SEGMENT REPORTING

12 Months Ended

Jan. 02, 2016

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 18:  SEGMENT REPORTING

The Company operates its kate spade new york and JACK SPADE brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. The Company's Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company's activities for which separate financial information is available and which is utilized on a regular basis by the Company's CODM to evaluate performance and allocate resources. In identifying the Company's reportable segments, the Company considers its management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of its operating segments. As such, the Company configured its operations into the following three reportable segments:

•           KATE SPADE North America segment — consists of the Company's kate spade new york and JACK SPADE brands in North America.

•           KATE SPADE International segment — consists of the Company's kate spade new york and JACK SPADE brands in International markets (principally in Japan, Asia (excluding Japan), Europe and Latin America).

•           Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands and (ii) the licensed LIZWEAR and LIZ CLAIBORNE NEW YORK brands.

The Company's Chief Executive Officer has been identified as the CODM. The Company's measure of segment profitability is Adjusted EBITDA of each reportable segment. Accordingly, the CODM evaluates performance and allocates resources based primarily on Segment Adjusted EBITDA. Segment Adjusted EBITDA excludes: (i) depreciation and amortization; (ii) charges due to streamlining initiatives, brand-exiting activities and acquisition related costs; (iii) losses on asset disposals and impairments; and (iv) the $26.0 million charge incurred in the first quarter of 2015 to terminate contracts with the Company's former joint venture partner in China. The costs of all corporate departments that serve the respective segment are fully allocated. The Company does not allocate amounts reported below Operating income to its reportable segments, other than adjusted equity income (loss) in equity method investees. The Company's definition of Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

The accounting policies of the Company's reportable segments are the same as those described in Note 1 — Basis of Presentation and Significant Accounting Policies. Sales are reported based on a destination basis. The Company, as licensor, also licenses to third parties the right to produce and market products bearing certain Company-owned trademarks; the resulting royalty income is included within the results of the associated segment.

Dollars in thousands	Net Sales		% to Total			Depreciation and Amortization Expense(a)		Adjuste EBITDA(b)			% of Sales			Segment Assets		Expenditures for Long- Lived Assets
Fiscal Year Ended
January 2, 2016
KATE SPADE North America	$	1,031,123		83.0	%	$	29,588	$	177,593			17.2	%	$	504,571	$	49,827
KATE SPADE International		188,151		15.1	%		12,164		17,697			9.4	%		180,259		19,909
Adelington Design Group		23,446		1.9	%		206		4,523			19.3	%		13,852		471
Corporate and Other		—		—			7,979		—			—			281,679		—
Totals	$	1,242,720		100.0	%	$	49,937									$	70,207
Fiscal Year Ended
January 3, 2015
KATE SPADE North America	$	891,766		78.3	%	$	31,905	$	143,009			16.0	%	$	467,383	$	76,707
KATE SPADE International		213,582		18.8	%		13,904		810			0.4	%		198,677		55,038
Adelington Design Group		33,255		2.9	%		887		4,092			12.3	%		18,671		476
Corporate and Other		—		—			7,742		(940	)		—			241,607		—
Totals	$	1,138,603		100.0	%	$	54,438									$	132,221
Fiscal Year Ended
December 28, 2013
KATE SPADE North America	$	597,748		74.4	%	$	23,961	$	70,250			11.8	%			$	58,089
KATE SPADE International		145,404		18.1			8,476		(815	)		(0.6	)%				9,139
Adelington Design Group		60,219		7.5			625		12,008			19.9	%				363
Corporate and Other		—		—			5,718		(4,334	)		—					—
Totals	$	803,371		100.0	%	$	38,780									$	67,591

(a)	For the years ended January 2, 2016, January 3, 2015 and December 28, 2013, $3.6 million, $5.2 million and $3.6 million, respectively, of Corporate depreciation and amortization was recorded within Interest expense, net on the accompanying Consolidated Statements of Income.
(b)	Other consists of expenses principally related to distribution functions that were included in Juicy Couture and Lucky Brand historical results, but are not directly attributable to those businesses and therefore have not been included in discontinued operations.

The following tables provide a reconciliation to Income (loss) from continuing operations:

	Fiscal Years Ended
In thousands	January 2, 2016			January 3, 2015			December 28, 2013
Reportable Segments Adjusted EBITDA:
KATE SPADE North America	$	177,593		$	143,009		$	70,250
KATE SPADE International(a)		17,697			810			(815	)
Adelington Design Group		4,523			4,092			12,008
Other(b)		—			(940	)		(4,334	)
Total Reportable Segments Adjusted EBITDA		199,813			146,971			77,109
Depreciation and amortization, net(c)		(46,311	)		(48,441	)		(35,088	)
Charges due to streamlining initiatives(d), brand-exiting activities, acquisition related costs, impairment of intangible assets and loss on asset disposals and impairments, net		(40,399	)		(30,371	)		(15,716	)
Joint venture contract termination fee		(26,000	)		—			—
Share-based compensation(e)		(25,577	)		(37,270	)		(7,269	)
Adjusted equity loss included in Reportable Segments Adjusted EBITDA(f)		4,872			2,583			1,179
Operating Income		66,398			33,472			20,215
Other expense, net(a)		(11,137	)		(4,033	)		(2,062	)
Loss on settlement of note receivable		(9,873	)		—			—
Impairment of cost investment		—			—			(6,109	)
Loss on extinguishment of debt		—			(16,914	)		(1,707	)
Interest expense, net		(19,152	)		(20,178	)		(47,065	)
Provision (benefit) for income taxes		4,528			(84,379	)		(4,563	)
Income (Loss) from Continuing Operations	$	21,708		$	76,726		$	(32,165	)

(a)	Amounts include equity in the adjusted losses of equity method investees of $4.9 million, $2.6 million and $1.2 million in 2015, 2014 and 2013, respectively.
(b)	Other consists of expenses principally related to distribution functions that were included in Juicy Couture and Lucky Brand historical results, but are not directly attributable to those businesses and therefore have not been included in discontinued operations.
(c)	Excludes amortization included in Interest expense, net.
(d)	See Note 13 — Streamlining Initiatives for a discussion of streamlining charges.
(e)	Includes share-based compensation expense of $0.3 million, $17.3 million and $2.8 million in 2015, 2014 and 2013, respectively, that was classified as restructuring.
(f)	Excludes joint venture restructuring expense included in equity losses of $1.8 million in 2015.

GEOGRAPHIC / CATEGORY DATA

Dollars in thousands	Net Sales		% to Total			Long-Lived Assets
Fiscal Year Ended January 2, 2016
Domestic	$	1,012,657		81.5	%	$	233,185
International		230,063		18.5	%		75,796
Total	$	1,242,720		100.0	%
Fiscal Year Ended January 3, 2015
Domestic	$	899,475		79.0	%	$	254,597
International		239,128		21.0	%		74,600
Total	$	1,138,603		100.0	%
Fiscal Year Ended December 28, 2013
Domestic	$	648,406		80.7	%
International		154,965		19.3	%
Total	$	803,371		100.0	%

The Company's net sales by major product category are as follows:

	Fiscal Years Ended
In thousands	January 2, 2016		January 3, 2015		December 28, 2013
Women's accessories(a)	$	886,630	$	790,544	$	507,999
Apparel, jewelry and other		356,090		348,059		295,372
Total	$	1,242,720	$	1,138,603	$	803,371

(a) Includes handbags, small leather goods and accessories.