12. STREAMLINING INITIATIVES

2015 Actions

In the second quarter of 2015, the Company announced that it signed a new distribution agreement for its operations in Latin America, including in Brazil, which will leverage the network of its new partner. As part of these actions, the Company will no longer operate directly in Brazil and will close or transition its stores to a partner in a phased approach during 2015. The Company recorded charges related to contract terminations, severance and non-cash asset impairment charges and expects to incur additional charges for contract termination costs, severance and other costs during the remainder of 2015.

On January 29, 2015, the Company announced that it is focusing its business on kate spade new york. As part of this business model, the Company is discontinuing KATE SPADE SATURDAY as a standalone business. The Company also announced a new business model for JACK SPADE to leverage the distribution network of its retail partners and expand its e-commerce platform. As part of these actions, the remainder of KATE SPADE SATURDAY’s Company-owned and three partnered store locations were substantially closed by the end of the second quarter of 2015. The Company also substantially completed the closure of the remainder of JACK SPADE’s Company-owned stores. These actions resulted in restructuring charges related to contract assignment and termination costs, severance and non-cash asset impairment charges and were substantially completed in the second quarter of 2015.

2014 Actions

In connection with the sale of the Juicy Couture IP and former Lucky Brand business, the Board of Directors of the Company approved various changes to its senior management, which resulted in charges related to severance in the first quarter of 2014. As discussed in Note 17 – Share-Based Compensation, the Company’s Compensation Committee approved the continued vesting of unvested options and restricted stock awards without any required service period or the accelerated vesting of such awards for former employees, including former executive officers. In addition, as a result of the reduction of office space in the Company’s former New York office, the Company recorded charges related to contract terminations and other charges in the first quarter of 2014.

For the six and three months ended July 4, 2015 and July 5, 2014, expenses associated with the Company’s streamlining actions were primarily recorded in SG&A on the accompanying Condensed Consolidated Statements of Operations and impacted reportable segments and Other as follows:

	Six Months Ended				Three Months Ended
In thousands	July 4, 2015 (26 Weeks)		July 5, 2014 (27 Weeks)		July 4, 2015 (13 Weeks)		July 5, 2014 (13 Weeks)
KATE SPADE North America	$	13,260	$	3,155	$	1,317	$	1,058
KATE SPADE International	7,647		--		4,590		--
Adelington Design Group	1,864		216		531		113
Other (a)	3,224		30,474		683		3,743

Total	$	25,995	$	33,845	$	7,121	$	4,914

^(a)

Other consists of unallocated corporate restructuring costs and Juicy Couture and Lucky Brand restructuring charges principally related to distribution functions that are not directly attributable to Juicy Couture or Lucky Brand and therefore have not been included in discontinued operations.

A summary rollforward of the liability for streamlining initiatives is as follows:

In thousands	Payroll and Related Costs			Contract Termination Costs			Asset Write-Downs			Other Costs			Total

Balance at January 3, 2015	$	2,080		$	987		$	--		$	6,830		$	9,897
2015 provision (a)	11,217			6,653			7,366			759			25,995
2015 asset write-downs	--			--			(7,366		)	--			(7,366		)
Translation difference	(36		)	--			--			(10		)	(46		)
2015 spending (a)	(6,595		)	(3,354		)	--			(2,807		)	(12,756		)

Balance at July 4, 2015 (b)	$	6,666		$	4,286		$	--		$	4,772		$	15,724

^(a)

Payroll and related costs and spending include $0.2 million of non-cash share-based compensation expense.

^(b)

The balance in other costs at July 4, 2015 includes $4.5 million for a withdrawal liability incurred in 2011 related to a multi-employer pension plan that the Company will pay through June 1, 2016.

For the six months ended July 4, 2015, the Company recorded pretax charges totaling $26.0 million related to these initiatives. The Company expects to pay the remaining accrued streamlining costs in the next 12 months. For the six months ended July 5, 2014, the Company recorded pretax charges of $33.8 million related to these initiatives, including $31.7 million of payroll and related costs, $1.0 million of contract termination costs, $0.9 million of asset write-downs and disposals and $0.2 million of other costs. Approximately $7.6 million and $17.9 million of these charges were non-cash during the six months ended July 4, 2015 and July 5, 2014, respectively.