless otherwise indicated, are presented on a continuing           
operations basis. This discussion should be read in conjunction with the        
Consolidated Financial Statements and related notes.                            

Our internal reporting and related ongoing management analyses utilize net      
earnings, earnings per share and gross profit excluding the impairment,         
restructuring and other non-recurring charges and the tax benefit from          
repatriation discussed below as key financial measures. Such items excluding    
the impairment, restructuring and other non-recurring charges and the income    
tax benefit from repatriation are referred to as ongoing. Management evaluates  
each of its divisions using these ongoing measures in order to isolate the      
results of operations by excluding these charges and benefits, which were       
infrequent and non-recurring. Therefore, throughout management's discussion     
and analysis of financial condition and results of operations, there will be a  
discussion of operating results both including and excluding the impairment,    
restructuring and other non-recurring charges. The ongoing amounts that         
exclude the impairment, restructuring and other non-recurring charges are       
non-GAAP measures and may not be comparable to measures used by other           
entities.                                                                       

OPERATING RESULTS                                                               
-----------------                                                               

2005 RESTRUCTURING PLAN                                                         
During the second quarter of 2005, we announced a Restructuring Plan (the 2005  
Restructuring Plan) aimed at advancing our corporate objectives of increasing   
our penetration of consumer lifestyle brands with strong growth and profit      
potential while reducing exposure to smaller volume brands and certain private  
label businesses. The 2005 Restructuring Plan resulted from a thorough          
strategic reassessment of all of our business operations. This reassessment     
was performed in the second quarter of 2005 and was directed by our Chief       
Executive Officer who was named to that position during the second quarter.     
The strategic reassessment focused on our businesses that had experienced       
profitability issues and considered the alignment of the businesses with our    
refreshed strategy, which considered, among other things, market place          
developments affecting the retail landscape and our retail customers.           

The results of operations and impairment, restructuring and other               
non-recurring charges for the businesses sold and shut down are reported as     
discontinued operations. The gains and losses on consummated transactions       
involving the sale of operations are included as part of net gain from          
discontinued operations and are not significant. See Note 4 to Consolidated     
Financial Statements for further information on the operating results and       
financial position of the discontinued businesses.                              

The total 2005 Restructuring Plan provision recorded to date (the second        
quarter of 2005 through the fourth quarter of 2006) related to our reportable   
segments (before tax) is as follows:                                            

                                                                [Download Table]

                      Continuing     Discontinued                 
                      Operations      Operations        Total     
                    --------------  --------------  --------------
                                                                  
Women's Sportswear  $       45,625  $       22,362  $       67,987
Men's Sportswear             1,022          13,197          14,219
Other Soft Goods               702          29,466          30,168
General Corporate           36,649           5,071          41,720
                    --------------  --------------  --------------
   Total            $       83,998  $       70,096  $      154,094
                    ==============  ==============  ==============

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As of February 3, 2007, we have substantially completed the business            
dispositions and shutdown activities contemplated by the 2005 Restructuring     
Plan. We do not anticipate incurring significant expense related to the 2005    
Restructuring Plan in future periods.                                           

For the twelve months ended January 28, 2006, the costs related to the 2005     
Restructuring Plan were recorded as follows:                                    

                                                        [Enlarge/Download Table]

                                                            Fiscal Year ended January 28, 2006                   
                                        -------------------------------------------------------------------------
                                              Continuing               Discontinued                              
                                              Operations                Operations                  Total        
                                        ---------------------     ---------------------     ---------------------
                                                                                                                 
Net sales                               $               2,450     $               2,266     $               4,716
Cost of products sold                                   5,575                    11,751                    17,326
Impairment of goodwill and intangibles                 30,909                    18,657                    49,566
Fixed asset impairment                                  1,850                     6,274                     8,124
Restructuring and other                                                                                          
   non-recurring charges                                9,582                    33,000                    42,582
                                        ---------------------     ---------------------     ---------------------
Total pretax cost                       $              50,366     $              71,948     $             122,314
                                        =====================     =====================     =====================
Total after tax cost                    $              35,508     $              50,508     $              86,016
                                        =====================     =====================     =====================
Diluted loss per share                  $                1.31     $                1.86     $                3.17
                                        =====================     =====================     =====================

For the twelve months ended February 3, 2007, the costs (income) related to     
the 2005 Restructuring Plan were recorded as follows:                           

                                                        [Enlarge/Download Table]

                                                     Fiscal Year ended February 3, 2007                    
                                 ------------------------------------------------------------------------- 
                                       Continuing               Discontinued                               
                                       Operations                Operations                  Total         
                                 ---------------------     ---------------------     --------------------- 
                                                                                                           
Net sales                        $                   -     $              (2,192)    $              (2,192)
Cost of products sold                                -                      (348)                     (348)
Restructuring and other                                                                                    
   non-recurring charges                        33,632                       688                    34,320 
                                 ---------------------     ---------------------     --------------------- 
Total pretax cost                $              33,632     $              (1,852)    $              31,780 
                                 =====================     =====================     ===================== 
Total after tax cost             $              21,423     $              (1,180)    $              20,243 
                                 =====================     =====================     ===================== 
Diluted loss (income) per share  $                0.83     $               (0.05)    $                0.78 
                                 =====================     =====================     ===================== 

A rollforward of the major components of this restructuring and other           
non-recurring charge from January 28, 2006 to February 3, 2007 recorded in      
continuing operations is as follows:                                            

                                                        [Enlarge/Download Table]

                         Accrual as of                                                    Accrual as of
                          January 28,                                                      February 3, 
                             2006          Provision       Reversals       Utilization         2007    
                         -------------  -------------  ---------------   --------------   -------------
                                                                                                       
Inventory and Purchase                                                                                 
  Commitment Reserves    $       2,710  $           -  $           (52)  $       (2,658)  $           -
Contractual Obligations          3,600         31,977                -          (12,435)         23,142
Employee Severance and                                                                                 
  Termination Benefits             520          1,707                -           (1,561)            666
                         -------------  -------------  ---------------   --------------   -------------
Total                    $       6,830  $      33,684  $           (52)  $      (16,654)  $      23,808
                         =============  =============  ===============   ==============   =============

A rollforward of the major components of this restructuring and other           
non-recurring charge from January 28, 2006 to February 3, 2007 recorded in      
discontinued operations is as follows:                                          

                                                        [Enlarge/Download Table]

                         Accrual as of                                                    Accrual as of
                          January 28,                                                      February 3, 
                             2006         Provision       Reversals       Utilization        2007      
                         -------------  -------------  ---------------   --------------   -------------
                                                                                                       
Inventory and Purchase                                                                                 
  Commitment Reserves    $       1,273  $         109  $          (603)  $         (779)  $           -
Sales Allowances                 2,266              -           (2,192)             (74)              -
Contractual Obligations         10,307            927                -           (6,538)          4,696
Employee Severance and                                                                                 
  Termination Benefits           9,783            307             (400)          (5,512)          4,178
                         -------------  -------------  ---------------   --------------   -------------
Total                    $      23,629  $       1,343  $        (3,195)  $      (12,903)  $       8,874
                         =============  =============  ===============   ==============   =============

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Inventory and Purchase Commitment Reserves include provisions to reduce         
inventory and purchase commitments to net realizable values. Sales allowances   
included provisions for anticipated increased deductions taken by customers on  
previous sales for discontinued operations. Contractual Obligations are         
adverse contractual arrangements under which losses are probable and estimable  
and where there is no future economic benefit. These include leases and         
minimum payments under license agreements. Employee Severance and Termination   
Benefits are provided for in accordance with SFAS No. 146, Accounting for       
Costs Associated with Exit or Disposal Activities. Total employee severance     
and termination benefits will be recorded as incurred and relates to            
approximately 1,400 employees.                                                  

The provision for contractual obligations for the twelve months ended February  
3, 2007 includes $19,333 before tax ($12,315 after tax) for estimated future    
payments in connection with contractual obligations. These amounts were         
previously planned to be expensed as they were incurred, in accordance with     
accounting guidance in place when the 2005 Restructuring Plan was announced.    
On November 10, 2005, the Financial Accounting Standards Board (FASB) issued    
Interpretation No. 45-3, Application of FASB Interpretation No. 45 to Minimum   
Revenue Guarantees Granted to a Business or Its Owners, which was applicable    
for certain contractual obligations entered into in the first quarter           
subsequent to its issuance. Contracts under which we were obligated and that    
are part of the 2005 Restructuring Plan were amended during the current year;   
thus, the related obligations have been accrued in accordance with the new      
guidance.                                                                       

Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other    
indefinite-lived intangible assets are no longer amortized but are reviewed     
for impairment at least annually and if a triggering event were to occur in an  
interim period. The 2005 Restructuring Plan was a triggering event that         
required impairment testing of certain divisions' goodwill and intangible       
asset balances. In connection with the 2005 Restructuring Plan and pursuant to  
our policies for assessing impairment of goodwill and long-lived assets,        
$29,279 and $20,287 of goodwill and intangible assets, respectively, including  
trademarks and customer lists, were written off during the second quarter of    
2005. Of these amounts, $9,234 and $9,423 of goodwill and intangible assets,    
respectively, relate to divisions that are included in discontinued             
operations. Included in continuing operations is the write-off of $20,045 and   
$10,864 of goodwill and intangible assets, respectively.                        

DISCONTINUED OPERATIONS                                                         
During the third quarter of 2006, our New Campaign and IZOD women's sportswear  
operations became discontinued. The discontinuance of New Campaign was the      
result of our agreement during the third quarter to transfer the business and   
sell business assets to the licensor. We expect to receive proceeds of          
approximately $9 million and do not anticipate a significant gain or loss from  
this sale. We expect to close this transaction in the first quarter of 2007.    
The discontinuance of our IZOD women's sportswear operation was the result of   
our agreement during the three months ended October 28, 2006 to terminate the   
licensing agreement. We expect to close this transaction in the second quarter  
of 2007 with no significant gain or loss. Prior to being classified as          
discontinued, the New Campaign and IZOD operations were included in the         
Women's Sportswear segment.                                                     

Related to our 2005 Restructuring Plan, as discussed in Note 2 to Consolidated  
Financial Statements, our Private Label Menswear (which does not include our    
Smart Shirts subsidiary) and several labels at our Oakland Operation were       
discontinued during the fourth quarter of 2005. During the third quarter of     
2005, our Intimate Apparel and Kellwood New England operations became           
discontinued. Prior to being classified as discontinued, Kellwood New England   
and the labels at the Oakland Operation were included in the Women's            
Sportswear segment, the Private Label Menswear operations were included in the  
Men's Sportswear segment, and Intimate Apparel was included in the Other Soft   
Goods segment.                                                                  

The results of operations and impairment, restructuring and other               
non-recurring charges for the discontinued operations (as discussed in Note 2   
to Consolidated Financial Statements) are reported as discontinued operations   
for all periods presented. Additionally, assets and liabilities of the          
discontinued operations are segregated in the accompanying Consolidated         
Balance Sheets.                                                                 

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Operating results for the discontinued operations, including all charges        
incurred during the periods presented for the 2005 Restructuring Plan related   
to these divisions as described in Note 2 to Consolidated Financial             
Statements, are as follows:                                                     

                                                        [Enlarge/Download Table]

                                                        Fiscal Year                   
                                     ------------------------------------------------ 
                                           2004            2005             2006      
                                     ---------------  --------------  --------------- 
                                                                                      
Net sales                            $       440,453  $      389,359  $        86,790 
                                     ===============  ==============  =============== 
Impairment, restructuring and other                                                   
  non-recurring charges              $             -  $       57,931  $           688 
                                     ===============  ==============  =============== 
Earnings (loss) before income taxes            6,933         (81,942)           6,392 
Income taxes                                   2,818         (24,773)          (3,927)
                                     ---------------  --------------  --------------- 
Net earnings (loss)                  $         4,115  $      (57,169) $        10,319 
                                     ===============  ==============  =============== 
Diluted earnings (loss) per share    $          0.15  $        (2.11) $          0.40 
                                     ===============  ==============  =============== 

The 2004 income tax rate of 40.6% for discontinued operations differs from our  
overall 2004 tax rate due to foreign losses for which no benefit will be        
obtained. The 2005 income tax benefit rate of 30.2% for discontinued            
operations differs from our overall tax rate due to the non-deductibility of    
certain costs (goodwill impairment) recorded under the 2005 Restructuring       
Plan. The 2006 income taxes for discontinued operations includes a $6,300       
reversal of allowances for tax exposures (related to a 2003 discontinued        
operation) no longer deemed necessary due to finalization of an open tax year.  

Summarized assets and liabilities of the discontinued operations are as         
follows:                                                                        

                                                                [Download Table]

                                                       2005             2006     
                                                  --------------  ---------------
                                                                                 
Cash and cash equivalents                         $          253  $             5
Receivables, net                                          42,806           12,898
Inventories                                               13,481           12,248
Current deferred taxes and prepaid expenses               33,671            3,485
                                                  --------------  ---------------
Current assets of discontinued operations         $       90,211  $        28,636
                                                  ==============  ===============

Property, plant and equipment, net                $        1,648  $         1,190
Goodwill                                                   2,995            2,995
Other assets                                               1,155              251
                                                  --------------  ---------------
Long-term assets of discontinued operations       $        5,798  $         4,436
                                                  ==============  ===============

Accounts payable                                  $       17,924  $         9,363
Accrued liabilities                                       25,660           12,911
                                                  --------------  ---------------
Current liabilities of discontinued operations    $       43,584  $        22,274
                                                  ==============  ===============

Deferred income taxes and other                   $            -  $           347
                                                  --------------  ---------------
Long-term liabilities of discontinued operations  $            -  $           347
                                                  ==============  ===============

The accrued liabilities reflect the discontinued operations classification of   
New Campaign and IZOD and also include charges taken in connection with the     
2005 Restructuring Plan that have not yet been paid and primarily related to    
contractual obligations and employee severance and termination benefits. As     
noted above, the transactions related to the New Campaign and IZOD women's      
sportswear operations are expected to close in the first quarter and second     
quarter of 2007, respectively.                                                  

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FISCAL 2006 VS. 2005                                                            
--------------------                                                            
Summarized comparative financial data for continuing operations for fiscal      
years 2005 and 2006 is as follows (percentages are calculated based on actual   
data, and columns may not add due to rounding):                                 

                                                        [Enlarge/Download Table]

                                                         Amounts                          Percentage of net sales     
                                    -------------------------------------------------  ------------------------------ 
                                                                          Percent                                     
                                         2005              2006           Change            2005            2006      
                                    ---------------  ---------------   -------------   --------------  -------------- 

                                                                                                                      
Net sales                           $     1,962,039  $     1,961,750            0.0%           100.0%          100.0% 
Cost of products sold                     1,559,453        1,547,242           (0.8%)           79.5%           78.9% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Gross profit                                402,586          414,508            3.0%            20.5%           21.1% 
SG&A                                        318,010          322,586            1.4%            16.2%           16.4% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Operating earnings before                                                                                             
   stock option expense,                                                                                              
   amortization and impairment,                                                                                       
   restructuring and other non-                                                                                       
   recurring charges (1)                     84,576           91,922            8.7%             4.3%            4.7% 
Stock option expense                              -            4,345            0.0%             0.0%            0.2% 
Amortization of intangibles                  10,685           10,935            2.3%             0.5%            0.6% 
Impairment, restructuring and                                                                                         
   other non-recurring charges               42,341           33,632          (20.6%)            2.2%            1.7% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Operating earnings                           31,550           43,010           36.3%             1.6%            2.2% 
Interest expense, net                        23,241           15,676          (32.6%)            1.2%            0.8% 
Other income, net                            (1,302)          (1,743)          33.9%            (0.1%)          (0.1%)
                                    ---------------  ---------------   -------------   --------------  -------------- 
Earnings before taxes                         9,611           29,077          202.6%             0.5%            1.5% 
Income taxes                                 (9,145)           7,994         (187.4%)           (0.5%)           0.4% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Net earnings from                                                                                                     
   continuing operations            $        18,756  $        21,083           12.4%             1.0%            1.1% 
                                    ===============  ===============   =============   ==============  ============== 
Effective tax rate                               NM            27.5%                                                  
                                    ===============  ===============                                                  

<FN>                                                                                                                  
NM - Not meaningful                                                                                                   

(1) Operating earnings before stock option expense, amortization and                                                  
impairment, restructuring and other non-recurring charges is a non-GAAP                                               
measure that differs from operating earnings in that it excludes stock option                                         
expense, amortization of intangibles and impairment, restructuring and other                                          
non-recurring charges. Operating earnings before stock option expense,                                                
amortization and impairment, restructuring and other non-recurring charges                                            
should not be considered as an alternative to operating earnings. Operating                                           
earnings before stock option expense, amortization and impairment,                                                    
restructuring and other non-recurring charges is the primary measure used by                                          
management to evaluate our performance, as well as the performance of our                                             
divisions and segments. Management believes the comparison of operating                                               
earnings before stock option expense, amortization and impairment,                                                    
restructuring and other non-recurring charges between periods is useful in                                            
showing the interaction of changes in gross profit and SG&A without inclusion                                         
of stock option expense, amortization of intangibles and impairment,                                                  
restructuring and other non-recurring charges, the changes in which are                                               
explained elsewhere. The subtotal of operating earnings before stock option                                           
expense, amortization and impairment, restructuring and other non-recurring                                           
charges may not be comparable to any similarly titled measure used by another                                         
company.                                                                                                              

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RECONCILIATION OF OPERATING RESULTS - CONTINUING OPERATIONS: The following      
tables provide operating results for ongoing operations, impairment,            
restructuring and other non-recurring charges and income tax repatriation,      
separately, for the fiscal years ended January 28, 2006 and February 3, 2007.   
The tables present this breakdown of our operations in a manner that            
reconciles to our consolidated results as presented in the Consolidated         
Financial Statements. The non-GAAP results of operations for the ongoing        
operations are presented separately from the impairment, restructuring and      
other non-recurring charges and the income tax repatriation in order to         
enhance the user's overall understanding of our current financial performance.  
We believe the non-GAAP adjusted operating results provide useful information   
to both management and investors by excluding non-recurring benefits and        
expenses that we believe are not indicative of our core operating results.      
Operating results for ongoing operations is the primary measure used by         
management to evaluate our performance, as well as the performance of our       
divisions and segments. The non-GAAP financial information should be            
considered in addition to, not as a substitute for or as being superior to,     
operating income, cash flows or other measures of financial performance         
prepared in accordance with GAAP. The following reconciliation and analysis is  
for continuing operations only.                                                 

                                                        [Enlarge/Download Table]
FISCAL YEAR ENDED JANUARY 28, 2006                                                                                    


                                                             Impairment,                                              
                                                          restructuring and                                           
                                           Total             other non-          Income Tax             Ongoing       
                                        Continuing        recurring charges     Repatriation           Operations     
                                    ------------------   ------------------  -------------------  ------------------- 

                                                                                                                      
Net sales                           $        1,962,039   $            2,450  $                 -  $         1,964,489 
Cost of products sold                        1,559,453               (5,575)                   -            1,553,878 
                                    ------------------   ------------------  -------------------  ------------------- 
Gross profit                                   402,586                8,025                    -              410,611 
SG&A                                           318,010                    -                    -              318,010 
Stock option expense                                 -                    -                    -                    - 
Amortization of intangibles                     10,685                    -                    -               10,685 
Impairment, restructuring and                                                                                         
   other non-recurring charges                  42,341              (42,341)                   -                    - 
Interest expense, net                           23,241                    -                    -               23,241 
Other income, net                               (1,302)                   -                    -               (1,302)
                                    ------------------   ------------------  -------------------  ------------------- 
Earnings before taxes                            9,611               50,366                    -               59,977 
Income taxes                                    (9,145)              14,858               13,000               18,713 
                                    ------------------   ------------------  -------------------  ------------------- 
Net earnings from                                                                                                     
   continuing operations            $           18,756   $           35,508  $           (13,000) $            41,264 
                                    ==================   ==================  ===================  =================== 
Effective tax rate                                  NM                29.5%                   NM                31.2% 


FISCAL YEAR ENDED FEBRUARY 3, 2007                                                                                    
                                                             Impairment,                                              
                                                          restructuring and                                           
                                           Total             other non-          Income Tax             Ongoing       
                                        Continuing        recurring charges     Repatriation           Operations     
                                    ------------------   ------------------  -------------------  ------------------- 

                                                                                                                      
Net sales                           $        1,961,750   $                -  $                 -  $         1,961,750 
Cost of products sold                        1,547,242                    -                    -            1,547,242 
                                    ------------------   ------------------  -------------------  ------------------- 
Gross profit                                   414,508                    -                    -              414,508 
SG&A                                           322,586                    -                    -              322,586 
Stock option expense                             4,345                    -                    -                4,345 
Amortization of intangibles                     10,935                    -                    -               10,935 
Impairment, restructuring                                                                                             
   and other non-recurring                                                                                            
   charges                                      33,632              (33,632)                   -                    - 
Interest expense, net                           15,676                    -                    -               15,676 
Other income, net                               (1,743)                   -                    -               (1,743)
                                    ------------------   ------------------  -------------------  ------------------- 
Earnings before taxes                           29,077               33,632                    -               62,709 
Income taxes                                     7,994               12,209                    -               20,203 
                                    ------------------   ------------------  -------------------  ------------------- 
Net earnings from                                                                                                     
   continuing operations            $           21,083   $           21,423  $                 -  $            42,506 
                                    ==================   ==================  ===================  =================== 
Effective tax rate                               27.5%                36.3%                   NM                32.2% 

<FN>                                                                                                                  
NM - Not meaningful                                                                                                   

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INCOME TAXES. In October 2004, the American Jobs Creation Act of 2004 (the      
Act) was signed into law. The Act provides a special one-time deduction of 85%  
of foreign earnings that are repatriated under a domestic reinvestment plan,    
as defined therein. During 2005, we adopted a formal domestic reinvestment      
plan that resulted in the repatriation of $160,000 of foreign earnings. This    
repatriation resulted in a one-time tax benefit of $13,000 recorded during the  
second quarter of 2005 due to the reversal of $23,500 of previously provided    
taxes on foreign earnings, which will not be incurred under the new             
regulations, offset by $10,500 of taxes provided on earnings to be              
repatriated.                                                                    

Our effective tax rates on all charges associated with the 2005 Restructuring   
Plan included in continuing operations for 2005 and 2006 were 29.5% and 36.3%,  
respectively. The 2005 effective rate is less than the U.S. statutory rate of   
35.0% primarily due to the non-deductibility of the goodwill and intangible     
asset impairment recorded under the 2005 Restructuring Plan. The 2006           
effective tax rate differs from the U.S. statutory rate of 35.0% primarily due  
to the provision of state taxes.                                                

CONTINUING OPERATIONS - ONGOING OPERATIONS: The following table provides        
summarized financial data for the fiscal years ended January 28, 2006 and       
February 3, 2007 (amounts based on actual data, therefore columns/rows may not  
add due to rounding). This table presents the same information for the ongoing  
operations as presented in the Reconciliation of Operating Results -            
Continuing Operations shown earlier. The non-GAAP financial information should  
be considered in addition to, not as a substitute for or as being superior to,  
operating income, cash flows or other measures of financial performance         
prepared in accordance with GAAP.                                               

                                                        [Enlarge/Download Table]

                                                         Amounts                          Percentage of net sales     
                                    -------------------------------------------------  ------------------------------ 
                                                                           Percent                                    
                                         2005              2006            Change           2005            2006      
                                    ---------------  ---------------   --------------  --------------  -------------- 

                                                                                                                      
Net sales                           $     1,964,489  $     1,961,750           (0.1%)          100.0%          100.0% 
Cost of products sold                     1,553,878        1,547,242           (0.4%)           79.1%           78.9% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Gross profit                                410,611          414,508            0.9%            20.9%           21.1% 
SG&A                                        318,010          322,586            1.4%            16.2%           16.4% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Operating earnings before                                                                                             
  stock option expense                                                                                                
  and amortization (1)                       92,601           91,922           (0.7%)            4.7%            4.7% 
Stock option expense                              -            4,345              NM             0.0%            0.2% 
Amortization of intangibles                  10,685           10,935            2.3%             0.5%            0.6% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Operating earnings                           81,916           76,642           (6.4%)            4.2%            3.9% 
Interest expense, net                        23,241           15,676          (32.6%)            1.2%            0.8% 
Other income, net                            (1,302)          (1,743)          33.9%            (0.1%)          (0.1%)
                                    ---------------  ---------------   -------------   --------------  -------------- 
Earnings before taxes                        59,977           62,709            4.6%             3.1%            3.2% 
Income taxes                                 18,713           20,203            8.0%             1.0%            1.0% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Net earnings from                                                                                                     
  continuing operations             $        41,264  $        42,506            3.0%             2.1%            2.2% 
                                    ===============  ===============   =============   ==============  ============== 
Effective tax rate                            31.2%            32.2%                                                  

<FN>                                                                                                                  
(1) Operating earnings before stock option expense and amortization is a                                              
non-GAAP measure that differs from operating earnings in that it excludes                                             
stock option expense and amortization of intangibles. Operating earnings                                              
before stock option expense and amortization should not be considered as an                                           
alternative to operating earnings. Operating earnings before stock option                                             
expense and amortization for ongoing divisions is the primary measure used by                                         
management to evaluate our performance, as well as the performance of our                                             
divisions and segments. Management believes the comparison of operating                                               
earnings before stock option expense and amortization between periods is                                              
useful in showing the interaction of changes in gross profit and SG&A                                                 
excluding stock option expense and amortization of intangibles, the change in                                         
which is explained elsewhere. The subtotal of operating earnings before stock                                         
option expense and amortization may not be comparable to any similarly titled                                         
measure used by another company.                                                                                      

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SALES for ongoing operations for 2006 were $1,961,750, decreasing $2,739 or     
0.1% versus 2005. The decline in sales is due to a decrease in orders for       
certain legacy brands and consolidations at retail associated with our Women's  
Sportswear segment. These decreases were partially offset by a growth in sales  
driven by our Smart Shirts' private label and branded businesses and the        
acquisition of Vince.                                                           

GROSS PROFIT for ongoing operations for 2006 was $414,508 or 21.1% of sales,    
increasing $3,897 or 0.2 percentage points of sales versus 2005. The increase   
in gross profit was due to a reduction in markdown expense, a reduction in the  
cost of liquidating surplus and obsolete inventory and improved retail          
performance related to the Women's Sportswear segment.                          

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) for 2006 were $322,586,     
increasing $4,576 or 1.4% versus 2005. SG&A expense as a percentage of sales    
increased from 16.2% for 2005 to 16.4% for 2006. The increase in SG&A expense   
and as a percent of sales is primarily due to the addition of retail stores,    
higher expense in accordance with various incentive programs and the            
acquisitions during 2006.                                                       

STOCK OPTION EXPENSE for 2006 was $4,345. On January 29, 2006, we adopted SFAS  
No. 123(R), Share-Based Payment, requiring the recognition of compensation      
expense in the Consolidated Statement of Operations related to the fair value   
of our employee share-based options. Therefore, stock option expense was not    
recorded in 2005. See Note 9 to Consolidated Financial Statements for           
additional information.                                                         

INTEREST EXPENSE, NET for 2006 was $15,676, decreasing $7,565 or 32.6% versus   
2005. Interest expense for 2006 was $35,073, increasing $2,437 versus 2005.     
Interest income for 2006 was $19,397, increasing $10,002 versus 2005. The       
decline in our interest expense, net for 2006 is due to an increase in          
interest income resulting from a higher average cash balance and higher short   
term interest rates.                                                            

INCOME TAXES. Our effective tax rates on pretax earnings for ongoing            
operations, excluding impairment, restructuring and other non-recurring         
charges and the income tax benefit from repatriation for 2005 and 2006 were     
31.2% and 32.2%, respectively. These rates differ from the U.S. statutory rate  
of 35.0% due to the lower tax rate on foreign earnings that will be             
permanently invested offshore, partially offset by the provision of state       
taxes. Our 2006 tax rate was lowered to 32.2% during the fourth quarter of      
2006 based on higher projected foreign earnings, which are taxed at a lower     
rate.                                                                           

WEIGHTED AVERAGE DILUTED SHARES outstanding decreased due to the Stock          
Repurchase Program.                                                             

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FISCAL 2005 VS. 2004                                                            
--------------------                                                            
CONTINUING OPERATIONS - ONGOING OPERATIONS: The following table provides        
summarized financial data for the fiscal years ended January 29, 2005 and       
January 28, 2006 (amounts based on actual data, therefore columns/rows may not  
add due to rounding). The table provides non-GAAP summarized financial data     
for the fiscal year ended January 28, 2006 and is the same information for the  
ongoing operations as presented in the Reconciliation of Operating Results -    
Continuing Operations shown earlier. The non-GAAP financial information should  
be considered in addition to, not as a substitute for or as being superior to,  
operating income, cash flows or other measures of financial performance         
prepared in accordance with GAAP. The operating results for the fiscal year     
ended January 29, 2005 do not include income tax repatriation or impairment,    
restructuring and other non-recurring charges; therefore, continuing and        
ongoing are the same, and no reconciliation is necessary.                       

                                                        [Enlarge/Download Table]

                                                         Amounts                           Percentage of net sales    
                                    -------------------------------------------------  ------------------------------ 
                                                                           Percent                                    
                                          2004             2005            Change           2004           2005       
                                    ---------------  ---------------   --------------  --------------  -------------- 

                                                                                                                      
Net sales                           $     2,115,252  $     1,964,489           (7.1%)          100.0%          100.0% 
Cost of products sold                     1,654,901        1,553,878           (6.1%)           78.2%           79.1% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Gross profit                                460,351          410,611          (10.8%)           21.8%           20.9% 
SG&A                                        331,670          318,010           (4.1%)           15.7%           16.2% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Operating earnings before                                                                                             
  amortization (1)                          128,681           92,601          (28.0%)            6.1%            4.7% 
Amortization of intangibles                  11,205           10,685           (4.6%)            0.5%            0.5% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Operating earnings                          117,476           81,916          (30.3%)            5.6%            4.2% 
Interest expense, net                        25,860           23,241          (10.1%)            1.2%            1.2% 
Other income, net                            (2,091)          (1,302)         (37.7%)           (0.1%)          (0.1%)
                                    ---------------  ---------------   -------------   --------------  -------------- 
Earnings before taxes                        93,707           59,977          (36.0%)            4.4%            3.1% 
Income taxes                                 31,486           18,713          (40.6%)            1.5%            1.0% 
                                    ---------------  ---------------   -------------   --------------  -------------- 
Net earnings from                                                                                                     
  continuing operations             $        62,221  $        41,264          (33.7%)            2.9%            2.1% 
                                    ===============  ===============   =============   ==============  ============== 
Effective tax rate                            33.6%            31.2%                                                  

<FN>                                                                                                                  
(1) Operating earnings before amortization is a non-GAAP measure that differs                                         
from operating earnings in that it excludes the amortization of intangibles.                                          
Operating earnings before amortization should not be considered as an                                                 
alternative to operating earnings. Operating earnings before amortization for                                         
ongoing operations is the primary measure used by management to evaluate our                                          
performance as well as the performance of our divisions and segments.                                                 
Management believes the comparison of operating earnings before amortization                                          
between periods is useful in showing the interaction of changes in gross                                              
profit and SG&A excluding the amortization of intangibles, the change in which                                        
is explained elsewhere. The subtotal of operating earnings before amortization                                        
may not be comparable to any similarly titled measure used by another company.                                        

SALES for ongoing operations for 2005 were $1,964,489, decreasing $150,763 or   
7.1% versus 2004. The decline in sales was due to decreased sales of            
popular-to-moderately priced women's sportswear brands and private label        
business. Additionally, the dress market has shrunk dramatically.               

GROSS PROFIT for ongoing operations for 2005 was $410,611 or 20.9% of sales,    
decreasing $49,740 or 0.9 percentage points of sales versus 2004. The decline   
in our gross profit rate in 2005 resulted from competitive price pressure and   
higher markdown expense, primarily in the Women's Sportswear segment.           

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) for ongoing operations for  
2005 were $318,010, decreasing $13,660 or 4.1% versus 2004. The decline in      
SG&A expense is primarily due to a decrease in overhead, primarily              
compensation expense, in divisions experiencing lower sales partially offset    
by increased advertising expense. SG&A expense as a percentage of sales         
increased from 15.7% for 2004 to 16.2% for 2005 primarily due to decreased      
sales. We have reduced SG&A expense but the sales levels have decreased faster  
than the decrease in SG&A expense.                                              

INTEREST EXPENSE, NET for 2005 was $23,241, decreasing $2,619 or 10.1% versus   
2004. Interest expense for 2005 was $32,636, increasing $2,730 versus 2004.     
Interest income for 2005 was $9,395, increasing $5,348 versus 2004. The         
decline in our interest expense, net is primarily due to an increase in         
interest income resulting from increased cash balances and higher interest      
rates on cash investments in 2005 as compared to 2004.                          

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INCOME TAXES. Our effective tax rate on earnings before income taxes before     
impairment, restructuring and other non-recurring charges and the income tax    
benefit from repatriation for 2005 was lowered in 2005 (33.6% in 2004 versus    
31.2% in 2005) as the incremental U.S. tax on current year foreign earnings     
was significantly less.                                                         

WEIGHTED AVERAGE DILUTED SHARES outstanding decreased due to the Stock          
Repurchase Program.                                                             

DISCONTINUED OPERATIONS: The following table provides summarized operating      
results for the fiscal years ended January 29, 2005, January 28, 2006 and       
February 3, 2007, for the discontinued operations.                              

                                                        [Enlarge/Download Table]

                                                    Fiscal Year                              Percent Change          
                               ---------------------------------------------------  ---------------------------------
                                     2004              2005             2006            2004-2005        2005-2006   
                               ----------------  ---------------  ----------------  ---------------- ----------------
                                                                                                                     
Net sales                      $        440,453  $       389,359  $         86,790           (11.6%)          (77.7%)
Cost of products sold                   358,764          351,528            63,805            (2.0%)          (81.8%)
                               ----------------  ---------------  ----------------  ---------------  --------------- 
Gross profit                             81,689           37,831            22,985           (53.7%)          (39.2%)
SG&A                                     72,560           61,146            14,546           (15.7%)          (76.2%)
                               ----------------  ---------------  ----------------  ---------------  --------------- 
Operating earnings (loss)                                                                                            
  before amortization and                                                                                            
  impairment, restructuring                                                                                          
  and other non-recurring                                                                                            
  charges (1)                             9,129          (23,315)            8,439               NM               NM 
Amortization of intangibles               2,228              842                 -           (62.2%)              NM 
Impairment, restructuring                                                                                            
  and other non-recurring                                                                                            
  charges                                     -           57,931               688               NM               NM 
                               ----------------  ---------------  ----------------  ---------------- ----------------
Operating earnings (loss)                 6,901          (82,088)            7,751               NM               NM 
Interest (income) expense, net               (4)              (1)                -           (67.7%)              NM 
Other income, net                           (28)            (145)            1,359               NM               NM 
                               ----------------  ---------------  ----------------  ---------------- ----------------
Earnings (loss) before taxes              6,933          (81,942)            6,392               NM               NM 
Income taxes                              2,818          (24,773)           (3,927)              NM           (84.2%)
                               ----------------  ---------------  ----------------  ---------------- --------------- 
Net earnings (loss)            $          4,115  $       (57,169) $         10,319               NM               NM 
                               ================  ===============  ================  ================ ================
Effective tax rate                        40.6%            30.2%                NM                                   

<FN>                                                                                                                 
NM - Not meaningful                                                                                                  

(1) Operating earnings (loss) before amortization and impairment,                                                    
restructuring and other non-recurring charges is a non-GAAP measure that                                             
differs from operating earnings (loss) in that it excludes amortization of                                           
intangibles and impairment, restructuring and other non-recurring charges.                                           
Operating earnings (loss) before amortization and impairment, restructuring                                          
and other non-recurring charges should not be considered as an alternative to                                        
operating earnings (loss). Operating earnings (loss) before amortization and                                         
impairment, restructuring and other non-recurring charges is the primary                                             
measure used by management to evaluate our performance, as well as the                                               
performance of our divisions and segments. Management believes the comparison                                        
of operating earnings (loss) before amortization and impairment, restructuring                                       
and other non-recurring charges between periods is useful in showing the                                             
interaction of changes in gross profit and SG&A excluding the amortization of                                        
intangibles and impairment, restructuring and other non-recurring charges, the                                       
changes in which are explained elsewhere. The subtotal of operating earnings                                         
(loss) before amortization and impairment, restructuring and other                                                   
non-recurring charges may not be comparable to any similarly titled measure                                          
used by another company.                                                                                             

Sales for 2005 were $389,359, decreasing $51,094 or 11.6% versus 2004, due      
primarily to the loss of business after the announcement of the 2005            
Restructuring Plan and to sales that were eliminated when certain discontinued  
operations were sold prior to the end of 2005. Gross profit for 2005 was        
$37,831, decreasing $43,858 or 53.7% versus 2004. This decrease was primarily   
caused by $14,017 of sales allowances and inventory reserves related to the     
2005 Restructuring Plan included in gross profit for 2005. SG&A expense for     
2005 decreased $11,414 versus 2004 primarily due to decreased spending at the   
discontinued operations.                                                        

Sales for 2006 were $86,790, decreasing $302,569 or 77.7% primarily due to      
sales that were eliminated when certain discontinued operations ceased          
operations in 2005. During the third quarter of 2006, our New Campaign and      
IZOD women's sportswear operations became discontinued. Fiscal year 2006        
operating results for discontinued operations primarily relate to the New       
Campaign and IZOD operations. The transactions related to New Campaign and      
IZOD are expected to close in the first quarter and the second quarter of       
2007, respectively.                                                             

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Income taxes for the fiscal year ended February 3, 2007 include a $6,300        
reversal of allowances for tax exposures (related to a 2003 discontinued        
operation) no longer deemed necessary due to finalization of an open tax year.  

Our effective tax rate on discontinued operations, excluding the reversal of    
tax reserves (see Note 4 to Consolidated Financial Statements for further       
information related to the reversal of tax reserves), was 37.1% for the fiscal  
year ended February 3, 2007.                                                    

SEGMENT RESULTS                                                                 
---------------                                                                 
We and our subsidiaries are principally engaged in the apparel and related      
soft goods industry. Our divisions are aggregated into the following            
reportable segments:                                                            

o    Women's Sportswear,                                              

o    Men's Sportswear,                                                

o    Other Soft Goods, and                                            

o    General Corporate.                                               

RECONCILIATION OF SEGMENT RESULTS - CONTINUING OPERATIONS: The following        
tables provide non-GAAP segment net sales and earnings (loss) for the fiscal    
year ended January 28, 2006, for the ongoing operations and impairment,         
restructuring and other non-recurring charges, separately. The tables present   
this breakdown of our operations in a manner that reconciles to our             
consolidated results. The non-GAAP segment net sales and earnings (loss) for    
the ongoing operations are provided separately from impairment, restructuring   
and other non-recurring charges to enhance the user's overall understanding of  
our current financial performance. We believe that the non-GAAP segment net     
sales and earnings (loss) provide useful information to both management and     
investors by excluding sales and expenses that we believe are not indicative    
of our core operating results. Segment net sales and earnings (loss) for        
ongoing operations are the primary measures we use to evaluate our              
performance, as well as the performance of our divisions. The non-GAAP          
financial information should be considered in addition to, not as a substitute  
for or as being superior to, operating income, cash flows or other measures of  
financial performance prepared in accordance with GAAP. Segment sales and       
earnings (loss) for the fiscal years ended January 29, 2005 and February 3,     
2007 do not include impairment, restructuring and other non-recurring charges;  
therefore, ongoing and continuing operations are the same, and no               
reconciliation is necessary.                                                    

                                                        [Enlarge/Download Table]

                                      Fiscal year ended January 28, 2006               
                         ------------------------------------------------------------- 
                                                  Impairment,                          
                                                 restructuring                         
                                                   and other                           
                                Total            non-recurring            Ongoing      
Net sales                    Continuing             charges             Operations     
---------                -------------------  -------------------  ------------------- 
                                                                                       
Women's Sportswear       $         1,144,607  $             2,400  $         1,147,007 
Men's Sportswear                     498,061                    -              498,061 
Other Soft Goods                     319,371                   50              319,421 
                         -------------------  -------------------  ------------------- 
Total net sales          $         1,962,039  $             2,450  $         1,964,489 
                         ===================  ===================  =================== 


                                      Fiscal year ended January 28, 2006               
                         ------------------------------------------------------------- 
                                                  Impairment,                          
                                                 restructuring                         
                                                   and other                           
                                Total            non-recurring            Ongoing      
Segment earnings (loss)      Continuing             charges             Operations     
-----------------------  -------------------  -------------------  ------------------- 
                                                                                       
Women's Sportswear       $            54,814  $             7,562  $            62,376 
Men's Sportswear                      43,262                    -               43,262 
Other Soft Goods                      31,205                  463               31,668 
General Corporate                    (44,705)                   -              (44,705)
                         -------------------  -------------------  ------------------- 
Total segment earnings   $            84,576  $             8,025  $            92,601 
                         ===================  ===================  =================== 

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CONTINUING OPERATIONS - ONGOING OPERATIONS: The following tables provide        
segment sales and earnings (loss) for the fiscal years ended January 29, 2005,  
January 28, 2006 and February 3, 2007. These tables provide non-GAAP data for   
ongoing operations and present the same information for the ongoing operations  
as presented in the Reconciliation of Segment Results - Continuing Operations   
shown earlier for fiscal year 2005. The non-GAAP information should be          
considered in addition to, not as a substitute for or as being superior to,     
operating income, cash flows or other measures of financial performance         
prepared in accordance with GAAP. Segment sales and earnings (loss) for fiscal  
years 2004 and 2006 do not include impairment, restructuring and other          
non-recurring charges; therefore, ongoing and continuing operations are the     
same.                                                                           

                                                        [Enlarge/Download Table]

                                                     Amounts                             Percent Change        
                                 ----------------------------------------------   -----------------------------
Net sales                             2004            2005            2006           2004-2005      2005-2006  
---------                        --------------  --------------  --------------   -------------  --------------
                                                                                                               
Women's Sportswear               $    1,304,740  $    1,147,007  $    1,107,571         (12.1%)          (3.4%)
Men's Sportswear                        505,318         498,061         525,005          (1.4%)           5.4% 
Other Soft Goods                        305,194         319,421         329,174           4.7%            3.1% 
                                 --------------  --------------  --------------   ------------   ------------- 
Total net sales                  $    2,115,252  $    1,964,489  $    1,961,750          (7.1%)          (0.1%)
                                 ==============  ==============  ==============   ============   ============= 

Segment earnings (loss)                                                                                        
-----------------------                                                                                        
Women's Sportswear               $       93,742  $       62,376  $       68,421         (33.5%)           9.7% 
Men's Sportswear                         52,645          43,262          38,297         (17.8%)         (11.5%)
Other Soft Goods                         28,211          31,668          35,085          12.3%           10.8% 
General Corporate                       (45,917)        (44,705)        (49,881)         (2.6%)          11.6% 
                                 --------------  --------------  --------------   ------------   ------------- 
Total segment earnings           $      128,681  $       92,601  $       91,922         (28.0%)          (0.7%)
                                 ==============  ==============  ==============   ============   ============= 

Segment earnings (loss) margins                                                                                
-------------------------------                                                                                
Women's Sportswear                         7.2%            5.4%            6.2%                                
Men's Sportswear                          10.4%            8.7%            7.3%                                
Other Soft Goods                           9.2%            9.9%           10.7%                                
General Corporate                            NM              NM              NM                                
                                 --------------  --------------  --------------                                
Total segment earnings                     6.1%            4.7%            4.7%                                
                                 ==============  ==============  ==============                                

<FN>                                                                                                           
NM - Not meaningful                                                                                            

WOMEN'S SPORTSWEAR. Sales for ongoing operations of Women's Sportswear for      
2005 were $1,147,007, decreasing $157,733 or 12.1% versus 2004. The decrease    
in sales is primarily due to reduced orders for some of our traditionally       
styled popular-to-moderately priced sportswear brands. Additionally, the dress  
market has shrunk dramatically with some of our customers having either         
dropped the category altogether or significantly cut open-to-buy. These         
decreases were partially offset by growth in junior sportswear and suits.       

Women's Sportswear segment earnings for ongoing operations for 2005 were        
$62,376 or 5.4% of net sales, decreasing $31,366 or 1.8 percentage points of    
net sales versus 2004, due to the decline in segment sales and the decrease in  
gross profit as a percent of sales related to markdown support provided to      
customers and higher off-price sales for 2005 compared to 2004. This was        
partially offset by increased profit from higher junior sportswear sales.       

Sales of Women's Sportswear for 2006 were $1,107,571, decreasing $39,436 or     
3.4% versus 2005. The sales decrease was primarily due to cutbacks in Fall      
open-to-buy for some of our legacy brands and customer consolidation at         
retail.                                                                         

Women's Sportswear segment earnings for 2006 were $68,421 or 6.2% of net        
sales, increasing $6,045 or 0.8 percentage points of net sales versus 2005.     
The increase was greater in the second half of the year than the first half of  
the year. The primary reasons for the increase in segment earnings for 2006     
was due to decreased markdown expense and improved inventory management.        

MEN'S SPORTSWEAR. Sales of Men's Sportswear for 2005 were $498,061, decreasing  
$7,257 or 1.4% versus 2004 primarily due to decreased private label sales.      

Men's Sportswear segment earnings for 2005 were $43,262 or 8.7% of net sales,   
decreasing $9,383 or 1.7 percentage points of net sales versus 2004. The        
decrease in earnings was primarily due to decreasing private label and branded  
margins resulting from increased competitive pricing pressure and increased     
markdown support provided to customers.                                         

Sales of Men's Sportswear for 2006 were $525,005, increasing $26,944 or 5.4%    
versus 2005. The increase in sales resulted primarily from Smart Shirts         
private label and branded business sales.                                       

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Men's Sportswear segment earnings for 2006 were $38,297, decreasing $4,965      
versus 2005. The decline in earnings was due to lower gross margins resulting   
from competitive price pressure and enhancing the quality and fashion level of  
our products.                                                                   

OTHER SOFT GOODS. Sales for ongoing operations of Other Soft Goods for 2005     
were $319,421, increasing $14,227 or 4.7% versus 2004. The increase in sales    
was due to the strength of our major consumer brands as retail selling prices   
were flat across most product categories following several years of price       
deflation.                                                                      

Segment earnings for ongoing operations of Other Soft Goods for 2005 were       
$31,668 or 9.9% of net sales, increasing $3,457 or 0.7 percentage points of     
net sales versus 2004. Segment earnings increased primarily due to the          
increase in sales.                                                              

Sales of Other Soft Goods for 2006 were $329,174, increasing $9,753 or 3.1%     
versus 2005. The increase in sales was due to strong replenishment orders and   
increased sales of seasonal product for Gerber Childrenswear and increased      
sales of non-traditional camping products.                                      

Segment earnings of Other Soft Goods for 2006 were $35,085, increasing $3,417   
versus 2005. The increase in segment earnings was primarily due to the          
increase in sales while controlling selling, general and administrative         
expenses at their previous level.                                               

GENERAL CORPORATE. General corporate expenses for 2005 were $44,705,            
decreasing $1,212 or 2.6% versus 2004. The decrease resulted from reduced       
operating expenses in several areas.                                            

General corporate expenses for 2006 were $49,881, increasing $5,176 or 11.6%    
versus 2005 due to increased spending for strategic initiatives and higher      
expense in accordance with various incentive programs.                          

CRITICAL ACCOUNTING POLICIES AND ESTIMATES                                      
------------------------------------------                                      
The preparation of financial statements in conformity with generally accepted   
accounting principles requires that management make certain estimates and       
assumptions that affect amounts reported in the financial statements and        
accompanying notes. Actual results will differ from those estimates and         
assumptions and the differences may be material. Significant accounting         
policies, estimates and judgments which management believes are the most        
critical to aid in fully understanding and evaluating the reported financial    
results are discussed below.                                                    

ACCOUNTS RECEIVABLE - RESERVES FOR ALLOWANCES                                   
---------------------------------------------                                   
Accounts receivable are recorded net of allowances for bad debts as well as     
existing and expected future chargebacks from customers. It is the nature of    
the apparel and soft goods industry that suppliers like us face significant     
pressure from customers in the retail industry to provide allowances to         
compensate for customer margin shortfalls. This pressure often takes the form   
of customers requiring us to provide price concessions on prior shipments as a  
prerequisite for obtaining future orders. Pressure for these concessions is     
largely determined by overall retail sales performance and, more specifically,  
the performance of our products at retail. To the extent our customers have     
more of our goods on hand at the end of the season, there will be greater       
pressure for us to grant markdown concessions on prior shipments. Our accounts  
receivable balances are reported net of expected allowances for these matters   
based on the historical level of concessions required and our estimates of the  
level of markdowns and allowances that will be required in the coming season    
in order to collect the receivables. We evaluate the allowance balances on a    
continuing basis and adjust them as necessary to reflect changes in             
anticipated allowance activity.                                                 

ACCOUNTS RECEIVABLE - ALLOWANCE FOR DOUBTFUL ACCOUNTS                           
-----------------------------------------------------                           
We maintain an allowance for doubtful accounts receivable for estimated losses  
resulting from customers that are unable to meet their financial obligations.   
Our estimation of the allowance for doubtful accounts involves consideration    
of the financial condition of specific customers as well as general estimates   
of future collectibility based on historical experience and expected future     
trends. The estimation of these factors involves significant judgment. In       
addition, actual collection experience, and thus bad debt expense, can be       
significantly impacted by the financial difficulties of as few as one           
customer.                                                                       

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INVENTORY VALUATION                                                             
-------------------                                                             
Inventories are recorded at cost. Inventory values are reduced to net           
realizable value when there are factors indicating that certain inventories     
will not be sold on terms sufficient to recover their cost. Our products can    
be classified into two types: replenishment and non-replenishment.              
Replenishment items are those basics (dress shirts, infant apparel, etc.) that  
are not highly seasonal or dependent on fashion trends. The same products are   
sold by retailers 12 months a year, and styles evolve slowly. Retailers         
generally replenish their stocks of these items as they are sold. Only a        
relatively small portion of our business involves replenishment items.          

The majority of our products consist of items that are non-replenishment as a   
result of being highly tied to a season or fashion look. These products are     
economically "perishable". The value of this seasonal merchandise might be      
sufficient for us to generate a profit over its cost at the beginning of its    
season, but by the end of its season a few months later the same inventory      
might be salable only at less than cost. For these products, the selling        
season generally ranges from three to six months. The value may rise again the  
following year when the season in which the goods sell approaches - or it may   
not, depending on the level of prior year merchandise on the market and on      
year-to-year fashion changes.                                                   

While we sell some "prior year" merchandise through our own outlet stores, the  
majority of out-of-season inventories must be sold to off-price retailers and   
other customers who serve a customer base that will purchase prior year         
fashions. The amount, if any, that these customers will pay for prior year      
fashions is determined by the desirability of the inventory itself as well as   
the general level of prior year goods available to these customers. The         
assessment of inventory value, as a result, is highly subjective and requires   
an assessment of the seasonality of the inventory, its future desirability,     
and future price levels in the "off-price" sector.                              

Many of our products are purchased for and sold to specific customers' orders.  
Others are purchased in anticipation of selling them to a specific customer.    
The loss of a major customer, whether due to the customer's financial           
difficulty or other reasons, could have a significant negative impact on the    
value of the inventory expected to be sold to that customer. This negative      
impact can also extend to purchase obligations for goods that have not yet      
been received. These obligations involve product to be received into inventory  
over the next one to six months.                                                

MARKET VALUE ASSESSMENTS OF GOODWILL AND INTANGIBLE ASSETS                      
----------------------------------------------------------                      
Before the implementation of SFAS No. 142, Goodwill and Other Intangible        
Assets, the values of goodwill and intangible assets were written off over the  
period expected to be benefited through regular amortization charges. Under     
SFAS No. 142, goodwill and indefinite-lived intangible assets will no longer    
be written off through periodic charges to the income statement over the        
defined period. Future impairment charges may be required if the value of the   
division becomes less than its book value. The determination of the fair value  
of the divisions is highly subjective, as it is determined largely by           
projections of future profitability and cash flows. This evaluation utilizes    
discounted cash flow analysis and analyses of historical and forecasted         
operating results of our divisions. The fair value of the division as a whole   
is compared to the book value of the division (including goodwill). If a        
deficiency exists, impairment will be calculated. Impairment is measured as     
the difference between the fair value of the goodwill and its carrying amount.  
The fair value of goodwill is the difference between the fair value of the      
division as a whole and the fair value of the division's individual assets and  
liabilities. The annual impairment testing is performed in the fourth quarter,  
and additional testing would be necessary if a triggering event were to occur   
in an interim period.                                                           

Identifiable intangible assets include trademarks, customer base and license    
agreements, which are being amortized over their useful lives ranging from 2    
to 20 years (weighted average life of 20 years). Impairment testing of these    
would occur if and when a triggering event occurs.                              

It is possible that our estimates of future operating results for certain of    
our divisions could change adversely and impact the evaluation of the           
recoverability of the carrying value of goodwill and that the effect of such    
changes on our Consolidated Financial Statements could be material. While we    
believe that the current recorded carrying value of our goodwill is not         
impaired, there can be no assurance that a significant non-cash write-down or   
write-off will not be required in the future.                                   

NEW ACCOUNTING PRONOUNCEMENTS                                                   
-----------------------------                                                   
In November 2005, the Financial Accounting Standards Board (FASB) issued FASB   
Staff Position (FSP) Financial Accounting Standard (FAS) No. 123(R)-3 (FSP No.  
123(R)-3), Transition Election Related to Accounting for the Tax Effects of     
Share-Based Payment Awards. This FSP provides an alternative method of          
calculating the excess tax benefits available to absorb tax deficiencies        
recognized subsequent to the adoption of SFAS No. 123(R). We have adopted FSP   
No. 123(R)-3 in the first quarter of 2006 and implemented the method contained  
in the original announcement. See Note 9 to Consolidated Financial Statements   
for detailed disclosure.                                                        

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In June 2006, the FASB issued Interpretation No. 48, Accounting for             
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN  
48), which clarifies the accounting for uncertainty in income tax positions.    
This Interpretation requires that the financial statement effects of a tax      
position taken or expected to be taken in a tax return are to be recognized in  
the financial statements when it is more likely than not, based on the          
technical merits, that the position will be sustained upon examination,         
including resolution of any related appeals or litigation processes. FIN 48 is  
effective for fiscal years beginning after December 15, 2006, and we will be    
required to adopt this interpretation in the first quarter of fiscal year       
2007. Based on our evaluation as of February 3, 2007, we do not believe that    
FIN 48 will have a material impact on our financial statements.                 

In September 2006, the FASB issued SFAS No. 158, Employer's Accounting for      
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB   
Statements No. 87, 88, 106, and 132(R) (SFAS No. 158), which requires an        
employer to recognize the overfunded or underfunded status of a defined         
benefit postretirement plan (other than a multiemployer plan) as an asset or    
liability in its statement of financial position and to recognize changes in    
the funded status in the year in which the changes occur. SFAS No. 158 also     
requires an employer to measure the funded status of a plan as of the date of   
its year-end statement of financial position, with limited exceptions. The      
recognition provisions of SFAS No. 158 are effective for fiscal years ending    
after December 15, 2006 while the measurement date provisions are effective     
for fiscal years ending after December 15, 2008. An employer with publicly      
traded equity securities is required to initially recognize the funded status   
of a defined benefit postretirement plan and to provide the required            
disclosures as of the end of the fiscal year ending after December 15, 2006.    
We have adopted the recognition requirements of SFAS No. 158 in the fourth      
quarter of 2006. See Note 8 to Consolidated Financial Statements for detailed   
disclosure.                                                                     

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS  
No. 157), which defines fair value, establishes a framework for measuring fair  
value in generally accepted accounting principles (GAAP) and expands            
disclosures about fair value measurements. SFAS No. 157 is effective for        
financial statements issued for fiscal years beginning after November 15, 2007  
and interim periods within those fiscal years. We are currently evaluating the  
impact of SFAS No. 157 on our financial statements, but do not expect it to     
have a material impact on our financial statements.                             

FINANCIAL CONDITION                                                             
-------------------                                                             
Cash flow from operations is our primary source of funds to finance operating   
needs, capital expenditures, debt service and acquisitions. We use financial    
leverage to minimize the overall cost of capital and maintain adequate          
operating and financial flexibility. Management monitors leverage through its   
debt-to-capital ratio (defined as total debt divided by the sum of total debt   
and total stockholders' equity, or total capital). At February 3, 2007, our     
debt-to-capital ratio was 44.4%, down 1.1 percentage points from January 28,    
2006 primarily due to increased net earnings and decreased debt.                

In July 2005, we announced a Stock Repurchase Program of up to ten percent or   
$75,000 of our stock. During fiscal year 2005, we repurchased 2,218,200 shares  
at an average price of $24.99 per share, totaling $55,430. During fiscal year   
2006, we repurchased 173,600 shares at an average price of $28.83 per share,    
totaling $5,006. Management believes that the current cash will provide the     
capital flexibility necessary to fund the restructuring and the announced       
stock repurchase program and to meet existing obligations.                      

NET CASH PROVIDED BY OPERATING ACTIVITIES decreased from $217,830 for 2005 to   
$67,093 for 2006. This $150,737 decrease was primarily due to the change in     
working capital discussed below and the significant decrease in working         
capital related to the discontinued businesses being liquidated and sold.       

Working Capital                                                                 
Working capital is significantly influenced by sales patterns, which are        
highly seasonal. Inventories, accounts payable and accrued expenses are highly  
dependent upon sales levels and order lead times. Receivable levels are         
dependent upon recent months' sales and customer payment experience.            

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The year-to-year changes in the major components of working capital from        
continuing operations are discussed below:                                      

 o    Accounts receivable increased $24,263 from $278,270 at January 28,
      2006 to $302,533 at February 3, 2007 due to increased sales in the
fourth quarter of 2006 versus the fourth quarter of 2005.   

 o    Inventories increased $24,747 from $219,639 at January 28, 2006 to
     $244,386 at February 3, 2007. Days supply were 52 days at January
     28, 2006 compared to 60 days at February 3, 2007. The increase in
      inventory levels and days supply is primarily due to the expansion
  of retail, an increase to more sustainable inventory levels by
     certain of our businesses and to a lesser extent, the push out of
delivery dates by certain customers at February 3, 2007.    

   o    Accounts payable increased $11,807 from $160,769 at January 28, 2006
 to $172,576 at February 3, 2007 as a result of an increase in
inventory purchases to support higher sales volumes.        

   o    Accrued expenses decreased $18,018 from $133,722 at January 28, 2006
      to $115,704 at February 3, 2007 primarily due to decreased accrued
       income taxes resulting from the continued ability to offset current
   taxes with loss carryforwards from the 2005 Restructuring Plan.

Working capital of discontinued operations decreased $40,265 from January 28,   
2006 to February 3, 2007 due to reduced inventory and accounts receivable       
balances as these businesses are being liquidated and/or sold.                  

NET CASH USED IN INVESTING ACTIVITIES increased $85,989 from $28,228 for 2005   
to $114,217 for 2006. The net cash used in investing activities primarily       
relates to acquisitions as discussed below. In addition to those described, we  
continually evaluate possible acquisition candidates as a part of our ongoing   
corporate development process. Various potential acquisition candidates are in  
different stages of this process. Capital expenditures were $27,436 for 2004,   
$19,583 for 2005 and $22,922 for 2006.                                          

BRIGGS. In connection with our acquisition of Briggs New York Corp. (Briggs)    
in 2003, additional cash purchase consideration has and will be due if Briggs   
achieves certain annual operating results for each of the four years after the  
acquisition (2003 through 2006). Additional cash consideration paid in 2004,    
2005 and 2006 was $8,226, $8,750 and $6,446, respectively. The additional       
consideration for fiscal year 2006 is estimated at $3,580, which resulted in    
an increase to goodwill and accrued expenses in the fourth quarter of 2006      
and will be paid in 2007.                                                       

PHAT. On February 3, 2004, we completed the acquisition of Phat Fashions, LLC   
and Phat Licensing, LLC (together referred to as Phat). Phat is a licensor of   
apparel for men, women and children, athletic shoes and accessories through     
the Phat Farm(R) and Baby Phat(R) brands. The acquisition of Phat adds          
important consumer lifestyle brands to our portfolio of brands. The purchase    
price (including acquisition costs) for Phat was $136,497 in cash, net of cash  
acquired. Included in this amount was the exercise price for Phat's option to   
buyout the license from the menswear licensee for $25,000, which we exercised   
in February 2004. Additional cash purchase consideration has been and will be   
due if Phat achieves certain specified financial performance targets for 2004   
through 2010. Such consideration, if earned, would be accounted for as          
additional goodwill. This additional cash purchase consideration is calculated  
based on a formula applied to annual royalty revenue through 2010. Additional   
cash consideration paid in 2005 and 2006 was $3,427 and $2,095, respectively.   
The additional consideration for fiscal year 2006 is estimated at $3,385,       
which resulted in an increase to goodwill and accrued expenses in the fourth    
quarter of 2006 and will be paid in 2007.                                       

VINCE. On October 31, 2006, we completed the acquisition of CRL Group, LLC,     
owner of the Vince(R) brand and trademark. Vince is a contemporary women's      
sportswear collection. The acquisition of Vince expands our marketing-focused   
portfolio with higher profile, upscale brand offerings. The purchase price      
(including acquisition costs) for Vince was $80,937 in cash, including net      
working capital of $11,652. Additional cash purchase consideration will be due  
if Vince achieves certain specified financial performance targets for each of   
the five years after the acquisition (2007 through 2011).                       

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES decreased $13,777 from      
$32,287 for 2005 to $18,510 for 2006. The $13,638 decrease was primarily due    
to reduced stock purchases under the Stock Repurchase Program partially offset  
by lower net borrowings of notes payable and long-term debt for 2006 compared   
to 2005.                                                                        

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On December 21, 2005, our Asian operations executed a $50,000 five-year         
unsecured, syndicated term and revolving credit facility agreement to support   
its working capital needs (the Asian Credit Facility). The term portion of the  
Asian Credit Facility (the Asian Term Credit Facility) is $25,000 and requires  
semiannual payments of principal that began in November 2006. The revolving     
portion of the Asian Credit Facility (the Asian Revolving Credit Facility) is   
$25,000 and can be used for borrowings and/or letters of credit. Borrowings     
under the Asian Credit Facility bear interest at LIBOR plus a spread ranging    
from 1.10% to 1.35% with such spread depending on our Asian operations'         
leverage ratio. The Asian Credit Facility contains certain customary            
covenants, which among other things, restrict our Asian operations' ability to  
incur indebtedness, grant liens, make investments and acquisitions and sell     
assets. The financial covenants of the Asian Credit Facility include            
requirements that our Asian operations satisfy an interest coverage ratio, a    
leverage ratio and a net worth maintenance covenant. At February 3, 2007, we    
were in compliance with the covenants of the Asian Credit Facility. At          
February 3, 2007, there were $14,000 and $22,222 of borrowings outstanding      
under the revolving and term portions of the Asian Credit Facility,             
respectively.                                                                   

On April 12, 2006, we executed a $400,000 five-year secured, syndicated credit  
facility (the Senior Credit Facility) and terminated our prior $400,000         
five-year unsecured, syndicated credit facility entered into on October 20,     
2004. We and our subsidiaries (the Borrowers) are the borrowers under the       
Senior Credit Facility. Borrowings under the Senior Credit Facility are         
secured by the Borrowers' domestic current assets, principally consisting of    
accounts receivable and inventory. This does not include the stock of any       
subsidiaries. Borrowings under the Senior Credit Facility are limited to the    
lesser of the commitment amount or the borrowing base as defined in the credit  
agreement. The Senior Credit Facility can be used to refinance existing         
indebtedness, for letters of credit, for working capital needs and for other    
general corporate purposes. Borrowings under the Senior Credit Facility bear    
interest at a rate equal to LIBOR plus a spread of 1.00% to 2.00%, with such    
spread depending upon excess liquidity, as defined in the credit agreement.     
The Senior Credit Facility contains certain customary covenants, including:     
(a) when availability under the Senior Credit Facility becomes less than        
$40,000, a minimum fixed charge coverage ratio is required; and (b) so long as  
availability remains above $60,000, Borrowers would generally not be            
restricted in terms of distributions and dividends, investments, issuance of    
new indebtedness, granting of liens (except to assets securing the Senior       
Credit Facility), acquisitions and capital expenditures. At February 3, 2007,   
there were no borrowings outstanding under the Senior Credit Facility, and we   
were in compliance with all covenants. Letters of credit outstanding under the  
Senior Credit Facility were $23,646 at February 3, 2007.                        

In addition to the revolving credit facilities discussed above, we maintain     
uncommitted lines of credit, which totaled $38,804 at February 3, 2007. There   
were no borrowings outstanding under these lines at February 3, 2007. We have   
$6,291 in outstanding letters of credit used by our foreign operations under    
these lines at February 3, 2007.                                                

After the announcement of the 2005 Restructuring Plan, Standard & Poor's        
downgraded our credit rating to BB from BBB-, and Moody's downgraded our        
credit rating to Ba2 from Ba1. These actions are not expected to impact our     
operations.                                                                     

Management believes that our operating, cash and equity position will continue  
to provide the capital flexibility necessary to fund future opportunities and   
to meet existing obligations.                                                   

DISCLOSURES CONCERNING "OFF-BALANCE SHEET" ARRANGEMENTS. We own 50% of a        
Singaporean manufacturing joint venture that has a $5,043 credit facility. We   
have guaranteed one half of the amount of any borrowing under this facility     
not otherwise paid when due by the joint venture. At the end of fiscal year     
2006, $3,317 was outstanding under this facility.                               

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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS                              
A summary of our long-term obligations at February 3, 2007 is as follows:       

                                                        [Enlarge/Download Table]

                                                                 Future payments due by period                     
                                            -----------------------------------------------------------------------
                                              Less than        1 - 3         4 - 5          After                  
                                               1 year          Years         Years         5 years        Total    
                                            ------------   ------------  ------------   ------------  -------------
                                                                                                                   
Long-term debt - principal                  $      5,556   $    151,406  $      5,556   $    329,665  $     492,183
Long-term debt - interest                         29,367         52,085        34,147        214,693        330,292
Operating lease obligations                       25,413         31,813        10,591          4,795         72,612
Minimum royalty/advertising obligations           28,334         48,588        43,633         18,283        138,838
Purchase orders/commitments                      232,603              -             -              -        232,603
Contingent purchase price (1)                      6,965              -             -              -          6,965
Deferred compensation (2)                          2,000          4,000         4,000         10,000         20,000
Unfunded pension obligations (3):                                                                                  
      Defined benefit plans                            -          1,000         1,000          2,000          4,000
      Multiemployer plans' exit liability            600            600           600            600          2,400
                                            ------------   ------------  ------------   ------------  -------------
Total                                       $    330,838   $    289,492  $     99,527   $    580,036  $   1,299,893
                                            ============   ============  ============   ============  =============

<FN>                                                                                                               
(1) Additional cash purchase consideration will be due if acquired entities                                        
achieve certain specified financial performance targets through 2011. Such                                         
consideration, if earned, would be accounted for as additional goodwill. This                                      
additional cash purchase consideration is calculated based on a formula                                            
applied to operating results. A minimum level of performance must be reached                                       
in order for this additional consideration to be paid. The amount of                                               
consideration increases with increased levels of earnings or royalty revenue                                       
depending on the agreement. There is no maximum amount of incremental purchase                                     
price. The table includes the estimated obligation based on actual 2006                                            
performance only for those entities where additional cash purchase                                                 
consideration has been accrued as estimable and probable. There is a potential                                     
for additional cash purchase consideration related to entities where such                                          
amounts are not yet estimable and probable.                                                                        

(2) The timing of payment of the deferred compensation is based on the                                             
individual participants' payment elections and the timing of their retirement                                      
or termination. There are 108 participants in the deferred compensation plan.                                      

(3) The timing of the pension funding obligations associated with our frozen                                       
defined benefit pension plans and exit obligations under multiemployer pension                                     
plans as discussed in Note 8 to Consolidated Financial Statements and is                                           
dependent on a number of factors including investment results and other                                            
factors that contribute to future pension expense. The defined benefit plan                                        
obligation is ratably allocated over the nine year payout period.                                                  

STOCK REPURCHASES                                                               
In July 2005, we announced the Stock Repurchase Program. The Board of           
Directors authorized us to repurchase, at our discretion, up to ten percent of  
the outstanding shares of our common stock through open market or privately     
negotiated transactions. The Board of Directors has approved the investment of  
up to $75,000 for this purpose. During fiscal year 2005, we repurchased         
2,218,200 shares at an average price of $24.99 per share, totaling $55,430.     
During fiscal year 2006, we repurchased 173,600 shares at an average price of   
$28.83 per share, totaling $5,006. Payments made under the Stock Repurchase     
Program are recorded in Treasury Stock on the Consolidated Balance Sheet. See   
Note 10 to Consolidated Financial Statements for further information.           

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

FOREIGN CURRENCY RISK. We do not believe that we have significant foreign       
currency transactional exposures. Almost all of our sales are denominated in    
U.S. dollars. Most of our purchases are denominated in U.S. dollars. A          
significant amount of our underlying sourcing and production costs would be     
impacted by changes in local currencies. Sourcing is not concentrated in any    
one foreign country. Approximately 28% is sourced in China with all other       
countries representing less than 15% each. The impact of a ten percent          
unfavorable change in the exchange rate of the U.S. dollar against the          
prevailing market rates of the foreign currencies in which we do have           
transactional exposures would be immaterial. In addition, there are             
discussions about strengthening the Chinese Renminbi against the U.S. dollar.   
If this were to occur and subject to the extent of the revaluation, we do not   
believe it will have a material impact on the financial position or results of  
operations. These foreign currency risks are similar to those experienced by    
our competitors.                                                                

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INTEREST RATE RISK. At February 3, 2007, our debt portfolio was composed of     
93% fixed-rate debt. Our strategy regarding management of our exposure to       
interest rate fluctuations did not change significantly during 2006. We do not  
expect any significant changes in our exposure to interest rate fluctuations    
or in how such exposure is managed in the coming year.                          

Based on quoted market prices obtained through independent pricing sources for  
the same or similar types of borrowing arrangements, our long-term debt has a   
market value of approximately $500,732, which compares to the book value of     
$506,183.                                                                       

We issue various financial instruments that are sensitive to changes in         
interest rates. Market interest rate changes would result in increases or       
decreases in the market value of our fixed-rate debt. With respect to our       
fixed-rate debt outstanding at February 3, 2007, a 10% increase in interest     
rates would have resulted in approximately a $21,101 decrease in the market     
value of our fixed-rate debt; a 10% decrease in interest rates would have       
resulted in approximately a $22,729 increase in the market value of our         
fixed-rate debt.                                                                

COMMODITY PRICE RISK. We are subject to commodity price risk arising from       
price fluctuations in the market prices of sourced garments and the various     
raw materials that comprise our manufactured products (synthetic fabrics,       
woolens, denim, cotton, etc.). We are subject to commodity price risk to the    
extent that any fluctuations in the market prices of our purchased garments     
and raw materials are not reflected by adjustments in selling prices of our     
products or if such adjustments significantly trail changes in these costs.     
Historically, there have been no significant risks due to commodity price       
fluctuations. We do not use derivative instruments in the management of these   
risks.                                                                          

INFLATION RISK. Our inflation risks are managed by each division through        
selective price increases when possible, productivity improvements and          
cost-containment measures. We do not believe that inflation risk is material    
to our business or our consolidated financial position, results of operations   
or cash flows.                                                                  

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS                            
----------------------------------------------------                            

The management of Kellwood Company is responsible for the preparation of the    
financial statements and other financial information included in this report.   
Management believes that the consolidated financial statements fairly reflect   
the form and substance of transactions and that the financial statements        
reasonably present the Company's financial position and results of operations   
in conformity with generally accepted accounting principles. Management has     
also included in the Company's financial statements amounts that are based on   
estimates and judgments, which it believes are reasonable under the             
circumstances.                                                                  

PricewaterhouseCoopers LLP audits the Company's consolidated financial          
statements in accordance with the standards of the Public Company Accounting    
Oversight Board (United States).                                                

The Board of Directors, through its Audit Committee consisting solely of        
non-management directors, meets periodically with management, the internal      
auditors and PricewaterhouseCoopers LLP to discuss accounting, control,         
auditing and financial reporting matters. Both the internal auditors and        
PricewaterhouseCoopers LLP have direct access to the Audit Committee.           

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING                
----------------------------------------------------------------                

The Company's management is responsible for establishing and maintaining        
adequate internal control over financial reporting, as such term is defined in  
Exchange Act Rules 13a- 15(f). Under the supervision and with the               
participation of our management, including the Company's Chief Executive        
Officer and Chief Financial Officer, we conducted an evaluation of the          
effectiveness of our internal control over financial reporting based on the     
framework in Internal Control - Integrated Framework issued by the Committee    
of Sponsoring Organizations of the Treadway Commission. Based on our            
evaluation under the framework in Internal Control - Integrated Framework, our  
management concluded that our internal control over financial reporting was     
effective as of February 3, 2007.                                               

Management's assessment of the effectiveness of our internal control over       
financial reporting as of February 3, 2007 has been audited by                  
PricewaterhouseCoopers LLP, an independent registered public accounting firm,   
as stated in their report.                                                      

Management has excluded Vince and HOLLYWOULD from its assessment of internal    
control over financial reporting as of February 3, 2007 because they were       
acquired by the Company in the fourth quarter of the fiscal year. Vince and     
HOLLYWOULD are wholly-owned subsidiaries whose total assets and total sales     
represent 0.5% and 0.6%, respectively, of the related Consolidated Financial    
Statements as of and for the year ended February 3, 2007.                       

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                         
-------------------------------------------------------                         

To the Shareowners and Board of Directors of Kellwood Company:                  

We have completed integrated audits of Kellwood Company's consolidated          
financial statements and of its internal control over financial reporting as    
of February 3, 2007, in accordance with the standards of the Public Company     
Accounting Oversight Board (United States). Our opinions, based on our audits,  
are presented below.                                                            

Consolidated financial statements                                               
---------------------------------                                               

In our opinion, the consolidated financial statements listed in the             
accompanying index present fairly, in all material respects, the financial      
position of Kellwood Company and its subsidiaries at February 3, 2007 and       
January 28, 2006, and the results of their operations and their cash flows for  
each of the three years in the period ended February 3, 2007 in conformity      
with accounting principles generally accepted in the United States of America.  
These financial statements are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial statements       
based on our audits. We conducted our audits of these statements in accordance  
with the standards of the Public Company Accounting Oversight Board (United     
States). Those standards require that we plan and perform the audit to obtain   
reasonable assurance about whether the financial statements are free of         
material misstatement. An audit of financial statements includes examining, on  
a test basis, evidence supporting the amounts and disclosures in the financial  
statements, assessing the accounting principles used and significant estimates  
made by management, and evaluating the overall financial statement              
presentation. We believe that our audits provide a reasonable basis for our     
opinion.                                                                        

As discussed in Note 8 to the consolidated financial statements, the Company    
changed the manner in which it accounts for defined benefit retirement plans    
in fiscal 2006.                                                                 

As discussed in Note 9 to the consolidated financial statements, the Company    
changed the manner in which it accounts for stock-based compensation in fiscal  
2006.                                                                           

Internal control over financial reporting                                       
-----------------------------------------                                       

Also, in our opinion, management's assessment, included in the accompanying     
Management's Report on Internal Control Over Financial Reporting, that the      
Company maintained effective internal control over financial reporting as of    
February 3, 2007 based on criteria established in Internal Control -            
Integrated Framework issued by the Committee of Sponsoring Organizations of     
the Treadway Commission (COSO), is fairly stated, in all material respects,     
based on those criteria. Furthermore, in our opinion, the Company maintained,   
in all material respects, effective internal control over financial reporting   
as of February 3, 2007, based on criteria established in Internal Control -     
Integrated Framework issued by the COSO. The Company's management is            
responsible for maintaining effective internal control over financial           
reporting and for its assessment of the effectiveness of internal control over  
financial reporting. Our responsibility is to express opinions on management's  
assessment and on the effectiveness of the Company's internal control over      
financial reporting based on our audit. We conducted our audit of internal      
control over financial reporting in accordance with the standards of the        
Public Company Accounting Oversight Board (United States). Those standards      
require that we plan and perform the audit to obtain reasonable assurance       
about whether effective internal control over financial reporting was           
maintained in all material respects. An audit of internal control over          
financial reporting includes obtaining an understanding of internal control     
over financial reporting, evaluating management's assessment, testing and       
evaluating the design and operating effectiveness of internal control, and      
performing such other procedures as we consider necessary in the                
circumstances. We believe that our audit provides a reasonable basis for our    
opinions.                                                                       

A company's internal control over financial reporting is a process designed to  
provide reasonable assurance regarding the reliability of financial reporting   
and the preparation of financial statements for external purposes in            
accordance with generally accepted accounting principles. A company's internal  
control over financial reporting includes those policies and procedures that    
(i) pertain to the maintenance of records that, in reasonable detail,           
accurately and fairly reflect the transactions and dispositions of the assets   
of the company; (ii) provide reasonable assurance that transactions are         
recorded as necessary to permit preparation of financial statements in          
accordance with generally accepted accounting principles, and that receipts     
and expenditures of the company are being made only in accordance with          
authorizations of management and directors of the company; and (iii) provide    
reasonable assurance regarding prevention or timely detection of unauthorized   
acquisition, use, or disposition of the company's assets that could have a      
material effect on the financial statements.                                    

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued)             
-------------------------------------------------------------------             

Because of its inherent limitations, internal control over financial reporting  
may not prevent or detect misstatements. Also, projections of any evaluation    
of effectiveness to future periods are subject to the risk that controls may    
become inadequate because of changes in conditions, or that the degree of       
compliance with the policies or procedures may deteriorate.                     

As described in Management's Report on Internal Control Over Financial          
Reporting, management has excluded CRL Group, LLC and HOLLYWOULD, Inc. from     
its assessment of internal control over financial reporting as of February 3,   
2007 because they were acquired by the Company in a purchase business           
combination during 2006. We have also excluded CRL Group, LLC and HOLLYWOULD,   
Inc. from our audit of internal control over financial reporting. CRL Group,    
LLC and HOLLYWOULD, Inc. are wholly-owned subsidiaries whose total assets and   
total revenues represent less than one percent, respectively, of the related    
consolidated financial statement amounts as of and for the year ended February  
3, 2007.                                                                        

/s/ PricewaterhouseCoopers LLP                                                  
St. Louis, Missouri                                                             
March 21, 2007                                                                  

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                                                        [Enlarge/Download Table]
                                   KELLWOOD COMPANY AND SUBSIDIARIES                                     
                                   ---------------------------------                                     
                                 CONSOLIDATED STATEMENTS OF OPERATIONS                                   
                                 -------------------------------------                                   
                              (Amounts in thousands, except per share data)                              


                                                                  2004           2005           2006     
                                                              ------------   ------------   ------------ 

                                                                                                         
Net sales                                                     $  2,115,252   $  1,962,039   $  1,961,750 
Cost of products sold                                            1,654,901      1,559,453      1,547,242 
                                                              ------------   ------------   ------------ 
Gross profit                                                       460,351        402,586        414,508 
Selling, general and administrative expenses                       331,670        318,010        322,586 
Stock option expense                                                     -              -          4,345 
Amortization of intangible assets                                   11,205         10,685         10,935 
Impairment, restructuring and other non-recurring charges                -         42,341         33,632 
Interest expense, net                                               25,860         23,241         15,676 
Other income, net                                                   (2,091)        (1,302)        (1,743)
                                                              ------------   ------------   ------------ 
Earnings before income taxes                                        93,707          9,611         29,077 
Income taxes                                                        31,486         (9,145)         7,994 
                                                              ------------   ------------   ------------ 
Net earnings from continuing operations                             62,221         18,756         21,083 

Net earnings (loss) from discontinued operations                     4,115        (57,169)        10,319 
                                                              ------------   ------------   ------------ 

Net earnings (loss)                                           $     66,336   $    (38,413)  $     31,402 
                                                              ============   ============   ============ 

Weighted average shares outstanding:                                                                     

   Basic                                                            27,504         26,986         25,709 

   Diluted                                                          28,039         27,094         25,866 

Earnings (loss) per share:                                                                               
   Basic:                                                                                                
      Continuing operations                                   $       2.26   $       0.70   $       0.82 
      Discontinued operations                                         0.15          (2.12)          0.40 
                                                              ------------   ------------   ------------ 
      Net earnings (loss)                                     $       2.41   $      (1.42)  $       1.22 
                                                              ============   ============   ============ 

   Diluted:                                                                                              
      Continuing operations                                   $       2.22   $       0.69   $       0.82 
      Discontinued operations                                         0.15          (2.11)          0.40 
                                                              ------------   ------------   ------------ 
      Net earnings (loss)                                     $       2.37   $      (1.42)  $       1.21 
                                                              ============   ============   ============ 

See accompanying notes to Consolidated Financial Statements.                                             

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                                                        [Enlarge/Download Table]
                                     KELLWOOD COMPANY AND SUBSIDIARIES                                       
                                     ---------------------------------                                       
                                        CONSOLIDATED BALANCE SHEETS                                          
                                        ---------------------------                                          
                                (Amounts in thousands, except per share data)                                


                                                                        January 28, 2006   February 3, 2007  
                                                                       -----------------   ----------------- 

                                                                                                             
ASSETS                                                                                                       
------                                                                                                       
Current assets:                                                                                              
   Cash and cash equivalents                                           $         406,706   $         341,072 
   Receivables, net                                                              278,270             302,533 
   Inventories                                                                   219,639             244,386 
   Current deferred taxes and prepaid expenses                                    45,976              55,935 
   Current assets of discontinued operations                                      90,211              28,636 
                                                                       -----------------   ----------------- 
      Total current assets                                                     1,040,802             972,562 
Property, plant and equipment:                                                                               
   Land                                                                            2,199               2,471 
   Buildings and improvements                                                     94,541              96,881 
   Machinery and equipment                                                       112,676             119,569 
   Capitalized software                                                           52,690              60,460 
                                                                       -----------------   ----------------- 
Total property, plant and equipment                                              262,106             279,381 
   Less accumulated depreciation and amortization                               (183,932)           (203,384)
                                                                       -----------------   ----------------- 
Property, plant and equipment, net                                                78,174              75,997 
Intangible assets, net                                                           160,027             202,704 
Goodwill                                                                         200,837             228,168 
Other assets                                                                      26,506              30,709 
Long-term assets of discontinued operations                                        5,798               4,436 
                                                                       -----------------   ----------------- 

Total assets                                                           $       1,512,144   $       1,514,576 
                                                                       =================   ================= 

LIABILITIES AND STOCKHOLDERS' EQUITY                                                                         
------------------------------------                                                                         
Current liabilities:                                                                                         
   Notes payable and current portion of long-term debt                 $          16,349   $          19,556 
   Accounts payable                                                              160,769             172,576 
   Accrued salaries and employee benefits                                         39,873              37,061 
   Other accrued expenses                                                         93,849              78,643 
   Current liabilities of discontinued operations                                 43,584              22,274 
                                                                       -----------------   ----------------- 
      Total current liabilities                                                  354,424             330,110 
Long-term debt                                                                   492,028             486,627 
Deferred income taxes and other                                                   56,325              62,366 
Long-term liabilities of discontinued operations                                       -                 347 
Stockholders' equity:                                                                                        
   Common stock, par value $0.01 per share, 50,000 shares authorized,                                        
     25,902 shares issued and outstanding (25,651 at January 28, 2006)           272,073             280,236 
   Retained earnings                                                             499,613             514,559 
   Accumulated other comprehensive loss                                           (8,634)             (8,259)
   Less treasury stock, at cost, 8,185 shares (8,435 at                                                      
     January 28, 2006)                                                          (153,685)           (151,410)
                                                                       -----------------   ----------------- 

      Total stockholders' equity                                                 609,367             635,126 
                                                                       -----------------   ----------------- 

Total liabilities and stockholders' equity                             $       1,512,144   $       1,514,576 
                                                                       =================   ================= 

See accompanying notes to Consolidated Financial Statements.                                                 

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                                                        [Enlarge/Download Table]
                                         KELLWOOD COMPANY AND SUBSIDIARIES                                         
                                         ---------------------------------                                         
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS                                       
                                       -------------------------------------                                       
                                              (Amounts in thousands)                                               


                                                                           2004           2005           2006      
                                                                       ------------   ------------   ------------- 

                                                                                                                   
OPERATING ACTIVITIES:                                                                                              

Net earnings (loss)                                                    $     66,336   $    (38,413)  $      31,402 

Add/(deduct) items not affecting operating cash flows:                                                             
   Depreciation and amortization                                             41,841         39,869          36,957 
   Stock-based compensation expense                                               -              -           4,345 
   Deferred income taxes and other                                            4,516        (25,672)          2,377 
   Incremental tax benefits from stock options exercised                          -              -            (326)
   Non-cash adjustments related to impairment, restructuring                                                       
     and other non-recurring charges                                              -         86,017          20,177 
Changes in working capital components:                                                                             
   Receivables, net                                                         (57,621)        55,905          17,024 
   Inventories                                                                7,614         77,504         (17,835)
   Prepaid expenses                                                             790         (2,703)         (4,670)
   Accounts payable and accrued expenses                                     (2,551)        (3,332)         (7,772)
   Payment of liabilities associated with the 2005 Restructuring Plan             -        (12,330)        (28,082)
   Current deferred and accrued income taxes                                 14,225         40,985          13,496 
                                                                       ------------   ------------   ------------- 
Net cash provided by operating activities                                    75,150        217,830          67,093 
                                                                       ------------   ------------   ------------- 

INVESTING ACTIVITIES:                                                                                              
Additions to property, plant and equipment                                  (27,436)       (19,583)        (22,922)
Acquisitions                                                               (144,722)       (12,177)        (94,500)
Receipts for note receivable                                                  2,063          2,750           2,750 
Dispositions of fixed assets                                                    436            782             455 
                                                                       ------------   ------------   ------------- 
Net cash used in investing activities                                      (169,659)       (28,228)       (114,217)
                                                                       ------------   ------------   ------------- 

FINANCING ACTIVITIES:                                                                                              
Borrowings of notes payable                                                       -         13,565          97,952 
Payments of notes payable                                                         -              -         (97,517)
Borrowings of long-term debt                                                195,343         25,000               - 
Payments of long-term debt                                                   (4,448)             -          (2,778)
Decrease in bank overdraft                                                   (1,372)        (2,203)         (5,542)
Dividends paid                                                              (17,584)       (17,361)        (16,453)
Stock purchases under Stock Repurchase Program                                    -        (55,430)         (5,006)
Stock transactions under incentive plans                                     17,495          4,142          10,508 
Incremental tax benefits from stock options exercised                             -              -             326 
                                                                       ------------   ------------   ------------- 
Net cash provided by / (used in) financing activities                       189,434        (32,287)        (18,510)
                                                                       ------------   ------------   ------------- 

NET CHANGE IN CASH AND CASH EQUIVALENTS                                      94,925        157,315         (65,634)

Cash and cash equivalents, beginning of year                                154,466        249,391         406,706 
                                                                       ------------   ------------   ------------- 
Cash and cash equivalents, end of year                                 $    249,391   $    406,706   $     341,072 
                                                                       ============   ============   ============= 

Supplemental cash flow information:                                                                                
   Interest paid                                                       $     27,659   $     30,957   $      34,085 
                                                                       ============   ============   ============= 
   Income taxes (refunded) paid, net                                   $       (628)  $    (16,399)  $         942 
                                                                       ============   ============   ============= 

See accompanying notes to Consolidated Financial Statements.                                                       

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                                                 KELLWOOD COMPANY AND SUBSIDIARIES                                                
                                                 ---------------------------------                                                
                                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                                         
                                          -----------------------------------------------                                         
                                           (Dollars in thousands, except per share data)                                          

----------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Accumulated       Total     
                                             Common                                                      Other          Stock-    
                                             Shares         Common        Treasury      Retained     Comprehensive      holders'  
                                           Outstanding       Stock          Stock       Earnings     Income (Loss)      Equity    
                                           -----------    -----------   -----------    ----------    -------------      -------   
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                  
BALANCE, JANUARY 31, 2004                   26,850,183    $   247,684   $  (103,010)   $  506,635    $     (11,621)   $   639,688 
Net earnings                                                                               66,336                          66,336 
Unrecognized gain on derivatives                                                                                31             31 
Foreign currency translation adjustment                                                                       (338)          (338)
Minimum pension liability adjustment, net                                                                                         
  of income tax expense of $312                                                                                532            532 
                                                                                                                      ----------- 
Total comprehensive income                                                                                                 66,561 
Cash dividends declared, $0.64 per share                                                  (17,584)                        (17,584)
Shares issued under stock plans                921,104         22,580         5,815                                        28,395 
Treasury stock acquired in conjunction                                                                                            
  with incentive plans                         (86,282)                      (3,536)                                       (3,536)
                                          ------------    -----------   -----------    ----------    -------------    ----------- 

BALANCE, JANUARY 29, 2005                   27,685,005        270,264      (100,731)      555,387          (11,396)       713,524 
Net loss                                                                                  (38,413)                        (38,413)
Unrecognized gain on derivatives                                                                               259            259 
Foreign currency translation adjustment                                                                      1,691          1,691 
Minimum pension liability adjustment, net                                                                                         
  of income tax expense of $477                                                                                812            812 
                                                                                                                      ----------- 
Total comprehensive loss                                                                                                  (35,651)
Cash dividends declared, $0.64 per share                                                  (17,361)                        (17,361)
Shares purchased under                                                                                                            
  Stock Repurchase Program                  (2,218,200)                     (55,430)                                      (55,430)

Shares issued under stock plans                206,473          1,475         3,074                                         4,549 
Treasury stock acquired in conjunction                                                                                            
  with incentive plans                         (22,055)                        (598)                                         (598)

Deferred stock unit costs                                         334                                                         334 
                                          ------------    -----------   -----------    ----------    -------------    ----------- 
BALANCE, JANUARY 28, 2006                   25,651,223        272,073      (153,685)      499,613           (8,634)       609,367 
Net earnings                                                                               31,402                          31,402 
Unrecognized loss on derivatives                                                                               (66)           (66)
Foreign currency translation adjustment                                                                     (1,638)        (1,638)
Minimum pension liability adjustment, net                                                                                         
  of income tax expense of $97                                                                                 165            165 
                                                                                                                      ----------- 
Total comprehensive income                                                                                                 29,863 
Adjustment to initially apply FASB                                                                                                
  Statement No. 158, net of tax                                                                              1,914          1,914 
Cash dividends declared, $0.64 per share                                                  (16,456)         (16,456)               
Shares purchased under                                                                                                            
  Stock Repurchase Program                    (173,600)                      (5,006)                                       (5,006)
Shares issued under stock plans                452,938          7,750         8,224                                        15,974 
Treasury stock acquired in conjunction                                                                                            
  with incentive plans                         (28,965)                        (943)                                         (943)

Deferred stock unit costs                                         413                                                         413 
                                          ------------    -----------   -----------    ----------    -------------    ----------- 
BALANCE, FEBRUARY 3, 2007                   25,901,596    $   280,236   $  (151,410)   $  514,559  $        (8,259)   $   635,126 
                                          ============    ===========   ===========    ==========    =============    =========== 

                                                                                                                                  
Accumulated other comprehensive income (loss) at February 3, 2007                                                                 
  includes:                                                                                                                       
Unrecognized gain on derivatives                                        $        33                                               
Foreign currency translation adjustment                                     (10,206)                                              
Adjustment to initially apply FASB Statement No. 158, net of tax              1,914                                               
                                                                        -----------                                               
Total accumulated other comprehensive loss                              $    (8,259)                                              
                                                                        ===========                                               

See accompanying notes to Consolidated Financial Statements.                                                                      

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
------------------------------------------  
(Dollars in thousands, except per share data) 

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             
(A) DESCRIPTION OF BUSINESS: We are marketers of women's and men's sportswear,  
infant apparel and recreational camping products. We market branded as well as  
private label products and market to all channels of distribution with product  
specific to the particular channel. We market products under many brands, some  
of which we own, and others that we use are under licensing agreements.         
Approximately 77% of our products are sourced from contract manufacturers,      
primarily in the Eastern Hemisphere. Products are manufactured to meet our      
product specifications and labor standards. In addition, we manufacture         
certain products in our own plants located primarily in the Eastern             
Hemisphere.                                                                     

(B) BASIS OF PRESENTATION: The consolidated financial statements include our    
accounts and the accounts of our majority-owned subsidiaries. Substantially     
all foreign subsidiaries are consolidated based upon a fiscal year ending       
December 31 due to the timing of receipt of financial information. All          
significant intercompany accounts and transactions have been eliminated. The    
amounts and disclosures included in the notes to the consolidated financial     
statements, unless otherwise indicated, are presented on a continuing           
operations basis. In the opinion of management, the financial statements        
contain all adjustments (consisting solely of normal recurring adjustments)     
and disclosures necessary to make the information presented therein not         
misleading. As used in this Report, unless the context requires otherwise,      
"our," "us" and "we" refer to Kellwood Company and its subsidiaries.            

(C) FISCAL YEAR: Our fiscal year ends on the Saturday nearest January 31.       
References to our fiscal years represent the following:                         

FISCAL YEAR                      REPRESENTS THE 52 WEEKS ENDED            
-----------                      -----------------------------            
2004                             January 29, 2005                         
2005                             January 28, 2006                         

FISCAL YEAR                      REPRESENTS THE 53 WEEKS ENDED            
-----------                      -----------------------------            
2006                             February 3, 2007                         

(D) USE OF ESTIMATES: The preparation of financial statements in conformity     
with generally accepted accounting principles requires that management make     
estimates and assumptions that affect amounts reported in the financial         
statements and accompanying notes. Actual results may differ from those         
estimates and assumptions.                                                      

(E) CASH AND CASH EQUIVALENTS: All highly liquid short-term time deposits with  
original maturities of three months or less maintained under cash management    
activities are considered cash equivalents. The effect of foreign currency      
exchange rate fluctuations on cash and cash equivalents was not significant     
for 2004, 2005 or 2006.                                                         

(F) ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK: We maintain an        
allowance for accounts receivable estimated to be uncollectible. The activity   
in this allowance is summarized as follows:                                     

                                                                [Download Table]

                                                2004          2005         2006     
                                            -----------   -----------   ----------- 
                                                                                    
Balance, beginning of year                  $     4,005   $     4,813   $     3,144 
Provision/(Reversals) for bad debt expense        1,465          (611)          872 
Bad debts written off                              (657)       (1,058)       (1,123)
                                            -----------   -----------   ----------- 
Balance, end of year                        $     4,813   $     3,144   $     2,893 
                                            ===========   ===========   =========== 

The provision for bad debts is included in selling, general and administrative  
expense. Substantially all of our trade receivables are derived from sales to   
retailers and are recorded at the invoiced amount and do not bear interest. We  
perform ongoing credit evaluations of our customers' financial condition and    
require collateral as deemed necessary. Account balances are charged off        
against the allowance when we feel it is probable the receivable will not be    
recovered.                                                                      

There was no customer that accounted for more than ten percent of our           
consolidated net sales in 2004 or 2005. Customers that accounted for more than  
ten percent of our consolidated net sales during 2006 and the related sales     
amounts are as follows:                                                         

                            Percent of Sales           Net Sales
                              ----------------          ------------
Wal-Mart                                   12%                $    222,893      
Kohl's                                     11%                $    201,493      

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

Sales to Wal-Mart occurred in our Women's Sportswear, Men's Sportswear and      
Other Soft Goods segments. Sales to Kohl's occurred in our Women's Sportswear   
and Men's Sportswear segments.                                                  

(G) INVENTORIES: Inventories are stated at the lower of cost or market. Cost    
is determined on the first-in, first-out (FIFO) basis. The cost of inventory    
includes manufacturing or purchase cost as well as sourcing, pre-production,    
transportation, duty and other processing costs associated with acquiring,      
importing and preparing inventory for sale. Inventory costs are included in     
cost of products sold at the time of their sale. In addition to inventory       
costs, other costs included in cost of products sold are royalties for          
licensed brand names and distribution costs. Product development costs are      
expensed when incurred. Inventory values are reduced to net realizable value    
when there are factors indicating that certain inventories will not be sold on  
terms sufficient to recover their cost. Inventories consist of the following:   

                                       2005           2006
                                        -----------    -----------
  Finished goods                        $   168,343    $   184,396
  Work in process                            29,240         32,163
  Raw materials                              22,056         27,827
                                        -----------    -----------
  Total inventories                     $   219,639    $   244,386
                                        ===========    ===========
  Net of obsolescence reserves of:      $    20,307    $    26,500
                                        ===========    ===========

(H) PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at  
cost. Depreciation is computed generally on the straight-line method over       
estimated useful lives of 15 years for buildings and of 3 to 10 years for       
machinery and equipment. Leasehold improvements are amortized principally on    
the straight-line basis over the shorter of their estimated useful lives or     
the remaining lease term, excluding renewal terms. Capitalized software is      
amortized on the straight-line basis over the estimated economic useful life    
of the software, generally 3 to 7 years. Depreciation expense was $25,764,      
$26,049 and $24,331 for 2004, 2005 and 2006, respectively. This includes        
computer software amortization of $8,095, $8,406 and $7,868 for 2004, 2005 and  
2006, respectively.                                                             

(I) IMPAIRMENT OF LONG-LIVED ASSETS: We review long-lived assets and other      
intangibles with a finite life if facts and circumstances exist which indicate  
that the asset useful life is shorter than previously estimated or the          
carrying amount may not be recoverable from future operations based on          
undiscounted expected future cash flows. Impairment losses are recognized in    
operating results when discounted expected future cash flows are less than the  
carrying value of the asset. See Note 2 and Note 5 for discussion of            
impairment of long-lived assets related to the 2005 Restructuring Plan.         

(J) GOODWILL AND OTHER INTANGIBLE ASSETS: Goodwill is recorded when the         
consideration paid for an acquisition exceeds the fair value of identifiable    
net tangible and identifiable intangible assets acquired. In accordance with    
the Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and    
Other Intangible Assets, goodwill and other indefinite-lived intangible assets  
are no longer amortized, but are reviewed for impairment at least annually and  
if a triggering event were to occur in an interim period. Goodwill impairment   
is determined using a two-step process. The first step of the impairment test   
is used to identify potential impairment by comparing the fair value of a       
division to the book value, including goodwill. If the fair value of a          
division exceeds its book value, goodwill of the division is not considered     
impaired and the second step of the impairment test is not required. If the     
book value of a division exceeds its fair value, the second step of the         
impairment test is performed to measure the amount of impairment loss, if any.  
The second step of the impairment test compares the implied fair value of the   
division's goodwill with the book value of that goodwill. If the book value of  
the division's goodwill exceeds the implied fair value of that goodwill, an     
impairment loss is recognized in an amount equal to that excess. The implied    
fair value of goodwill is determined in the same manner as the amount of        
goodwill recognized in a business combination. The annual impairment testing    
is performed in the fourth quarter. This evaluation utilizes discounted cash    
flow analysis and multiple analyses of the historical and forecasted operating  
results of our divisions. During the second quarter of 2005, we announced a     
Restructuring Plan (the 2005 Restructuring Plan) (see Note 2). As a result of   
this triggering event, interim impairment testing was deemed necessary and      
impairment charges were recorded. See Note 5 for more information on SFAS No.   
142 and accounting for goodwill as well as the details surrounding the          
impairment charges. At the end of 2005 and 2006, no additional impairment was   
indicated.                                                                      

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

It is possible that our estimates of future operating results for certain of    
our divisions could change adversely and impact the evaluation of the           
recoverability of the carrying value of goodwill and that the effect of such    
changes on our Consolidated Financial Statements could be material. While we    
believe that the current recorded carrying value of our goodwill is not         
impaired, there can be no assurance that a significant non-cash write-down or   
write-off will not be required in the future.                                   

Identifiable intangible assets are valued and assigned lives based on           
independent appraisals. Identifiable intangible assets include trademarks,      
customer relationships, and license agreements, which are being amortized over  
their useful lives ranging from 2 to 20 years. Impairment testing of these      
would occur if and when a triggering event occurs. In connection with the 2005  
Restructuring Plan, interim impairment testing was deemed necessary and         
impairment charges were recorded. See Note 5 for more information on SFAS No.   
142 and the details surrounding the impairment charges.                         

(K) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: We periodically enter into   
forward currency exchange contracts to hedge our exposure to foreign currency   
fluctuations for purchases of certain inventories and sales of certain          
products. Company policy allows for the use of derivatives only for             
identifiable exposures, and therefore, we do not enter into derivative          
instruments for speculative purposes where the objective is to generate         
profits. We use derivatives that have an initial term of less than one year.    
Management expects these derivatives to be highly effective in hedging the      
intended foreign currency fluctuation risks. As of January 28, 2006 and         
February 3, 2007, our derivatives have been designated as hedges of variable    
cash flows of forecasted transactions. As such, the fair values of the          
derivatives have been recorded in the Consolidated Balance Sheets, with the     
offset recorded in other comprehensive income. The fair value of these          
derivatives on January 28, 2006 and February 3, 2007 was not material. The      
gain or loss related to these derivatives will be reclassified to earnings as   
the forecasted transactions take place between February 2007 and December       
2007.                                                                           

(L) FAIR VALUE DISCLOSURE FOR FINANCIAL INSTRUMENTS: Our financial instruments  
consist of cash equivalents, accounts receivable, notes receivable, notes       
payable and long-term debt. For cash equivalents, accounts receivable, notes    
receivable and notes payable, the carrying amounts approximate fair value.      
Based on quoted market prices obtained through independent pricing sources for  
the same or similar types of borrowing arrangements, our long-term debt has a   
market value of $500,732 that compares to its book value of $506,183 at         
February 3, 2007.                                                               

(M) FOREIGN CURRENCY TRANSLATION: The financial statements of foreign           
subsidiaries are translated into United States dollars in accordance with SFAS  
No. 52, Foreign Currency Translation. Where the functional currency of a        
foreign subsidiary is its local currency, income statement items are            
translated at the average exchange rate for the period and balance sheet        
accounts are translated using period-end exchange rates. Gains and losses       
resulting from translation are reported as a separate component of other        
comprehensive income within stockholders' equity.                               

Where the local currency of a foreign subsidiary is not its functional          
currency, financial statements are translated at either current or historical   
exchange rates as appropriate. These adjustments, together with gains and       
losses on foreign currency transactions, are recognized in the income           
statement as incurred.                                                          

(N) REVENUE RECOGNITION: Sales are recognized when goods are shipped in         
accordance with customer orders. The estimated amounts of sales discounts,      
returns and allowances are accounted for as reductions of sales when the        
associated sale occurs. These estimated amounts are adjusted periodically       
based on changes in facts and circumstances when the changes become known to    
us. Accrued discounts, returns and allowances are included as an offset to      
accounts receivable in the balance sheet. The activity in the accrued           
discounts, returns and allowances account is summarized as follows:             

                                                                [Download Table]

                                2004          2005         2006     
                            -----------   -----------   ----------- 
                                                                    
Balance, beginning of year  $    61,382   $    54,008   $    48,474 
Provision                       146,634       138,283       139,367 
(Charges)/Recoveries           (154,008)     (143,817)     (140,047)
                            -----------   -----------   ----------- 

Balance, end of year        $    54,008   $    48,474   $    47,794 
                            ===========   ===========   =========== 

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

Amounts billed to customers for shipping and handling costs are not             
significant. Our stated terms are FOB shipping point. There is no stated        
obligation to customers after shipment, other than specifically set forth       
allowances or discounts that are accrued at the time of sale. The rights of     
inspection or acceptance contained in certain sales agreements are limited to   
whether the goods received by our customers are in conformance with the order   
specifications.                                                                 

(O) LICENSE AGREEMENTS: We have exclusive license agreements to market apparel  
and other soft goods under trademarks owned by other parties. These agreements  
contain provisions for minimum guaranteed royalty and advertising payments      
based on anticipated sales. In any year, if we do not anticipate meeting the    
minimum sales amounts to satisfy the guaranteed minimum royalty and             
advertising amounts, the guaranteed minimum royalty and advertising amounts     
are accrued. In 2004, 2005 and 2006 sales of licensed products were             
approximately $417,406, $437,222 and $452,407, respectively. See Note 2 and     
Note 13 for additional discussion regarding commitments.                        

(P) ADVERTISING: We provide cooperative advertising allowances to certain of    
our customers. These allowances are accounted for as reductions in sales as     
discussed in "Revenue Recognition" above. Advertising expense includes          
contractually set forth amounts paid to licensors that are specifically         
identified as advertising payments and advertising we conduct for products we   
sell. Production expense related to company-directed advertising is deferred    
until the first time at which the advertisement runs. Communication expense     
related to Company-directed advertising is expensed as incurred. Advertising    
expense was $22,788 in 2004, $27,778 in 2005 and $26,756 in 2006. There were    
no significant amounts of production expenses associated with company-directed  
advertising deferred at January 28, 2006 and February 3, 2007.                  

(Q) INCOME TAXES: Income taxes are based upon income for financial reporting    
purposes. Deferred income taxes are recognized for the effect of temporary      
differences between financial and tax reporting in accordance with the          
requirements of SFAS No. 109, Accounting for Income Taxes.                      

(R) STOCK-BASED COMPENSATION: We have two stock-based employee compensation     
plans, which are described more fully in Note 9. On January 29, 2006, we        
adopted SFAS No. 123(R), Share-Based Payment, requiring the recognition of      
compensation expense in the Consolidated Statement of Operations related to     
the fair value of our employee share-based options. SFAS No. 123(R) revises     
SFAS No. 123, Accounting for Stock-Based Compensation, and supercedes           
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued   
to Employees. SFAS No. 123(R) is supplemented by Securities and Exchange        
Commission (SEC) Staff Accounting Bulletin (SAB) No. 107, Share-Based Payment.  
SAB No. 107 expresses the SEC staff's views regarding the interaction between   
SFAS No. 123(R) and certain SEC rules and regulations including the valuation   
of share-based payment arrangements. SFAS No. 123(R) amends SFAS No. 95,        
Statement of Cash Flows, to require that excess tax benefits be reported as a   
financing cash inflow rather than as a reduction of taxes paid, which is        
included within operating cash flows.                                           

Compensation expense for restricted stock awards is measured at fair value on   
the date of grant based on the number of shares granted and the quoted market   
price of our common stock. For stock option awards, no compensation cost was    
recognized prior to January 28, 2006. If the fair value method had been         
applied, our net earnings and earnings per share for 2004 and 2005 would have   
been the pro-forma amounts as follows:                                          

                                                                [Download Table]

                                                         2004         2005     
                                                     -----------   ----------- 
                                                                               
Net earnings from continuing operations as reported  $    62,221   $    18,756 

Stock-based employee compensation expense                                      
   determined under fair value-based method for                                
   all stock option awards, net of tax effect             (3,710)       (7,404)
                                                     -----------   ----------- 
Pro-forma net earnings from continuing operations    $    58,511   $    11,352 
                                                     ===========   =========== 

Earnings per share from continuing operations:                                 

Basic, as reported                                   $      2.26   $      0.70 
Basic, pro-forma                                     $      2.13   $      0.42 
Diluted, as reported                                 $      2.22   $      0.69 
Diluted, pro-forma                                   $      2.09   $      0.42 

Further discussion of the methodology and key assumptions used in developing    
the option fair values, as well as other information regarding the option       
plans and the adoption of SFAS No. 123(R), is included in Note 9.               

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KELLWOOD COMPANY AND SUBSIDIARIES 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

(S) RECLASSIFICATIONS: Certain amounts in the prior years' financial            
statements have been reclassified to conform to the current year's              
presentation.                                                                   

(T) NEW ACCOUNTING STANDARDS: In November 2005, the Financial Accounting        
Standards Board (FASB) issued FASB Staff Position (FSP) Financial Accounting    
Standard (FAS) No. 123(R)-3 (FSP No. 123(R)-3), Transition Election Related to  
Accounting for the Tax Effects of Share-Based Payment Awards. This FSP          
provides an alternative method of calculating the excess tax benefits           
available to absorb tax deficiencies recognized subsequent to the adoption of   
SFAS No. 123(R). We have adopted FSP No. 123(R)-3 in the first quarter of 2006  
and implemented the method contained in the original announcement. See Note 9   
for detailed disclosure.                                                        

In June 2006, the FASB issued Interpretation No. 48, Accounting for             
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN  
48), which clarifies the accounting for uncertainty in income tax positions.    
This Interpretation requires that the financial statement effects of a tax      
position taken or expected to be taken in a tax return are to be recognized in  
the financial statements when it is more likely than not, based on the          
technical merits, that the position will be sustained upon examination,         
including resolution of any related appeals or litigation processes. FIN 48 is  
effective for fiscal years beginning after December 15, 2006, and we will be    
required to adopt this interpretation in the first quarter of fiscal year       
2007. Based on our evaluation as of February 3, 2007, we do not believe that    
FIN 48 will have a material impact on our financial statements.                 

In September 2006, the FASB issued SFAS No. 158, Employer's Accounting for      
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB   
Statements No. 87, 88, 106, and 132(R) (SFAS No. 158), which requires an        
employer to recognize the overfunded or underfunded status of a defined         
benefit postretirement plan (other than a multiemployer plan) as an asset or    
liability in its statement of financial position and to recognize changes in    
the funded status in the year in which the changes occur. SFAS No. 158 also     
requires an employer to measure the funded status of a plan as of the date of   
its year-end statement of financial position, with limited exceptions. The      
recognition provisions of SFAS 158 are effective for fiscal years ending after  
December 15, 2006 while the measurement date provisions are effective for       
fiscal years ending after December 15, 2008. An employer with publicly traded   
equity securities is required to initially recognize the funded status of a     
defined benefit postretirement plan and to provide the required disclosures as  
of the end of the fiscal year ending after December 15, 2006. We have adopted   
the recognition provisions of SFAS No. 158 in the fourth quarter of 2006. See   
Note 8 for detailed disclosure.                                                 

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS  
No. 157), which defines fair value, establishes a framework for measuring fair  
value in generally accepted accounting principles (GAAP) and expands            
disclosures about fair value measurements. SFAS No. 157 is effective for        
financial statements issued for fiscal years beginning after November 15, 2007  
and interim periods within those fiscal years. We are currently evaluating the  
impact of SFAS No. 157 on our financial statements, but do not expect it to     
have a material impact on our financial statements.                             

NOTE 2. IMPAIRMENT, RESTRUCTURING AND OTHER NON-RECURRING CHARGES               
During the second quarter of 2005, we announced a Restructuring Plan (the 2005  
Restructuring Plan) aimed at advancing our corporate objectives of increasing   
our penetration of consumer lifestyle brands with strong growth and profit      
potential while reducing exposure to smaller volume brands and certain private  
label businesses. The 2005 Restructuring Plan resulted from a thorough          
strategic reassessment of all of our business operations. This reassessment     
was performed in the second quarter of 2005 and was directed by our Chief       
Executive Officer who was named to that position during the second quarter.     
The strategic reassessment focused on our businesses that had experienced       
profitability issues and considered the alignment of the businesses with our    
refreshed strategy, which considered, among other things, market place          
developments affecting the retail landscape and our retail customers.           

The results of operations and impairment, restructuring and other               
non-recurring charges for the businesses sold and shut down are reported as     
discontinued operations. The gains and losses on consummated transactions       
involving the sale of operations are included as part of net gain from          
discontinued operations and are not significant. See Note 4 for further         
information on the operating results and financial position of the              
discontinued businesses.                                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

The total 2005 Restructuring Plan provision recorded to date (the second        
quarter of 2005 through the fourth quarter of 2006) related to our reportable   
segments (before tax) is as follows:                                            

                                                                [Download Table]

                       Continuing         Discontinued                      
                       Operations          Operations            Total      
                    -----------------  -----------------  ------------------
                                                                            
Women's Sportswear  $          45,625  $          22,362  $           67,987
Men's Sportswear                1,022             13,197              14,219
Other Soft Goods                  702             29,466              30,168
General Corporate              36,649              5,071              41,720
                    -----------------  -----------------  ------------------
   Total            $          83,998  $          70,096  $          154,094
                    =================  =================  ==================

As of February 3, 2007, we have substantially completed the business            
dispositions and shutdown activities contemplated by the 2005 Restructuring     
Plan. We do not anticipate incurring significant expense related to the 2005    
Restructuring Plan in future periods.                                           

For the twelve months ended January 28, 2006, the costs related to the 2005     
Restructuring Plan were recorded as follows:                                    

                                                        [Enlarge/Download Table]

                                                            Fiscal Year ended January 28, 2006                   
                                        -------------------------------------------------------------------------
                                              Continuing               Discontinued                              
                                              Operations                Operations                  Total        
                                        ---------------------     ---------------------     ---------------------
                                                                                                                 
Net sales                               $               2,450     $               2,266     $               4,716
Cost of products sold                                   5,575                    11,751                    17,326
Impairment of goodwill and intangibles                 30,909                    18,657                    49,566
Fixed asset impairment                                  1,850                     6,274                     8,124
Restructuring and other                                                                                          
   non-recurring charges                                9,582                    33,000                    42,582
                                        ---------------------     ---------------------     ---------------------
Total pretax cost                       $              50,366     $              71,948     $             122,314
                                        =====================     =====================     =====================
Total after tax cost                    $              35,508     $              50,508     $              86,016
                                        =====================     =====================     =====================
Diluted loss per share                  $                1.31     $                1.86     $                3.17
                                        =====================     =====================     =====================

For the twelve months ended February 3, 2007, the costs (income) related to     
the 2005 Restructuring Plan were recorded as follows:                           

                                                        [Enlarge/Download Table]

                                                     Fiscal Year ended February 3, 2007                    
                                 ------------------------------------------------------------------------- 
                                       Continuing               Discontinued                               
                                       Operations                Operations                  Total         
                                 ---------------------     ---------------------     --------------------- 
                                                                                                           
Net sales                        $                   -     $              (2,192)    $              (2,192)
Cost of products sold                                -                      (348)                     (348)
Restructuring and other                                                                                    
   non-recurring charges                        33,632                       688                    34,320 
                                 ---------------------     ---------------------     --------------------- 
Total pretax cost                $              33,632     $              (1,852)    $              31,780 
                                 =====================     =====================     ===================== 
Total after tax cost             $              21,423     $              (1,180)    $              20,243 
                                 =====================     =====================     ===================== 
Diluted loss (income) per share  $                0.83     $               (0.05)    $                0.78 
                                 =====================     =====================     ===================== 

A rollforward of the major components of this restructuring and other           
non-recurring charge from January 28, 2006 to February 3, 2007 recorded in      
continuing operations is as follows:                                            

                                                        [Enlarge/Download Table]

                          Accrual as of                                                   Accrual as of 
                           January 28,                                                      February 3, 
                              2006         Provision       Reversals       Utilization         2007     
                          -------------  -------------  ---------------   --------------   -------------
                                                                                                        
Inventory and Purchase                                                                                  
    Commitment Reserves   $       2,710  $           -  $           (52)  $       (2,658)  $           -
Contractual Obligations           3,600         31,977                -          (12,435)         23,142
Employee Severance and                                                                                  
    Termination Benefits            520          1,707                -           (1,561)            666
                          -------------  -------------  ---------------   --------------   -------------
Total                     $       6,830  $      33,684  $           (52)  $      (16,654)  $      23,808
                          =============  =============  ===============   ==============   =============

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

A rollforward of the major components of this restructuring and other           
non-recurring charge from January 28, 2006 to February 3, 2007 recorded in      
discontinued operations is as follows:                                          

                                                        [Enlarge/Download Table]

                           Accrual as of                                                   Accrual as of
                            January 28,                                                     February 3, 
                               2006        Provision       Reversals       Utilization         2007     
                          -------------  -------------  ---------------   --------------   -------------
                                                                                                        
Inventory and Purchase                                                                                  
    Commitment Reserves   $       1,273  $         109  $          (603)  $         (779)  $           -
Sales Allowances                  2,266              -           (2,192)             (74)              -
Contractual Obligations          10,307            927                -           (6,538)          4,696
Employee Severance and                                                                                  
    Termination Benefits          9,783            307             (400)          (5,512)          4,178
                          -------------  -------------  ---------------   --------------   -------------
Total                     $      23,629  $       1,343  $        (3,195)  $      (12,903)  $       8,874
                          =============  =============  ===============   ==============   =============

Inventory and Purchase Commitment Reserves include provisions to reduce         
inventory and purchase commitments to net realizable values. Sales allowances   
included provisions for anticipated increased deductions taken by customers on  
previous sales for discontinued operations. Contractual Obligations are         
adverse contractual arrangements under which losses are probable and estimable  
and where there is no future economic benefit. These include leases and         
minimum payments under license agreements. Employee Severance and Termination   
Benefits are provided for in accordance with SFAS No. 146, Accounting for       
Costs Associated with Exit or Disposal Activities. Total employee severance     
and termination benefits will be recorded as incurred and relates to            
approximately 1,400 employees.                                                  

The provision for contractual obligations for the twelve months ended February  
3, 2007 includes $19,333 before tax ($12,315 after tax) for estimated future    
payments in connection with contractual obligations. These amounts were         
previously planned to be expensed as they were incurred, in accordance with     
accounting guidance in place when the 2005 Restructuring Plan was announced.    
On November 10, 2005, the Financial Accounting Standards Board (FASB) issued    
Interpretation No. 45-3, Application of FASB Interpretation No. 45 to Minimum   
Revenue Guarantees Granted to a Business or Its Owners, which was applicable    
for certain contractual obligations entered into in the first quarter           
subsequent to its issuance. Contracts under which we were obligated and that    
are part of the 2005 Restructuring Plan were amended during the current year;   
thus, the related obligations have been accrued in accordance with the new      
guidance.                                                                       

Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other    
indefinite-lived intangible assets are no longer amortized but are reviewed     
for impairment at least annually and if a triggering event were to occur in an  
interim period. The 2005 Restructuring Plan was a triggering event that         
required impairment testing of certain divisions' goodwill and intangible       
asset balances. In connection with the 2005 Restructuring Plan and pursuant to  
our policies for assessing impairment of goodwill and long-lived assets,        
$29,279 and $20,287 of goodwill and intangible assets, respectively, including  
trademarks and customer lists, were written off during the second quarter of    
2005. Of these amounts, $9,234 and $9,423 of goodwill and intangible assets,    
respectively, relate to divisions that are included in discontinued             
operations. Included in continuing operations is the write-off of $20,045 and   
$10,864 of goodwill and intangible assets, respectively.                        

NOTE 3.  BUSINESS COMBINATIONS                                                  
On February 4, 2003, we completed the acquisition of substantially all of the   
assets of Briggs New York Corp. (Briggs). Briggs is a leading provider of       
women's pants and skirts for the moderate market to department stores and       
national chains. Additional cash purchase consideration has and will be due if  
Briggs achieves certain annual operating results for each of the four years     
after the acquisition (2003 through 2006). Additional cash consideration paid   
is recorded as goodwill. Additional cash purchase consideration paid in 2004,   
2005 and 2006 was $8,226, $8,750 and $6,446, respectively. The additional       
consideration for fiscal year 2006 is estimated at $3,580, which resulted in    
an increase to goodwill and accrued expenses in the fourth quarter of 2006 and  
will be paid in 2007.                                                           

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KELLWOOD COMPANY AND SUBSIDIARIES 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

On February 3, 2004, we completed the acquisition of Phat Fashions, LLC and     
Phat Licensing, LLC (together referred to as Phat). Phat is a licensor of       
apparel for men, women and children, athletic shoes and accessories through     
the Phat Farm(R) and Baby Phat(R) brands. The acquisition of Phat adds          
important consumer lifestyle brands to our portfolio of brands. The purchase    
price (including acquisition costs) for Phat was $136,497 in cash, net of cash  
acquired. Included in this amount was the exercise price for Phat's option to   
buyout the license from the menswear licensee for $25,000, which we exercised   
in February 2004. Additional cash purchase consideration has been and will be   
due if Phat achieves certain specified financial performance targets for 2004   
through 2010. Such consideration, if earned, is accounted for as additional     
goodwill. This additional cash purchase consideration is calculated based on a  
formula applied to annual royalty revenue through 2010. A minimum level of      
royalty revenue must be earned in order for this additional consideration to    
be paid. There is no maximum amount of incremental purchase price. Additional   
cash consideration paid in 2005 and 2006 was $3,427 and $2,095, respectively.   
The additional consideration for fiscal year 2006 is estimated at $3,385,       
which resulted in an increase to goodwill and accrued expenses in the fourth    
quarter of 2006 and will be paid in 2007.                                       

On October 31, 2006, we completed the acquisition of CRL Group, LLC, owner of   
the Vince(R) brand and trademark. Vince is a contemporary women's sportswear    
collection. The acquisition of Vince expands our marketing-focused portfolio    
with higher profile, upscale brand offerings. The purchase price (including     
acquisition costs) for Vince was $80,937 in cash, including net working         
capital of $11,652. Additional cash purchase consideration will be due if       
Vince achieves certain specified financial performance targets for each of the  
five full years after the acquisition (2007 through 2011). Such consideration,  
if earned, would be accounted for as additional goodwill.                       

On December 5, 2006, we completed the acquisition of HOLLYWOULD, Inc., owner    
of the HOLLYWOULD(R) brand and trademark. HOLLYWOULD is an upscale women's      
line that includes apparel, accessories and shoes. The acquisition of           
HOLLYWOULD augments our strategy to expand our marketing-focused portfolio      
with higher profile, upscale brands. The purchase price (including acquisition  
costs) for HOLLYWOULD was $5,022 in cash, net of cash acquired. Additional      
cash purchase consideration will be due if HOLLYWOULD achieves certain          
specified financial performance targets for each of the five years after the    
acquisition (2007 through 2011). Such consideration, if earned, would be        
accounted for as additional goodwill.                                           

Briggs, Vince and HOLLYWOULD are part of the Women's Sportswear segment. Phat   
is part of the Men's Sportswear segment. These acquisitions were accounted for  
under the purchase method of accounting. Accordingly, their results have been   
included in the Consolidated Financial Statements from the acquisition dates.   
Unaudited consolidated results of operations on a pro-forma basis, assuming     
these acquisitions had occurred at the beginning of the year in which they      
occurred, are not required as the acquisitions were at the beginning of a       
fiscal year or they were immaterial to our consolidated results of operations.  

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KELLWOOD COMPANY AND SUBSIDIARIES 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

For the more significant acquisitions, the following table summarizes the fair  
value of the assets acquired and liabilities assumed at the date of             
acquisition. For Phat, the table represents the final fair values of the        
assets acquired and liabilities assumed at the date of acquisition. For Vince,  
the table represents the estimated fair value of the assets acquired and        
liabilities assumed at the date of acquisition. We are in the process of        
finalizing third-party valuations of certain intangible assets; thus, the       
allocation of the purchase price for Vince is subject to refinement.            

                                                                [Download Table]

                                        Phat                Vince             
                                   --------------       -------------         
                                                                              
     Cash                          $        5,437       $           -         
     Other current assets                   3,331              12,211         
     Property, plant & equipment            2,940                 105         
     Intangible assets                     89,340(1)           51,112(2)      
     Goodwill                              48,060              18,045         
     Other assets                               -                  23         
                                   --------------       -------------         
     Total assets acquired                149,108              81,496         
                                   --------------       -------------         

     Current liabilities                    7,174                 559         
                                   --------------       -------------         

     Net assets acquired           $      141,934       $      80,937         
                                   ==============       =============         

<FN>                                                                          
(1) Identified intangible assets related to the acquisition of Phat are       
trademarks ($86,290) and customer relationships ($3,050) with useful lives of 
20 and 15 years, respectively, based on an independent appraisal. The amount  
of goodwill expected to be deductible for tax purposes is $48,060, not        
including additional consideration based on operating results.                

(2) Preliminary identified intangible assets related to the acquisition of    
Vince are trademarks ($16,908) and customer relationships ($34,204) with      
useful lives of 20 years each based on an independent appraisal. The amount of
goodwill expected to be deductible for tax purposes is $18,045, not including 
increases related to additional consideration based on operating results and  
further refinement to the purchase price allocation.                          

NOTE 4. DISCONTINUED OPERATIONS                                                 
During the third quarter of 2006, our New Campaign and IZOD women's sportswear  
operations became discontinued. The discontinuance of New Campaign was the      
result of our agreement during the third quarter to transfer the business and   
sell business assets to the licensor. We expect to receive proceeds of          
approximately $9 million and do not anticipate a significant gain or loss from  
this sale. We expect to close this transaction in the first quarter of 2007.    
The discontinuance of our IZOD women's sportswear operation was the result of   
our agreement during the three months ended October 28, 2006 to terminate the   
licensing agreement. We expect to close this transaction in the second quarter  
of 2007 with no significant gain or loss. Prior to being classified as          
discontinued, the New Campaign and IZOD operations were included in the         
Women's Sportswear segment.                                                     

Related to our 2005 Restructuring Plan, as discussed in Note 2, our Private     
Label Menswear (which does not include our Smart Shirts subsidiary) and         
several labels at our Oakland Operation were discontinued during the fourth     
quarter of 2005. During the third quarter of 2005, our Intimate Apparel and     
Kellwood New England operations became discontinued. Prior to being classified  
as discontinued, Kellwood New England and the labels at the Oakland Operation   
were included in the Women's Sportswear segment, the Private Label Menswear     
operations were included in the Men's Sportswear segment, and Intimate Apparel  
was included in the Other Soft Goods segment.                                   

The results of operations and impairment, restructuring and other               
non-recurring charges for the discontinued operations (as discussed in Note 2)  
are reported as discontinued operations for all periods presented.              
Additionally, assets and liabilities of the discontinued operations are         
segregated in the accompanying Consolidated Balance Sheets.                     

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KELLWOOD COMPANY AND SUBSIDIARIES 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

Operating results for the discontinued operations, including all charges        
incurred during the periods presented for the 2005 Restructuring Plan related   
to these divisions as described in Note 2, are as follows:                      

                                                        [Enlarge/Download Table]

                                                        Fiscal Year                   
                                     ------------------------------------------------ 
                                           2004            2005             2006      
                                     ---------------  --------------  --------------- 
                                                                                      
Net sales                            $       440,453  $      389,359  $        86,790 
                                     ===============  ==============  =============== 
Impairment, restructuring and other                                                   
    non-recurring charges            $             -  $       57,931  $           688 
                                     ===============  ==============  =============== 
Earnings (loss) before income taxes            6,933         (81,942)           6,392 
Income taxes                                   2,818         (24,773)          (3,927)
                                     ---------------  --------------  --------------- 
Net earnings (loss)                  $         4,115  $      (57,169) $        10,319 
                                     ===============  ==============  =============== 
Diluted earnings (loss) per share    $          0.15  $        (2.11) $          0.40 
                                     ===============  ==============  =============== 

The 2004 income tax rate of 40.6% for discontinued operations differs from our  
overall 2004 tax rate due to foreign losses for which no benefit will be        
obtained. The 2005 income tax benefit rate of 30.2% for discontinued            
operations differs from our overall tax rate due to the non-deductibility of    
certain costs (goodwill impairment) recorded under the 2005 Restructuring       
Plan. The 2006 income taxes for discontinued operations includes a $6,300       
reversal of allowances for tax exposures (related to a 2003 discontinued        
operation) no longer deemed necessary due to finalization of an open tax year.  

Summarized assets and liabilities of the discontinued operations are as         
follows:                                                                        

                                                                [Download Table]

                                                       2005             2006     
                                                  --------------  ---------------
                                                                                 
Cash and cash equivalents                         $          253  $             5
Receivables, net                                          42,806           12,898
Inventories                                               13,481           12,248
Current deferred taxes and prepaid expenses               33,671            3,485
                                                  --------------  ---------------
Current assets of discontinued operations         $       90,211  $        28,636
                                                  ==============  ===============

Property, plant and equipment, net                $        1,648  $         1,190
Goodwill                                                   2,995            2,995
Other assets                                               1,155              251
                                                  --------------  ---------------
Long-term assets of discontinued operations       $        5,798  $         4,436
                                                  ==============  ===============

Accounts payable                                  $       17,924  $         9,363
Accrued liabilities                                       25,660           12,911
                                                  --------------  ---------------
Current liabilities of discontinued operations    $       43,584  $        22,274
                                                  ==============  ===============

Deferred income taxes and other                   $            -  $           347
                                                  --------------  ---------------
Long-term liabilities of discontinued operations  $            -  $           347
                                                  ==============  ===============

The accrued liabilities reflect the discontinued operations classification of   
New Campaign and IZOD and also include charges taken in connection with the     
2005 Restructuring Plan that have not yet been paid and primarily related to    
contractual obligations and employee severance and termination benefits. As     
noted above, the transactions related to the New Campaign and IZOD women's      
sportswear operations are expected to close in the first quarter and second     
quarter of 2007, respectively.                                                  

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KELLWOOD COMPANY AND SUBSIDIARIES 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

NOTE 5.  GOODWILL AND INTANGIBLE ASSETS                                         
Goodwill balances and changes therein since the beginning of fiscal year 2005   
by segment are as follows:                                                      

                                                        [Enlarge/Download Table]

                                            Women's         Men's         Other                   
                                          Sportswear     Sportswear    Soft Goods       Total     
                                         ------------   ------------  ------------  ------------- 
                                                                                                  
Balance as of January 29, 2005           $    134,120   $     51,390  $     26,243  $     211,753 
Impairment charges                            (20,045)             -             -        (20,045)
Adjustment to contingent purchase price                                                           
    for 2004                                      541             97             -            638 
Contingent purchase price for 2005              6,487          2,004             -          8,491 
                                         ------------   ------------  ------------  ------------- 
Balance as of January 28, 2006                121,103         53,491        26,243        200,837 
Adjustment to contingent purchase price                                                           
    for 2005                                      (41)            91             -             50 
Contingent purchase price for 2006              3,580          3,385             -          6,965 
Acquisitions                                   20,316              -             -         20,316 
                                         ------------   ------------  ------------  ------------- 
Balance as of February 3, 2007           $    144,958   $     56,967  $     26,243  $     228,168 
                                         ============   ============  ============  ============= 

Identifiable intangible assets that are being amortized are as follows:         

                                                        [Enlarge/Download Table]

                                       Life (1)      Gross       Accumulated         Net       
                                       (Years)       Amount      Amortization     Book Value   
                                       --------  ------------  ---------------  ---------------
                                                                                               
AS OF JANUARY 28, 2006:                                                                        
Customer base                            20      $     46,708  $         7,934  $        38,774
Trademarks                               20           130,356           17,844          112,512
License agreements                       19            13,931            5,190            8,741
Other                                    10               662              662                -
                                                 ------------  ---------------  ---------------
Total intangibles                        19      $    191,657  $        31,630  $       160,027
                                                 ============  ===============  ===============

AS OF FEBRUARY 3, 2007:                                                                        
Customer base                            20      $     82,162  $        10,817  $        71,345
Trademarks                               20           148,513           24,723          123,790
License agreements                       19            12,220            4,651            7,569
Other                                    10               660              660                -
                                                 ------------  ---------------  ---------------
Total intangibles                        20      $    243,555  $        40,851  $       202,704
                                                 ============  ===============  ===============

<FN>                                                                                           
(1) Weighted Average - original lives                                                          

Amortization of identifiable intangible assets for continuing operations was    
$11,205 for 2004, $10,685 for 2005 and $10,935 for 2006. Amortization expense   
for the years 2007 to 2010 is expected to be approximately $13,000 per year.    

In connection with the restructuring activities described in Note 2 and         
pursuant to our policies for assessing impairment of goodwill and long-lived    
assets, $29,279 and $20,287 of goodwill and intangible assets, respectively,    
including trademarks and customer lists, were written off during 2005. These    
write-offs occurred in the second quarter of 2005. Of these amounts, $9,234     
and $9,423 of goodwill and intangible assets, respectively, relate to           
divisions that are included in discontinued operations. The remaining           
impairment charges of $10,864 for intangible assets and $20,045 for goodwill    
are included in continuing operations and are discussed in the following        
paragraph.                                                                      

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
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(Dollars in thousands, except per share data) 

Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and other    
indefinite-lived intangible assets are no longer amortized but are reviewed     
for impairment at least annually and if a triggering event were to occur in an  
interim period. Our annual impairment testing is performed in the fourth        
quarter. In 2005, the Restructuring Plan was a triggering event that required   
impairment testing of certain divisions' goodwill and intangible asset          
balances. The impairment resulting from this test was due to the operating      
results for the first half of 2005 and expectations regarding future results    
of our dress business being well below the expectations reflected in the test   
performed in the fourth quarter of 2004. This business has experienced several  
years of significant sales decreases resulting from weakness in the retail      
market for dresses. Expectations reflected in prior period impairment tests     
were that these market decreases were ending. The reassessment of our           
businesses performed as part of the 2005 Restructuring Plan during the second   
quarter of 2005 resulted in the conclusion that the negative trends were        
likely to continue into the future. The first step of the impairment testing    
showed that the book value of the dress business in the Women's Sportswear      
segment, which is not being exited, exceeded its fair value. The second step    
of the impairment testing showed that the identifiable intangible assets of     
this business (customer relationships and trademarks) had no fair value, and    
that the book value of the division's goodwill exceeded the implied fair value  
of that goodwill. This evaluation utilized discounted cash flow analyses and    
multiple analyses of the historical and updated forecasted operating results.   
As a result, impairment charges of $20,045 and $10,864 for goodwill and         
intangible assets, including trademarks and customer lists, respectively, of    
this division were recorded during the second quarter of 2005. At the end of    
2005 and 2006, no additional impairment was indicated.                          

It is possible that our estimates of future operating results for certain of    
our divisions could change adversely and impact the evaluation of the           
recoverability of the carrying value of goodwill and that the effect of such    
changes on our Consolidated Financial Statements could be material. While we    
believe that the current recorded carrying value of our goodwill is not         
impaired, there can be no assurance that a significant non-cash write-down or   
write-off will not be required in the future.                                   

NOTE 6.  NOTES PAYABLE AND LONG-TERM DEBT                                       
Notes Payable:                                                                  
On October 20, 2004, we executed a $400,000 five-year unsecured, syndicated     
credit facility (the U.S. Revolving Credit Facility). The U.S. Revolving        
Credit Facility could have been used for borrowings and/or letters of credit.   
Borrowings under the U.S. Revolving Credit Facility bore interest at LIBOR      
plus a spread ranging from 0.60% to 1.25% with such spread depending on our     
consolidated leverage ratio. The U.S. Revolving Credit Facility contained       
certain customary covenants, which, among other things, restricted our ability  
to incur indebtedness, grant liens, make investments and acquisitions and sell  
assets. The financial covenants of the U.S. Revolving Credit Facility included  
requirements that we satisfy an interest coverage ratio, a leverage ratio and   
a net worth maintenance covenant.                                               

On September 1, 2005, the U.S. Revolving Credit Facility was amended to         
accommodate the impact of the 2005 Restructuring Plan and lower earnings from   
certain brands of women's sportswear included in our ongoing operations. The    
amendments to the U.S. Revolving Credit Facility changed the interest rate      
spread to LIBOR plus 0.60% to 1.45%, depending on our consolidated leverage     
ratio. In addition, provisions were added to include a borrowing base           
calculation, and the financial covenants were updated. The updated financial    
covenants included the exclusion of the charges related to the 2005             
Restructuring Plan, a lowered pretax interest coverage threshold and            
modification of the consolidated leverage ratio.                                

On December 21, 2005, our Asian operations executed a $50,000 five-year         
unsecured, syndicated term and revolving credit facility agreement to support   
its working capital needs (the Asian Credit Facility). The term portion of the  
Asian Credit Facility (the Asian Term Credit Facility) is discussed in the      
long-term debt section of this footnote. The revolving portion of the Asian     
Credit Facility (the Asian Revolving Credit Facility) is $25,000 and can be     
used for borrowings and/or letters of credit. Borrowings under the Asian        
Credit Facility bear interest at LIBOR plus a spread ranging from 1.10% to      
1.35% with such spread depending on our Asian operations' leverage ratio. The   
Asian Credit Facility contains certain customary covenants, which among other   
things, restrict our Asian operations' ability to incur indebtedness, grant     
liens, make investments and acquisitions and sell assets. The financial         
covenants of the Asian Credit Facility include requirements that our Asian      
operations satisfy an interest coverage ratio, a leverage ratio and a net       
worth maintenance covenant. We were in compliance with the covenants of the     
Asian Credit Facility at the end of 2006. At February 3, 2007, there was        
$14,000 of borrowings outstanding under the Asian Revolving Credit Facility.    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
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(Dollars in thousands, except per share data) 

On April 12, 2006, we executed a $400,000 five-year secured, syndicated credit  
facility (the Senior Credit Facility) and terminated our prior U.S. Revolving   
Credit Facility. We and our subsidiaries (the Borrowers) are the borrowers      
under the Senior Credit Facility. Borrowings under the Senior Credit Facility   
are secured by the Borrowers' domestic current assets, principally consisting   
of accounts receivable and inventory. This does not include the stock of any    
subsidiaries. Borrowings under the Senior Credit Facility are limited to the    
lesser of the commitment amount or the borrowing base as defined in the credit  
agreement. The Senior Credit Facility can be used to refinance existing         
indebtedness, for letters of credit, for working capital needs and for other    
general corporate purposes. Borrowings under the Senior Credit Facility bear    
interest at a rate equal to LIBOR plus a spread of 1.00% to 2.00%, with such    
spread depending upon excess liquidity, as defined in the credit agreement.     
The Senior Credit Facility contains certain customary covenants, including:     
(a) when availability under the Senior Credit Facility becomes less than        
$40,000, a minimum fixed charge coverage ratio is required; and (b) so long as  
availability remains above $60,000, Borrowers would generally not be            
restricted in terms of distributions and dividends, investments, issuance of    
new indebtedness, granting of liens (except to assets securing the Senior       
Credit Facility), acquisitions and capital expenditures. At February 3, 2007,   
there were no borrowings outstanding under the Senior Credit Facility, and we   
were in compliance with all covenants. Letters of credit outstanding under the  
Senior Credit Facility were $23,646 at February 3, 2007.                        

In addition to the revolving credit facilities discussed above, we maintain     
uncommitted lines of credit, which totaled $38,804 at February 3, 2007. There   
were no borrowings outstanding under these lines at February 3, 2007. We have   
$6,291 in outstanding letters of credit used by our foreign operations under    
these lines at February 3, 2007.                                                

The weighted average interest rate on the notes payable was 5.81% and 6.45% as  
of January 28, 2006 and February 3, 2007, respectively.                         

Long-term Debt:                                                                 
Long-term debt is comprised of the following at January 28, 2006 and            
February 3, 2007:                                                               

                                                        [Enlarge/Download Table]

                                                     January 28, 2006   February 3, 2007 
                                                     ----------------   ---------------- 
                                                                                         
3.50% 2004 Convertible Debentures due June 15, 2034  $        200,000   $        200,000 
7.625% 1997 Debentures due October 15, 2017                   129,592            129,665 
7.875% 1999 Debentures due July 15, 2009                      140,214            140,296 
Asian Term Credit Facility                                     25,000             22,222 
Other                                                               6                  - 
                                                     ----------------   ---------------- 
                                                              494,812            492,183 
Less current maturities                                        (2,784)            (5,556)
                                                     ----------------   ---------------- 
                                                     $        492,028   $        486,627 
                                                     ================   ================ 

On December 21, 2005, our Asian operations executed a $50,000 five-year         
unsecured, syndicated term and revolving credit facility agreement to support   
its working capital needs (the Asian Credit Facility). The term portion of the  
Asian Credit Facility (the Asian Term Credit Facility) is $25,000 and requires  
semiannual payments of principal that began in November 2006. See the notes     
payable section of this footnote for a discussion of the revolving portion and  
additional information related to the Asian Credit Facility. At February 3,     
2007, there was $22,222 of borrowings outstanding under the Asian Term Credit   
Facility, of which $5,556 is current.                                           

During the second quarter of 2004, we privately placed $200,000 of 3.50%        
Convertible Senior Debentures due 2034. The debentures are convertible into     
shares of Kellwood's common stock at an initial conversion rate of 18.7434      
shares per one thousand dollars original principal amount of debentures (which  
is equivalent to an initial conversion price of $53.35 per share) if the last   
reported sale price of the common stock is greater than or equal to $70.05 per  
share for at least 20 trading days in the period of 30 consecutive trading      
days ending on the last trading day of the preceding fiscal quarter. The        
holders may also convert the debentures into shares of Kellwood common stock    
prior to the stated maturity if we call the debentures for redemption and       
under certain other circumstances. In July 2004, we irrevocably elected to      
satisfy in cash (in lieu of issuance of stock) 100% of the accreted principal   
amount of debentures converted. We may still satisfy the remainder of our       
conversion obligation to the extent it exceeds the accreted principal amount    
in cash or common stock or any combination thereof.                             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
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(Dollars in thousands, except per share data) 

The debentures accrue interest at an annual rate of 3.50%, payable              
semi-annually until June 15, 2011. After June 15, 2011 interest will not be     
paid, but instead the recorded value of the bonds will increase until           
maturity. At maturity, the holder will receive the accreted principal amount,   
which will be equal to the original principal amount of one thousand dollars    
per debenture plus the accreted interest.                                       

The debentures will mature on June 15, 2034, unless we convert, redeem or       
repurchase them at an earlier date. We may redeem some or all of the            
debentures for cash, at any time and from time to time, on or after June 20,    
2011 at a redemption price equal to 100% of the accreted principal amount of    
the debentures to be redeemed, plus accrued and unpaid interest. Holders have   
the right to require us to repurchase some or all of the debentures for cash    
at a repurchase price equal to 100% of the accreted principal amount of the     
debentures to be repurchased, plus accrued and unpaid interest on June 15,      
2011, June 15, 2014, June 15, 2019, June 15, 2024 and June 15, 2029, or if we   
undergo a fundamental change as defined in the debentures agreement.            

During 1997, $150,000 of 7.625% Debentures were issued under a shelf            
registration. Principal on the notes is due October 15, 2017. Interest is       
payable semi-annually on each April 15 and October 15. During 1999, $150,000    
of 7.875% Debentures were issued under a shelf registration. Principal on the   
notes is due July 15, 2009. Interest is payable semi-annually on each January   
15 and July 15. In prior fiscal years, we have purchased portions of these      
securities on the open market.                                                  

Aggregate maturities on long-term debt for the next five years are as follows:  
2007 - $5,556; 2008 - $5,555; 2009 - $145,851; 2010 - $5,556; 2011 - $0; 2012   
& thereafter - $329,665.                                                        

We own 50% of a Singaporean shirt manufacturing joint venture that has a        
$5,043 credit facility. We have guaranteed one half of the borrowings under     
this facility not otherwise paid when due by the joint venture. At the end of   
fiscal year 2006, $3,317 was outstanding under this facility.                   

NOTE 7.  LEASES                                                                 
We lease substantially all of our office space, certain distribution            
facilities, retail outlet stores and certain machinery and equipment under      
operating leases having remaining terms ranging up to 10 years, excluding       
renewal terms. Rent under leases with scheduled rent changes or lease           
concessions is recorded on a straight-line basis over the lease term. Rent      
expense under all operating leases for 2006 totaled $30,135 ($29,783 for 2004   
and $30,087 for 2005).                                                          

The future minimum lease payments under operating leases at February 3, 2007    
were as follows:                                                                

                               Operating
                               -------------
2007                                             $      25,413                  
2008                                                    19,072                  
2009                                                    12,741                  
2010                                                     6,997                  
2011                                                     3,594                  
Thereafter                                               4,795                  
                               -------------
Total minimum lease payments                     $      72,612                  
                               =============

Minimum operating lease payments were not reduced for future minimum sublease   
rentals of approximately $311.                                                  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

NOTE 8.  RETIREMENT BENEFITS                                                    
Various contributory and/or noncontributory retirement plans cover              
substantially all domestic and certain foreign employees. Total retirement      
benefits expense includes the following:                                        

                                                                [Download Table]

                                           2004          2005         2006   
                                       ------------  -----------  -----------

                                                                             
Defined contribution plans             $      6,105  $     6,085  $     6,552
Single-employer defined benefit plans         1,815        1,309          997
Multi-employer defined benefit plan             333          299           19
                                       ------------  -----------  -----------

Total retirement benefits expense      $      8,253  $     7,693  $     7,568
                                       ============  ===========  ===========

Defined Contribution Plans:                                                     
We sponsor or contribute to various defined contribution retirement benefit     
and savings plans covering substantially all employees.                         

Single-Employer Defined Benefit Plans:                                          
Our Smart Shirts subsidiary maintains a defined benefit plan for certain of     
its employees. This plan was closed to new hires after December 1, 2000. Our    
Gerber Childrenswear (Gerber) subsidiary maintains a defined benefit plan for   
certain of its employees. This plan was frozen effective December 2002. We use  
a December 31 measurement date for these plans.                                 

Summarized information on our single-employer defined benefit plans (Gerber     
and Smart Shirts) is as follows:                                                

                                                        [Enlarge/Download Table]

                                                                2004          2005           2006     
                                                             -----------   -----------   ------------ 
                                                                                                      
Components of Net Periodic Pension Cost and other                                                     
amounts recognized in Other Comprehensive Income:                                                     
   Service cost                                              $       903   $       494   $        480 
   Interest cost                                                   2,742         2,176          2,127 
   Expected return on plan assets                                 (2,173)       (1,996)        (2,102)
   Amortization of prior service costs and actuarial losses          343           239            104 
   Settlement loss / (gain)                                            -           396             (5)
                                                             -----------   -----------   ------------ 
    Net periodic pension cost                                $     1,815   $     1,309   $        604 
                                                             ===========   ===========   ============ 

The weighted average key actuarial assumptions used to determine:               

                                                                [Download Table]
                                                                    
Benefit obligations:                                                
  Discount rate                                     5.8%  5.4%  5.6%
  Expected long-term rate of return on plan assets  6.8%  6.8%  7.0%
Net periodic benefit cost:                                          
  Discount rate                                     6.0%  5.8%  5.4%
  Expected long-term rate of return on plan assets  6.6%  6.8%  6.8%
  Rate of compensation increases                    3.0%  3.0%  3.0%

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KELLWOOD COMPANY AND SUBSIDIARIES 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

The market assumptions for the defined benefit plans are developed using        
several approaches, including an analysis of historical returns, developing an  
inflation expectation and real return risk premiums over inflation for each     
asset class, and developing returns based on the drivers of return for each     
asset class.                                                                    

                                                                [Download Table]

                                                             2005          2006     
                                                          -----------   ----------- 
                                                                                    
Change in Projected Benefit Obligation:                                             
Projected benefit obligation, beginning of year           $    41,123   $    40,105 
Service cost                                                      753           708 
Interest cost                                                   2,176         2,127 
Actuarial (gain)/loss                                            (368)         (113)
Settlement loss                                                   396          (192)
Benefits paid                                                  (3,975)       (3,018)
                                                          -----------   ----------- 
Projected benefit obligation, end of year                 $    40,105   $    39,617 
                                                          ===========   =========== 

Change in Plan Assets:                                                              
Fair value of plan assets, beginning of year              $    32,154   $    33,066 
Actual return on plan assets                                    2,607         4,294 
Employer contributions                                          2,053         1,428 
Employee contributions                                            227           212 
Benefits paid                                                  (3,975)       (3,203)
                                                          -----------   ----------- 
Fair value of plan assets, end of year                    $    33,066   $    35,797 
                                                          ===========   =========== 

                                                             2005          2006     
                                                          -----------   ----------- 
                                                                                    
Reconciliation of funded status to prepaid pension cost:                            
Funded Status - Plan assets in excess of                                            
     projected benefit obligation                         $    (7,039)  $    (3,820)
Unamortized prior service costs                                    23             * 
Unrecognized actuarial (gain)/loss                             (1,156)            * 
                                                          -----------   ----------- 
Accrued pension costs                                     $    (8,172)  $    (3,820)
                                                          ===========   =========== 

Amounts recognized in the Consolidated Balance Sheets consist of the            
following:                                                                      

                                                                [Download Table]

                                           2005          2006     
                                        -----------   ----------- 
                                                                  
Accrued pension cost                    $    (8,337)  $         * 
Accumulated other comprehensive income          165             * 
Noncurrent liability                              *        (3,820)
                                        -----------   ----------- 
Net amount recognized                   $    (8,172)  $    (3,820)
                                        ===========   =========== 

Amounts recognized in Accumulated Other Comprehensive Income consist of the     
following:                                                                      

                                                                [Download Table]

                                                     2005         2006     
                                                  -----------  ----------- 
                                                                           
Unamortized prior service costs                   $         *  $        13 
Net actuarial gain                                          *       (3,540)
                                                  -----------  ----------- 
Net amount recognized                             $         *  $    (3,527)
                                                  ===========  =========== 
<FN>                                                                       
* Not applicable due to adoption of SFAS No. 158.                          

We adopted SFAS No. 158 as of February 3, 2007. The incremental effect of       
applying SFAS No. 158 on individual line items in the consolidated balance      
sheet at February 3, 2007, is as follows:                                       

                                                        [Enlarge/Download Table]

                                                  Before application                    After application
                                                    of SFAS No. 158     Adjustments      of SFAS No. 158 
                                                  ------------------  ---------------   -----------------
                                                                                                         
Deferred tax asset                                $                -  $         1,613   $           1,613
Accrued pension liability                                      7,347           (3,527)              3,820
Accumulated other comprehensive loss, net of tax                   -            1,914               1,914

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KELLWOOD COMPANY AND SUBSIDIARIES 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

The decrease in the minimum liability included in other comprehensive income    
in 2006 was $262 (a decrease of $1,289 for 2005). The accumulated benefit       
obligation for all defined benefit pension plans was $38,336 and $39,617 at     
January 28, 2006 and February 3, 2007, respectively. Information for the        
defined benefit pension plans with accumulated benefit obligation in excess of  
plan assets is as follows:                                                      

                                                                [Download Table]

                                                2005           2006    
                                            ------------   ------------
                                                                       
Projected benefit obligation                $     40,105   $     39,617
Accumulated benefit obligation                    38,336         39,617
Fair value of plan assets                         33,066         35,797

The weighted average asset allocations for each of our pension plans by asset   
category are as follows:                                                        

                                                                [Download Table]

                        Gerber Plan Assets       Smart Shirts Plan Assets 
                   ---------------------------  --------------------------
Asset Category         2005           2006          2005           2006   
--------------     ------------   ------------  ------------   -----------
                                                                          
Equity securities           70%            69%           47%           55%
Debt securities             29%            29%           53%           44%
Other                        1%             2%            0%            1%
                   ------------   ------------  ------------   -----------
                           100%           100%          100%          100%
                   ============   ============  ============   ===========

Gerber's retirement assets are invested in a series of broadly diversified      
asset class specific portfolios. Assets are allocated to these funds in         
accordance with the strategic target allocation as follows: equity securities   
of 67%, debt securities of 30% and cash of 3%. Smart Shirts' investment         
policies are to maintain solvency for the future, establish an overall average  
company contribution rate and ensure the ability to pay short-term              
distributions. The target allocations for the Smart Shirts' plan assets are 50% 
debt securities and 50% equity securities.                                      

We expect to contribute approximately $1,700 to our pension plans during 2007.  

We expect that the plans will make payments ranging from $2,300 to $3,400       
annually for the next five years and payments totaling $18,700 for the years    
2012 through 2016.                                                              

Multi-Employer Defined Benefit Plan:                                            
Certain of our subsidiaries make contributions to a multi-employer defined      
benefit plan on behalf of their participating employees. The plan               
administrator estimates that if we were to withdraw from the plan, its          
potential liability for unfunded plan benefits would be approximately $2,400    
as of December 31, 2006, the date of the most recent actuarial valuation        
report.                                                                         

NOTE 9.  STOCK PLANS                                                            
On January 29, 2006, we adopted SFAS No. 123(R), Share-Based Payment,           
requiring the recognition of compensation expense in the Consolidated           
Statement of Operations related to the fair value of our employee share-based   
options. SFAS No. 123(R) revises SFAS No. 123, Accounting for Stock-Based       
Compensation, and supercedes Accounting Principles Board (APB) Opinion No. 25,  
Accounting for Stock Issued to Employees. SFAS No. 123(R) is supplemented by    
Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No.    
107, Share-Based Payment. SAB No. 107 expresses the SEC staff's views           
regarding the interaction between SFAS No. 123(R) and certain SEC rules and     
regulations including the valuation of share-based payment arrangements. SFAS   
No. 123(R) amends SFAS No. 95, Statement of Cash Flows, to require that excess  
tax benefits be reported as a financing cash inflow rather than as a reduction  
of taxes paid, which is included within operating cash flows.                   

Determining the fair value of share-based awards at the grant date requires     
judgment, including estimating the expected term that stock options will be     
outstanding prior to exercise, the associated volatility and the expected       
dividends. Judgment is also required in estimating the amount of share-based    
awards expected to be forfeited prior to vesting. If actual forfeitures differ  
significantly from these estimates, share-based compensation expense could be   
materially impacted. Prior to adopting SFAS No. 123(R), we applied APB Opinion  
No. 25, and related Interpretations, in accounting for our stock-based          
compensation plans. All employee stock options were granted at or above the     
grant date market price. Accordingly, no compensation cost was recognized for   
fixed stock option grants in prior periods.                                     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
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(Dollars in thousands, except per share data) 

We will recognize the cost of all employee stock options on a straight-line     
attribution basis over their respective vesting periods. We have selected the   
modified prospective method of transition; accordingly, prior periods have not  
been restated. Total stock option expense recorded in fiscal year 2006 and in   
the pro-forma table in Note 1 for 2004 and 2005 has been reduced by an          
estimated forfeiture rate of 5.0%. This estimate will be revised in subsequent  
periods if actual forfeitures differ from the original estimates.               

We have issued stock options and restricted shares to employees under           
share-based compensation plans. Stock options are issued at the current market  
price, subject to a three to five year vesting period with a contractual term   
of 10 years. Shares are issued from treasury stock upon the exercise of stock   
options.                                                                        

The fair value of options granted is estimated on the date of grant using the   
Black-Scholes option-pricing model. No options have been granted since the      
first quarter of 2005. The following weighted average assumptions were used     
for the options granted in the first quarter of 2005:                           

Expected option life                               6 years                      

Risk-free interest rate                               4.5%                      

Expected volatility of Kellwood stock                33.6%                      

Expected dividend yield on Kellwood stock             2.2%                      

A summary of stock options outstanding as of January 28, 2006 and the plans'    
activity during the twelve months ended February 3, 2007 is presented below:    

                                                        [Enlarge/Download Table]

                                                                         Weighted Average                
                                                                             Remaining        Aggregate  
                                                     Weighted Average       Contractual       Intrinsic  
(Shares in thousands)                 Shares          Exercise Price       Term (Years)         Value    
                                 ----------------   ------------------  ------------------  -------------
                                                                                                         
Outstanding at January 28, 2006             2,748   $            28.84                                   
Granted                                         -                    -                                   
Exercised                                    (461)               23.61                                   
Forfeited or expired                         (135)               34.72                                   
                                 ----------------   ------------------  ------------------  -------------
Outstanding at February 3, 2007             2,152   $            29.60                 5.6  $      10,809
                                 ----------------   ------------------  ------------------  -------------

Exercisable at February 3, 2007             1,586   $            30.38                 5.1  $       7,924
                                 ----------------   ------------------  ------------------  -------------

The total intrinsic value of options exercised during 2004, 2005 and 2006 was   
$13,024, $1,483 and $3,209, respectively. The amount of cash received from the  
exercise of stock options for the twelve months ended February 3, 2007 was      
$10,264.                                                                        

A summary of the activity for nonvested stock option awards as of February 3,   
2007 and changes during 2006 is presented below:                                

                                                                [Download Table]

                                                         Weighted Average  
                                                            Grant Date     
(Shares in thousands)                    Awards        Fair Value per Award
                                    ----------------  ---------------------
                                                                           
Nonvested at January 28, 2006                  1,043  $                8.53
Granted                                            -                      -
Vested                                          (742)                  8.44
Cancelled                                        (38)                  8.65
                                    ----------------  ---------------------

Nonvested at February 3, 2007                    263  $                8.78
                                    ----------------  ---------------------

For the twelve months ended February 3, 2007, we recorded $4,344 of stock       
option expense and a related deferred tax asset of $1,605. As of February 3,    
2007, there was $1,371 of total unrecognized compensation cost related to       
nonvested share-based compensation awards granted under the stock option        
plans, which will all be expensed in fiscal year 2007.                          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

NOTE 10.  CAPITAL STOCK                                                         
The reported outstanding shares of common stock have been reduced by treasury   
stock totaling 8,184,894 shares at February 3, 2007 (8,435,267 shares at        
January 28, 2006).                                                              

Authorized capital includes 500,000 shares of preferred stock, none of which    
have been issued.                                                               

We have adopted a Rights Agreement. Each outstanding common share has           
associated with it one right to purchase a specified amount of Series A Junior  
Preferred Stock at a stipulated price in certain circumstances related to       
changes in the ownership of our common shares. There are 160,000 shares of      
Preferred Stock reserved for the exercise of the rights. None of the rights     
were exercisable as of February 3, 2007.                                        

In July 2005, we announced a stock repurchase program (Stock Repurchase         
Program). The Board of Directors authorized us to repurchase, at our            
discretion, up to ten percent of the outstanding shares of our common stock     
through open market or privately negotiated transactions. The Board of          
Directors has approved the investment of up to $75,000 for this purpose.        
During fiscal year 2005, we repurchased 2,218,200 shares at an average price    
of $24.99 per share, totaling $55,430. During fiscal year 2006, we repurchased  
173,600 shares at an average price of $28.83 per share, totaling $5,006.        
Payments made under the Stock Repurchase Program are recorded in Treasury       
Stock on the Consolidated Balance Sheets.                                       

NOTE 11.  INCOME TAXES                                                          
The provision (benefit) for income taxes for continuing operations consists of  
the following:                                                                  

                                                        [Enlarge/Download Table]

                                                           2004        2005          2006    
                                                       -----------  -----------   -----------
                                                                                             
Current:                                                                                     
   Domestic:                                                                                 
       Federal                                         $    10,830  $    (5,114)  $     1,481
       State                                                   541        1,102         1,092
   Foreign                                                   4,970        5,514         1,754
                                                       -----------  -----------   -----------
Total current provision for income taxes                    16,341        1,502         4,327
Deferred (primarily federal)                                15,145        2,353         3,667
Effect of repatriation of foreign earnings                       -      (13,000)            -
                                                       -----------  -----------   -----------
Total (benefit) provision for income taxes             $    31,486  $    (9,145)  $     7,994
                                                       ===========  ===========   ===========

The sources of income (loss) before income taxes are:                                        
   United States                                       $    66,664  $   (18,788)  $    10,010
   Foreign                                                  27,043       28,399        19,067
                                                       -----------  -----------   -----------
Kellwood total                                         $    93,707  $     9,611   $    29,077
                                                       ===========  ===========   ===========

Current income taxes are the amounts payable under the respective tax laws and  
regulations on each year's earnings and on foreign earnings remitted during     
the year. A reconciliation of the federal statutory income tax rate to the      
effective tax rate (including impairment, restructuring and other               
non-recurring charges and repatriation) is as follows:                          

                                                        [Enlarge/Download Table]

                                                 2004                        2005                        2006          
                                     --------------------------  --------------------------  --------------------------
                                        Dollars     Percentage      Dollars     Percentage      Dollars     Percentage 
                                     ------------  ------------  ------------  ------------  ------------  ------------
                                                                                                                       
Statutory rate                       $     32,797        35.0%   $      3,364        35.0%   $     10,177        35.0% 
State taxes, net of federal benefit         1,183         1.3%            831         8.6%          1,729         5.9% 
Foreign tax rate differential              (1,403)       (1.5%)        (4,430)      (46.1%)        (4,928)      (16.9%)
Non-deductible impairment                       -         0.0%          2,866        29.8%              -         0.0% 
Other                                      (1,091)       (1.2%)         1,224        12.8%          1,016         3.5% 
                                     ------------  -----------   ------------  -----------   ------------  ----------- 
   Prior to repatriation benefit           31,486        33.6%          3,855        40.1%          7,994        27.5% 
Repatriation benefit                            -         0.0%        (13,000)     (135.3%)             -         0.0% 
                                     ------------  ------------  ------------  -----------   ------------  ----------- 
   Total                             $     31,486        33.6%   $     (9,145)      (95.2%)  $      7,994        27.5% 
                                     ============  ============  ============  ===========   ============  =========== 

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

In October 2004, the American Jobs Creation Act of 2004 (the Act) was signed    
into law. The Act provides a special one-time deduction of 85% of foreign       
earnings that are repatriated under a domestic reinvestment plan, as defined    
therein. During 2005, we adopted a formal domestic reinvestment plan that       
resulted in the repatriation of $160,000 of foreign earnings. This              
repatriation resulted in a one-time tax benefit of $13,000 recorded during the  
second quarter of 2005 due to the reversal of $23,500 of previously provided    
taxes on foreign earnings, which will not be incurred under the new             
regulations, offset by $10,500 of taxes provided on earnings to be              
repatriated.                                                                    

Deferred income tax assets and liabilities consisted of the following:          

                                                        [Enlarge/Download Table]

                                                       2005                  2006        
                                                ------------------   ------------------- 
                                                                                         
Deferred tax assets                                                                      
   Employee related costs                       $           18,003   $            13,845 
   Allowance for asset valuations                           17,023                13,609 
   Net operating losses                                          -                21,450 
   Other                                                    10,056                17,262 
                                                ------------------   ------------------- 
Net deferred income tax assets                  $           45,082   $            66,166 
                                                ------------------   ------------------- 

Deferred tax liabilities                                                                 
   Depreciation and amortization                $          (15,373)  $           (16,544)
   Other                                                    (5,067)               (8,449)
                                                ------------------   ------------------- 
Net deferred income tax liabilities             $          (20,440)  $           (24,993)
                                                ------------------   ------------------- 

Net deferred income tax assets / (liabilities)  $           24,642   $            41,173 
                                                ==================   =================== 

Included in:                                                                             
   Current deferred taxes and prepaid expenses  $           26,400   $            33,363 
   Other assets                                                  -                 7,810 
   Deferred income taxes and other                          (1,758)                    - 
                                                ------------------   ------------------- 
Net deferred income tax assets / (liabilities)  $           24,642   $            41,173 
                                                ==================   =================== 

Substantially all available net operating loss carryforwards as of February 3,  
2007 will expire in 2026. We expect to utilize these net operating loss         
carryforwards in 2007 and 2008. As of January 28, 2006 and February 3, 2007,    
the other deferred tax asset shown above consists substantially of deferred tax 
assets for accrued expenses not deductible until paid and the other deferred    
tax liability shown above is primarily related to accrued interest.             

Federal income taxes are provided on earnings of foreign subsidiaries except    
to the extent that such earnings are currently expected to be permanently       
reinvested abroad. Undistributed foreign earnings that we currently consider    
to be permanently reinvested abroad totaled approximately $14,045 through       
February 3, 2007.                                                               

In June 2006, the FASB issued Interpretation No. 48, Accounting for             
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN  
48), which clarifies the accounting for uncertainty in income tax positions.    
This Interpretation requires that the financial statement effects of a tax      
position taken or expected to be taken in a tax return are to be recognized in  
the financial statements when it is more likely than not, based on the          
technical merits, that the position will be sustained upon examination,         
including resolution of any related appeals or litigation processes. FIN 48 is  
effective for fiscal years beginning after December 15, 2006, and we will be    
required to adopt this interpretation in the first quarter of fiscal year       
2007. Based on our evaluation as of February 3, 2007, we do not believe that    
FIN 48 will have a material impact on our financial statements.                 

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

NOTE 12.  EARNINGS (LOSS) PER SHARE                                             
Earnings (loss) per share have been calculated as follows:                      

                                                        [Enlarge/Download Table]

                                                         2004        2005          2006    
                                                     -----------  -----------   -----------
                                                                                           
Numerators:                                                                                
   Net earnings from continuing operations           $    62,221  $    18,756   $    21,083
   Net earnings (loss) from discontinued operations        4,115      (57,169)       10,319
                                                     -----------  -----------   -----------
   Net earnings (loss)                               $    66,336  $   (38,413)  $    31,402
                                                     ===========  ===========   ===========

Denominators (000's):                                                                      
    Average shares outstanding - Basic                    27,504       26,986        25,709
    Impact of stock options                                  535          108           157
                                                     -----------  -----------   -----------
    Average shares outstanding - Diluted                  28,039       27,094        25,866
                                                     -----------  -----------   -----------

Continuing operations                                $      2.26  $      0.70   $      0.82
Discontinued operations                                     0.15        (2.12)         0.40
                                                     -----------  -----------   -----------
   Basic earnings (loss) per share                   $      2.41  $     (1.42)  $      1.22
                                                     ===========  ===========   ===========

Continuing operations                                $      2.22  $      0.69   $      0.82
Discontinued operations                                     0.15        (2.11)         0.40
                                                     -----------  -----------   -----------
   Diluted earnings (loss) per share                 $      2.37  $     (1.42)  $      1.21
                                                     ===========  ===========   ===========

The calculation of diluted earnings per share excludes the impact of the        
contingent convertible debt for 2004, 2005 and 2006, and 601,000, 2,318,975     
and 1,065,066 of stock options in 2004, 2005 and 2006, respectively, because to 
include them would have been antidilutive.                                      

NOTE 13.  COMMITMENTS AND CONTINGENCIES                                         
We are currently party to various legal proceedings. While management,          
including internal counsel, currently believes that the ultimate outcome of     
these proceedings, individually and in the aggregate, will not have a material  
adverse impact on our financial position or results of operations, litigation   
is subject to inherent uncertainties.                                           

We have exclusive license agreements to market apparel under trademarks owned   
by other parties. These include Calvin Klein for women's better sportswear,     
Liz Claiborne(R) for women's dresses and suits, O Oscar for women's better      
sportswear and XOXO(R) for junior's sportswear and dresses. These agreements    
contain provisions for minimum royalty and advertising payments based on        
anticipated sales in future periods.                                            

During 2006, there were changes to our license agreements. We entered into an   
amended agreement under which we extended the Calvin Klein women's better       
sportswear license for North America; we were granted the ck Calvin Klein       
women's bridge sportswear license for North America; we agreed to re-launch O   
Oscar, an Oscar de la Renta Company, as a better women's sportswear collection  
exclusively at Macy's; and we extended the XOXO(R) license for junior's         
sportswear and dresses. In addition, as discussed in Note 4, we discontinued    
the New Campaign and IZOD operations, which resulted in the termination of the  
related licensing agreements. In 2006, the royalty and advertising expense for  
all agreements totaled $21,351 and $9,698, respectively ($21,665 and $11,610    
in 2004 and $21,199 and $9,769 in 2005).                                        

Our future minimum payments for all license agreements is as follows:           

                                                                [Download Table]

                                                  Royalties     Advertising 
                                                 -----------    ------------
                                                                            
2007                                             $    17,455    $     10,879
2008                                                  15,958          11,287
2009                                                  13,062           8,281
2010                                                  14,400           6,805
2011                                                  15,210           7,218
Thereafter                                            12,224           6,059
                                                 -----------    ------------
Total                                            $    88,309    $     50,529
                                                 ===========    ============

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

NOTE 14.  INDUSTRY SEGMENT AND GEOGRAPHIC AREA INFORMATION                      
We and our subsidiaries are principally engaged in the apparel and related      
soft goods industries. Our operations are managed in a number of divisions      
that are organized around individual product lines and brands. These divisions  
are aggregated into three major consumer market product groupings along with    
General Corporate, which represent our reportable segments. These segments      
are:                                                                            

o    WOMEN'S SPORTSWEAR designs, merchandises and sells women's       
sportswear sold through leading retailers in all channels of
       distribution. The product line includes blazers, dresses, sweaters,
      blouses, vests, other tops, skirts, pants and skorts. The business
    is primarily branded goods sold at the popular-to-moderate price
      points, but the segment does include some better-to-bridge lines -
      upper price point women's sportswear sold principally to specialty
        stores, department stores and catalog houses. A partial list of such
  brands are Sag Harbor(R), Koret(R), Dorby(TM), My Michelle(R),
        Briggs New York(R) (Briggs) and Vince(R). Calvin Klein, XOXO(R), Liz
    Claiborne(R) Dresses and Suits, O Oscar and David Meister(R) are
produced under licensing agreements.                        

o    MEN'S SPORTSWEAR designs, manufactures and sells men's woven and 
   knit shirts, pants and jeans sold to leading department stores,
 catalog houses and national chains. The business is primarily
        private label but also includes a number of branded programs such as
 Nautica(R), Claiborne(R) and Dockers(R) dress shirts and Phat
Farm(R) and Northern Isles(R) sportswear.                   

  o    OTHER SOFT GOODS designs, merchandises and sells infant apparel and
    recreation products (tents, sleeping bags, backpacks and related
products). The business is primarily branded goods including
       Kelty(R) and Sierra Design(R) for recreation products and Gerber(R)
for infant apparel.                                         

o    GENERAL CORPORATE includes general and administrative expenses at
     the corporate level that are not allocated to the above segments.

Management evaluates the performance of our operating segments separately to    
individually monitor the different factors affecting financial performance.     
Segment earnings for the three major consumer market product segments includes  
substantially all of the segment's costs of production, distribution and        
administration.                                                                 

Segment net assets measures net working capital, net fixed assets and other     
noncurrent assets and liabilities of each segment. Goodwill, net intangibles    
and certain corporate assets, including capitalized software, shared            
distribution centers, and debt and cash balances, are accounted for at the      
corporate level and as a result are included in the General Corporate segment   
net assets. Amortization of intangibles is accounted for at the corporate       
level and is not allocated to the segments. Capital expenditures exclude the    
cost of long-lived assets included in acquisitions accounted for under          
purchase accounting.                                                            

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

                                                                [Download Table]

                                       2004             2005             2006     
                                   -------------   --------------   ------------- 
                                                                                  
Net sales:                                                                        
   Women's Sportswear              $   1,304,740   $    1,144,607   $   1,107,571 
   Men's Sportswear                      505,318          498,061         525,005 
   Other Soft Goods                      305,194          319,371         329,174 
                                   -------------   --------------   ------------- 
   Total net sales                 $   2,115,252   $    1,962,039   $   1,961,750 
                                   =============   ==============   ============= 

Segment earnings:                                                                 
   Women's Sportswear              $      93,742   $       54,814   $      68,421 
   Men's Sportswear                       52,645           43,262          38,297 
   Other Soft Goods                       28,211           31,204          35,085 
   General Corporate                     (45,917)         (44,704)        (49,881)
                                   -------------   --------------   ------------- 
   Total segments                        128,681           84,576          91,922 

Stock option expense                           -                -           4,345 
Amortization of intangible assets         11,205           10,685          10,935 
Impairment, restructuring and                                                     
   other non-recurring charges                 -           42,341          33,632 
Interest expense, net                     25,860           23,241          15,676 
Other income, net                         (2,091)          (1,302)         (1,743)
                                   -------------   --------------   ------------- 
Earnings before income taxes       $      93,707   $        9,611   $      29,077 
                                   =============   ==============   ============= 

Net assets at end of year:                                                        
   Women's Sportswear              $     243,415   $      168,164   $     178,313 
   Men's Sportswear                      160,060          111,426         115,089 
   Other Soft Goods                       51,893           38,030          46,957 
   General Corporate                      97,256          239,322         284,316 
                                   -------------   --------------   ------------- 
   Continuing operations                 552,624          556,942         624,675 
   Discontinued operations               160,900           52,425          10,451 
                                   -------------   --------------   ------------- 
   Kellwood total                  $     713,524   $      609,367   $     635,126 
                                   =============   ==============   ============= 

Capital expenditures:                                                             
   Women's Sportswear              $       3,292   $        3,197   $       3,360 
   Men's Sportswear                        8,254           11,371           8,830 
   Other Soft Goods                          915              354             589 
   General Corporate                       9,386            4,602          10,127 
                                   -------------   --------------   ------------- 
   Continuing operations                  21,847           19,524          22,906 
   Discontinued operations                 5,589               58              16 
                                   -------------   --------------   ------------- 
   Kellwood total                  $      27,436   $       19,582   $      22,922 
                                   =============   ==============   ============= 

Depreciation expense:                                                             
   Women's Sportswear              $       6,359   $        6,051   $       3,535 
   Men's Sportswear                        8,110            8,854           7,979 
   Other Soft Goods                        2,147            1,351             705 
   General Corporate                       9,148            9,793          12,112 
                                   -------------   --------------   ------------- 
   Continuing operations                  25,764           26,049          24,331 
   Discontinued operations                 1,388            1,251             246 
                                   -------------   --------------   ------------- 
   Kellwood total                  $      27,152   $       27,300   $      24,577 
                                   =============   ==============   ============= 

Substantially all sales are to U.S. customers. Sales and transfers between      
segments were not significant. Approximately $31,024 of our net property,       
plant and equipment is located in Asia.                                         

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KELLWOOD COMPANY AND SUBSIDIARIES 
--------------------------------- 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  
------------------------------------------------------  
(Dollars in thousands, except per share data) 

NOTE 15.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)                         

                                                        [Enlarge/Download Table]

Quarter                                                     First           Second            Third          Fourth    
                                                       --------------   --------------   --------------  --------------
                                                                                                                       
FISCAL 2005(1):                                                                                                        
   Net sales                                           $      528,196   $      467,406   $      519,962  $      446,476
   Gross profit                                               117,881           95,031          102,759          86,917

   Net earnings (loss) from continuing operations              14,412           (7,624)           7,879           4,090
   Net (loss) earnings from discontinued operations            (2,593)         (71,308)           8,309           8,423
                                                       --------------   --------------   --------------  --------------
   Net earnings (loss)                                 $       11,819   $      (78,932)  $       16,188  $       12,513
                                                       ==============   ==============   ==============  ==============

   Diluted earnings (loss) per share:                                                                                  
      Continuing operations                            $         0.52   $        (0.27)  $         0.29  $         0.16
      Discontinued operations                                   (0.09)           (2.56)            0.31            0.33
                                                       --------------   --------------   --------------  --------------
      Net earnings (loss)                              $         0.42   $        (2.84)  $         0.60  $         0.49
                                                       ==============   ==============   ==============  ==============

FISCAL 2006:                                                                                                           
   Net sales                                           $      493,777   $      459,648   $      516,397  $      491,928
   Gross profit                                                99,669           96,598          113,776         104,464

   Net earnings from continuing operations                      1,077            7,946            5,521           6,538
   Net earnings (loss) from discontinued operations             8,116             (780)           2,554             429
                                                       --------------   --------------   --------------  --------------
   Net earnings                                        $        9,193   $        7,166   $        8,075  $        6,967
                                                       ==============   ==============   ==============  ==============

   Diluted earnings (loss) per share:                                                                                  
      Continuing operations                            $         0.04   $         0.31   $         0.21  $         0.25
      Discontinued operations                                    0.31            (0.03)            0.10            0.02
                                                       --------------   --------------   --------------  --------------
      Net earnings (loss)                              $         0.36   $         0.28   $         0.31  $         0.27
                                                       ==============   ==============   ==============  ==============

<FN>                                                                                                                   
(1) Included in net loss from continuing operations and net loss from                                                  
discontinued operations in the second quarter of 2005 were charges taken in                                            
connection with the 2005 Restructuring Plan of $25,952 and $67,397,                                                    
respectively. The net charges associated with the 2005 Restructuring Plan                                              
decreased net earnings from continuing operations in the third and fourth                                              
quarters of 2005 by $8,272 and $3,374, respectively, while the net reversal of                                         
charges associated with the 2005 Restructuring Plan increased net earnings                                             
from discontinued operations in the third and fourth quarters of 2005 by                                               
$7,225 and $10,530, respectively. Reversals of previously recorded expenses                                            
were $863 and $1,228 for continuing operations in the third and fourth                                                 
quarters of 2005, respectively, and $15,388 and $19,255 for discontinued                                               
operations in the third and fourth quarters of 2005, respectively.                                                     

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE                                          
None.                                                                           

ITEM 9A. CONTROLS AND PROCEDURES                                                

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES                                
The Company's Chief Executive Officer and Chief Financial Officer have          
concluded, based on their evaluation as of the end of the period covered by     
this report, that the Company's disclosure controls and procedures (as defined  
in the Securities Exchange Act of 1934 Rules 13a- 15(e) and 15d- 15(e)) are     
effective to ensure that information required to be disclosed in the reports    
that the Company files or submits under the Securities Exchange Act of 1934 is  
recorded, processed, summarized and reported within the time periods specified  
in the Securities and Exchange Commission's rules and forms. Disclosure         
controls and procedures include, without limitation, controls and procedures    
designed to ensure that information required to be disclosed by an issuer in    
the reports that it files or submits under the Act is accumulated and           
communicated to the issuer's management, including its principal executive and  
principal financial officers, or persons performing similar functions, as       
appropriate to allow timely decisions regarding required disclosure.            

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING                
Management's Report on Internal Control Over Financial Reporting and the        
Report of Independent Registered Public Accounting Firm thereon are set forth   
in Part II, Item 8 of this Form 10-K.                                           

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CHANGE IN INTERNAL CONTROLS                                                     
There were no changes in the Company's internal control over financial          
reporting during the quarter ended February 3, 2007 that have materially        
affected, or are reasonably likely to materially affect, the Company's          
internal controls over financial reporting.                                     

ITEM 9B.  OTHER INFORMATION                                                     

None.                                                                           

PART III                                                                        
--------                                                                        

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE                
(a) The information required by this Item regarding directors constitutes part  
of our Proxy Statement for the 2007 Annual Meeting of Shareowners, under the    
captions "Nominees for Election to Serve Until 2009" and "Directors Continuing  
to Serve Until 2008," which information is incorporated herein by reference.    
The information regarding compliance with section 16(a) of the Securities and   
Exchange Act of 1934 constitutes part of our Proxy Statement for the 2007       
Annual Meeting of Shareowners under the caption "Section 16(a) Beneficial       
Ownership Reporting Compliance," which information is incorporated herein by    
reference.                                                                      

(b) Executive Officers of the Registrant as of March 10, 2007:                  

                                                        [Enlarge/Download Table]

Name of Officer         Age  Office and Employment During the Last Five Years                                       
----------------------  ---  ------------------------------------------------                                       

                                                                                                                    
Robert C. Skinner, Jr.   52  Chairman, President and Chief Executive Officer since February 1, 2006;                
                             President and Chief Executive Officer (June 1, 2005 - January 31, 2006);               
                             President and Chief Operating Officer (2003 - June 1, 2005);                           
                             Vice President and President Menswear (2002 - 2003);                                   
                             President Kellwood Menswear (2000 - 2002)                                              

W. Lee Capps III         59  Chief Financial Officer, Chief Operating Officer and Treasurer since November 30, 2006;
                             Chief Operating Officer and Chief Financial Officer (June 1, 2005 - November 30, 2006);
                             Executive Vice President Finance and Chief Financial Officer (2003 - June 1, 2005);    
                             Senior Vice President Finance and Chief Financial Officer (2002 - 2003);               
                             Vice President Finance and Chief Financial Officer (2000 - 2002)                       

Thomas H. Pollihan       57  Executive Vice President, Secretary and General Counsel since June 1, 2005;            
                             Senior Vice President, Secretary and General Counsel (2002 - 2005);                    
                             Vice President, Secretary and General Counsel (1993 - 2002)                            

Gregory W. Kleffner      52  Senior Vice President Finance and Controller since June 1, 2006;                       
                             Vice President Finance and Controller (June 1, 2005 - June 1, 2006);                   
                             Vice President Controller (2002 - 2005);                                               
                             Partner, Arthur Andersen (1988 - 2002)                                                 

Donna B. Weaver          56  Vice President Corporate Communications since April 24, 2002;                          
                             Director Corporate Communications (1998 - 2002)                                        

(c) The information called for with respect to the identification of certain    
significant employees is not applicable to the registrant.                      

(d) There are no family relationships between the directors and executive       
officers listed above. There are neither arrangements nor understandings        
between any named officer and any other person pursuant to which such person    
was selected as an officer.                                                     

(e) Each of the officers named in Item 10(b) above was elected to serve in the  
office indicated for a period of one year and until his successor is elected    
and qualified.                                                                  

(f) There are no legal proceedings involving directors, nominees for            
directors, or officers.                                                         

(g) The information called for with respect to this item is not applicable to   
the registrant.                                                                 

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(h) The Board, in its business judgment, has determined that Mr. Larry R.       
Katzen and Mr. Ben B. Blount, Jr. meet the Securities and Exchange              
Commission's definition of audit committee financial expert and has so          
designated them as such. The Board has determined that Mr. Katzen and Mr.       
Blount are independent as such term is used under Schedule 14A of the           
Securities Exchange Act of 1934.                                                

We have adopted a Code of Ethical Conduct for Senior Financial Officers and     
Financial Management. This Code applies to, and has been signed by, all key     
financial management personnel as well as the Chief Financial Officer and the   
Chief Executive Officer. The full text of the Code of Ethical Conduct for       
Senior Financial Officers and Financial Management is available at our website  
at www.kellwood.com and is available in print to any shareowner who requests    
it. The Corporate Governance Committee determined that should any changes to    
or waivers of this Code of Ethical Conduct occur, such changes or waivers will  
be timely disclosed on our website.                                             

ITEM 11. EXECUTIVE COMPENSATION                                                 
The information required by this Item is set forth in our Proxy Statement for   
the 2007 Annual Meeting of Shareowners, under the captions "Director            
Compensation," "Compensation Discussion and Analysis - Executive Officer        
Agreements," and "Compensation Discussion and Analysis - Summary Compensation   
Table" which information is incorporated herein by reference.                   

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND     
RELATED STOCKHOLDER MATTERS Some of the information required by this Item is    
set forth in our Proxy Statement for the 2007 Annual Meeting of Shareowners,    
under the captions "Security Ownership - Security Ownership of Certain          
Beneficial Owners" and "Security Ownership - Security Ownership of Directors    
and Executive Officers," which information is incorporated herein by            
reference. In addition, set forth below is certain equity compensation plan     
information.                                                                    

                                                        [Enlarge/Download Table]
EQUITY COMPENSATION PLAN INFORMATION                                                                                       


---------------------------------------------------------------------------------------------------------------------------
     Plan Category              Number Of Securities To      Weighted-Average        Number Of Securities Remaining        
                                Be Issued Upon Exercise      Exercise Price Of       Available For Future Issuance Under   
                                Of Outstanding Options,      Outstanding Options,    Equity Compensation Plans (Excluding  
                                Warrants And Rights          Warrants And Rights     Securities Reflected In Columnn (A))  

---------------------------------------------------------------------------------------------------------------------------
                                         (A)                         (B)                             (C)                   
---------------------------------------------------------------------------------------------------------------------------

                                                                                                                           
Equity Compensation Plans                                                                                                  
  Approved by Security Holders        2,151,581                    $29.60                         2,485,782                
Equity Compensation Plans not                                                                                              
   Approved by Security Holders          N/A                         N/A                             N/A                   

---------------------------------------------------------------------------------------------------------------------------
         TOTAL                        2,151,581                    $29.60                         2,485,782                
---------------------------------------------------------------------------------------------------------------------------

Additional information required by this Item is set forth under the caption     
"Stock Plans" in Note 9 to the Consolidated Financial Statements included in    
our 2006 Annual Report to Shareowners, which information is included in Item 8  
to this Form 10-K and incorporated herein by reference.                         

Our 1995 Stock Option Plan provides for an annual increase in the shares        
available for issuance by an amount equal to 2% of the adjusted average common  
stock outstanding we used to calculate diluted earnings per share for the       
preceding fiscal year. Additional shares reserved based upon the 2006 adjusted  
average common stock outstanding are reflected in the amounts in column (C)     
above.                                                                          

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR            
INDEPENDENCE                                                  
The information required by this Item is set forth in our Proxy Statement for   
the 2007 Annual Meeting of Shareowners, under the caption "Certain              
Relationships and Related Transactions," which information is incorporated      
herein by reference.                                                            

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                 
The information required by this Item is set forth in our Proxy Statement for   
the 2007 Annual Meeting of Shareowners, under the caption "Independent          
Registered Public Accounting Firm," which information is incorporated herein    
by reference.                                                                   

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PART IV                                                                         
-------                                                                         

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                             
(a) Financial Statements and Schedules                                          

(i)      Financial Statements:                                        

              The following financial statements are included in this Form 10-K:

                Reports of Independent Registered Public Accounting Firm

Financial Statements                    
--------------------                    
                      Consolidated Statement of Operations..................37
                      Consolidated Balance Sheets...........................38
                      Consolidated Statements of Cash Flows.................39
                      Consolidated Statements of Stockholders' Equity.......40
                      Notes to Consolidated Financial Statements............41

(ii)     Financial Statement Schedules:                               

        Schedules have been omitted because they are not
     required or are not applicable or because the
                information required to be set forth therein is included
                in the Consolidated Financial Statements or the notes to
the Consolidated Financial Statements.  

(iii)    Exhibits:                                                    

               Exhibits filed as part of this report are listed below.
            Certain exhibits have been previously filed with the
            Commission and are incorporated herein by reference.

S.E.C. Exhibit                                                                  
Reference No.   Description                                                     
-------------   -----------                                                     

3.1             Restated Certificate of Incorporation of Kellwood Company, as   
              amended, incorporated herein by reference to Form 10-Q for the
 quarter ended July 31, 1987, SEC File No. 1-7340.

3.2             By-Laws, as amended, incorporated herein by reference to Form   
              8-K filed with the SEC on March 21, 2007, SEC File No. 1-7340.

4.1             Indenture for senior debt securities dated as of September 30,  
      1997 between Kellwood Company and JPMorgan Chase Bank,
             formerly known as the Chase Manhattan Bank, as Trustee, under
  which certain of the Company's debt securities are
         outstanding, incorporated herein by reference to Form S-3
filed October 24, 1997, SEC File No. 333-36559. 

4.2             [Intentionally Omitted]                                         

4.3             [Intentionally Omitted]                                         

4.4             Rights to Acquire Series A Junior Preferred Stock, pursuant to  
            a Rights Agreement between the registrant and Centerre Trust
         Company of St. Louis, incorporated herein by reference to
           Registration Statement on Form 8-A, effective June 24, 1986
           and Amendment dated August 21, 1990, incorporated herein by
              reference to Form 10-Q for the quarter ended October 31, 1990,
       and Amendment dated May 31, 1996 incorporated herein by
            reference to Form 8-A/A effective June 3, 1996, SEC File No.
          1-7340, and Amendment dated November 21, 2000 incorporated
          herein by reference to Form 10-K for the fiscal year ended
February 3, 2001, SEC File No. 1-7340.          

4.5             [Intentionally Omitted]                                         

4.6             [Intentionally Omitted]                                         

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S.E.C. Exhibit                                                                  
Reference No.   Description                                                     
--------------  -----------                                                     

4.7             [Intentionally Omitted]                                         

4.8             Loan and Security Agreement dated as of April 12, 2006 among    
          Kellwood Company and certain of its domestic subsidiaries,
             certain commercial lending institutions, and Bank of America,
           N.A., as Agent incorporated herein by reference to Form 8-K
          filed with the SEC on April 17, 2006, SEC File No. 1-7340.

4.9             Indenture for senior debt securities dated as of June 22, 2004  
            between Kellwood Company and Union Bank of California, N.A.,
     as Trustee, under which certain of the Company's debt
            securities are outstanding, incorporated herein by reference
         to Form S-3 filed July 30, 2004, SEC File No. 333-117833.

4.10            [Intentionally Omitted]                                         

4.11            Guaranty Agreement executed and delivered as of March 15,       
             2005, made by certain domestic subsidiaries of the Company to
            Union Bank of California, N.A., incorporated by reference to
       Exhibit 4.01 to Form 8-K filed March 15, 2005, File No.
1-7340.                                         

4.12            Supplemental Indenture to the 3.50% Convertible Senior          
     Debenture Indenture, dated as of March 15, 2005, with
            Union Bank of California, N.A., incorporated by reference to
       Exhibit 4.02 to Form 8-K filed March 15, 2005, File No.
1-7340.                                         

4.13            Guaranty Agreement executed and delivered as of March 15,       
             2005, made be certain domestic subsidiaries of the Company to
              JPMorgan Chase Bank, as trustee, with respect to the Company's
            $150,000,000 7.625% 1997 Debentures due October 15, 2017 and
      $150,000,000 7.875% 1999 Debentures due July 15, 2009,
           incorporated by reference to Exhibit 4.03 to Form 8-K filed
March 15, 2005, File No. 1-7340.                

4.14            Supplemental Indenture to the Master Trust Indenture, dated as  
        of March 15, 2005, with JPMorgan Chase Bank, as trustee,
           governing the Company's $150,000,000 7.625% 1997 Debentures
            due October 15, 2017 and $150,000,000 7.875% 1999 Debentures
            due July 15, 2009, incorporated by reference to Exhibit 4.04
  to Form 8-K filed March 15, 2005, File No. 1-7340.

10.1            Form of Rights Agreement dated June 10, 2006, between Kellwood  
      Company and American Stock Transfer and Trust Company,
           incorporated by reference to Exhibit 10.1 of Form 8-K filed
June 12, 2006, SEC file No. 1-7340.             

10.2*           Restricted Stock Compensation Plan of 1969, as Amended,         
              incorporated herein by reference to Form 10-K/A (Amendment No.
           1) for the fiscal year ended January 29, 2005, SEC File No.
1-7340.                                         

10.3*           Form of Employment Agreement regarding change of control        
             matters dated November 30, 1984, between Kellwood Company and
            executive officers, incorporated herein by reference to Form
           10-K for the fiscal year ended April 30, 1985, SEC File No.
1-7340.                                         

10.4*           1995 Stock Option Plan For Nonemployee Directors and 1995       
           Omnibus Incentive Stock Option Plan, incorporated herein by
         reference to Appendices A & B to the Company's definitive
         Proxy Statement dated July 13, 1995, SEC File No. 1-7340.

10.5*           Executive Deferred Compensation Plan, adopted and effective as  
            of January 1, 1997; and Executive Deferred Compensation Plan
         Amendment, adopted March 18, 1997, incorporated herein by
          reference to Form 10-K for the fiscal year ended April 30,
1997, SEC File No. 1-7340.                      

10.6**          Information Technology Service Agreement between Kellwood       
           Company and Electronic Data Systems Corporation dated March
           31, 2002, incorporated herein by reference to Form 10-K for
            the fiscal year ended February 2, 2002, SEC File No. 1-7340.

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S.E.C. Exhibit                                                                  
Reference No.   Description                                                     
--------------  -----------                                                     

10.7*           Corporate Development Incentive Plan, As Restated, filed        
herewith.                                       

10.8            [Intentionally Omitted]                                         

10.9*           1995 Stock Option Plan For Nonemployee Directors As Amended,    
       dated May 30, 2002, incorporated herein by reference to
            Appendix A to the Company's definitive Proxy Statement dated
April 16, 2002, SEC File No. 1-7340.            

10.10*          Executive Deferred Compensation Plan II, effective as of        
  January 1, 2005, and the Kellwood Company Deferred
             Compensation Plan II for Non-Employee Directors, effective as
            of January 1, 2005, incorporated herein by reference to Form
8-K dated December 6, 2004, SEC File No. 1-7340.

10.11*          Form of Non-Qualified Stock Option, incorporated herein by      
           reference to Exhibit 99.1 of Form 8-K filed March 14, 2005,
SEC File No. 1-7340.                            

10.12*          Form of Incentive Stock Option, incorporated herein by          
           reference to Exhibit 99.2 of Form 8-K filed March 14, 2005,
SEC File No. 1-7340.                            

10.13           [Intentionally Omitted]                                         

10.14           [Intentionally Omitted]                                         

10.15           [Intentionally Omitted]                                         

10.16           [Intentionally Omitted]                                         

10.17           [Intentionally Omitted]                                         

10.18           [Intentionally Omitted]                                         

10.19*          Form of Death Benefit Agreement dated June 2, 1994 entered      
            into between the Company and each of Hal J. Upbin and Thomas
           H. Pollihan, effective June 2, 1994, incorporated herein by
              reference to Form 10-K/A (Amendment No. 1) for the fiscal year
ended January 29, 2005, SEC File No. 1-7340.    

10.20*          Form of First Amendment to Death Benefit Agreement dated May    
            22, 2001 entered into between the Company and each of Hal J.
         Upbin and Thomas H. Pollihan, effective December 8, 2000,
              incorporated herein by reference to Form 10-K/A (Amendment No.
           1) for the fiscal year ended January 29, 2005, SEC File No.
1-7340.                                         

10.21*          Form of Long-Term Incentive Plan of 2005, As Restated, filed    
herewith.                                       

10.22*          Form of 2005 Stock Plan for Non-Employee Directors,             
            incorporated herein by reference to Exhibit 99.2 of Form 8-K
filed June 3, 2005, SEC File No. 1-7340.        

10.23*          Consulting Agreement dated June 1, 2005, between Kellwood       
             Company and Hal J. Upbin, incorporated herein by reference to
         Exhibit 99.3 of Form 8-K filed June 3, 2005, SEC File No.
1-7340.                                         

10.24*          Employment Agreement dated June 1, 2005, between Kellwood       
          Company and Robert C. Skinner, Jr., incorporated herein by
             reference to Exhibit 99.4 of Form 8-K filed June 3, 2005, SEC
File No. 1-7340.                                

10.25*          Form of Deferred Stock Units Agreement, incorporated herein by  
             reference to Exhibit 99.6 of Form 8-K filed June 3, 2005, SEC
File No. 1-7340.                                

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S.E.C. Exhibit                                                                  
Reference No.   Description                                                     
--------------  -----------                                                     

10.26*          Form of annual compensation term sheet for Robert C. Skinner,   
      Jr., including the form of stock grant award under the
           Kellwood Corporate Development Incentive Plan, as restated,
            incorporated herein by reference to Exhibit 99.1 of Form 8-K
filed March 15, 2006, SEC File No. 1-7340.      

10.27*          Form of annual compensation term sheet for Stephen L. Ruzow,    
          including the form of stock grant award under the Kellwood
  Corporate Development Incentive Plan, as restated,
            incorporated herein by reference to Exhibit 99.2 of Form 8-K
filed March 15, 2006, SEC File No. 1-7340.      

10.28*          Form of annual compensation term sheet for W. Lee Capps III,    
          including the form of stock grant award under the Kellwood
             Company Development Incentive Plan, as restated, incorporated
           herein by reference to Exhibit 99.3 of Form 8-K filed March
15, 2006, SEC File No. 1-7340.                  

10.29*          Form of annual compensation term sheet for Thomas H. Pollihan,  
          including the form of stock grant award under the Kellwood
  Corporate Development Incentive Plan, as restated,
            incorporated herein by reference to Exhibit 99.4 of Form 8-K
filed March 15, 2006, SEC File No. 1-7340.      

10.30           [Intentionally Omitted]                                         

10.31           US $50,000,000 Term and Revolving Credit Facility Agreement by  
              and among Smart Shirts Limited, certain guarantors thereto and
          Banc of America Securities as facility Agent, incorporated
            herein by reference to Exhibit 4.9 to Current Report on Form
8-K filed with the SEC on April 17, 2006.       

10.32           Supplemental Amendment No. 1 dated August 3, 2006 to US         
           $50,000,000 Term and Revolving Credit Facility Agreement by
              and among Smart Shirts Limited, certain guarantors thereto and
          Banc of America Securities Asia Limited as facility agent,
        incorporated herein by reference to Exhibit 10.32 of the
            Quarterly Report on Form 10-Q for the quarterly period ended
        October 28, 2006 filed with the SEC on December 6, 2006.

21              Subsidiaries of the Company, filed herewith.                    

23              Consent of Independent Registered Public Accounting Firm,       
filed herewith.                                 

24              Powers of Attorney: Ms. Dickerson and Page and Messrs. Baer,    
           Blount, Hunter, Katzen, Miller, Skinner and Weinberg, filed
herewith.                                       

31.1            Certification of Chief Executive Officer pursuant to Section    
      302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2            Certification of Chief Financial Officer pursuant to Section    
      302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32              Certification pursuant to Section 906 of the Sarbanes-Oxley     
Act of 2002, filed herewith.                    

<FN>                                                                            
* Denotes management contract or compensatory plan.                             

** Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential    
portions of Exhibit 10.6 have been deleted and filed separately with the        
Commission pursuant to a request for confidential treatment.                    

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SIGNATURES                                                                      
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act of 1934, the registrant has duly caused this report to be signed on its     
behalf by the undersigned, thereunto duly authorized.                           

KELLWOOD COMPANY          

Dated:  March 22, 2007                                                          

/s/ Robert C. Skinner, Jr.
--------------------------
Robert C. Skinner, Jr.    
                     Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this       
report has been signed below by the following on behalf of Kellwood Company     
and in the capacities and on the dates indicated.                               

                                                                [Download Table]

Signature                      Title                           Date          
---------                      -----                           ----          

                                                                             
/s/ Robert C. Skinner, Jr.     Chairman, President and         March 22, 2007
-----------------------------  Chief Executive Officer                       
Robert C. Skinner, Jr.                                                       

/s/ W. Lee Capps III           Chief Operating Officer,        March 22, 2007
-----------------------------  Chief Financial Officer and                   
W. Lee Capps III               Treasurer                                     
                               (principal financial officer)                 

/s/ Gregory W. Kleffner        Senior Vice President Finance   March 22, 2007
-----------------------------  and Controller                                
Gregory W. Kleffner            (principal accounting officer)                

Robert J. Baer*                Director                                      

Ben B. Blount, Jr.*            Director                                      

Kitty G. Dickerson, Ph.D.*     Director                                      

Jerry M. Hunter*               Director                                      

Larry R. Katzen*               Director                                      

Philip B. Miller*              Director                                      

Janice E. Page*                Director                                      

Harvey A. Weinberg*            Director                                      

/s/ W. Lee Capps III                                                         
-----------------------------                                                
W. Lee Capps III                                                             
<FN>                                                                         
*Attorney-in-fact                                                            
March 22, 2007                                                               

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APPENDIX  

Page 13 of the Form 10-K contains a Performance Graph. The            
information contained within the graph is presented in a tabular format         
immediately following the graph.                                                

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		6/2/94		69
		7/13/95		68					DEF 14A, 10-K405
		5/31/96		67
		6/3/96		67					8-A12B/A
		1/1/97		68
		3/18/97		68
		4/30/97		68					10-K405
		9/30/97		67
		10/24/97		67					424B2
		11/21/00		67					8-K
		12/1/00		55					8-K
		12/8/00		69
		2/3/01		67
		5/22/01		69
		2/2/02		68
		3/31/02		68
		4/16/02		69					DEF 14A
		4/24/02		65					10-K
		5/30/02		69					DEF 14A
		2/4/03		47					8-K
		2/3/04		30		48
		6/22/04		68
		7/30/04		68					8-K, S-3
		10/20/04		31		52			8-K
		12/6/04		69					8-K
		1/1/05		69
		1/29/05		3		69			10-K, 10-K/A
		3/14/05		69					4, 8-K
		3/15/05		68					SC 13G, 8-K
		6/1/05		65		69			8-K, 4
		6/3/05		69					4, 8-K
		9/1/05		52					3, 8-K
		11/10/05		17		47
		12/21/05		31		53
		1/28/06		3		60			5, 10-K
		1/29/06		22		57
		1/31/06		65
		2/1/06		65
		2/3/06		16		47
		3/15/06		70					8-K
		4/12/06		31		68			8-K
		4/17/06		68		70			8-K
		6/1/06		65					8-K, DEF 14A
		6/10/06		68					8-K
		6/12/06		68					8-A12B, 8-K, 4
		7/29/06		1					10-Q
		8/3/06		70
		10/28/06		17		70			10-Q
		10/31/06		30		48
		11/30/06		65
		12/5/06		48
		12/6/06		70					10-Q, 4
		12/15/06		29		60
		12/31/06		57
For The Period Ended		2/3/07		1		65
		3/10/07		1		65
		3/21/07		36		67			8-K
Filed On / Filed As Of		3/22/07		71
		6/7/07		1
		11/15/07		29		45
		12/15/08		29		45
		7/15/09		54		68
		6/15/11		54
		6/20/11		54
		6/15/14		54
		10/15/17		54		68
		6/15/19		54
		6/15/24		54
		6/15/29		54
		6/15/34		53		54
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