Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Jan. 03, 2015 | Feb. 20, 2015 | Jul. 05, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | Kate Spade & Co. | ||
Entity Central Index Key | 352363 | ||
Document Type | 10-K | ||
Document Period End Date | 3-Jan-15 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -2 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Common Stock, Shares Outstanding | 127,416,971 | ||
Entity Public Float | $4,760,642,000 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Jan. 03, 2015 | Dec. 28, 2013 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $184,044 | $130,222 |
Accounts receivable - trade, net | 90,091 | 89,554 |
Inventories, net | 158,241 | 184,634 |
Deferred income taxes | 616 | 218 |
Other current assets | 41,508 | 45,031 |
Assets held for sale | 202,054 | |
Total current assets | 474,500 | 651,713 |
Property and Equipment, Net | 174,072 | 149,071 |
Goodwill | 64,798 | 49,111 |
Intangibles, Net | 90,327 | 90,678 |
Deferred Income Taxes | 56 | 57 |
Note Receivable | 88,976 | |
Other Assets | 33,609 | 36,881 |
Total Assets | 926,338 | 977,511 |
Current Liabilities: | ||
Short-term borrowings | 10,459 | 3,407 |
Accounts payable | 88,402 | 142,654 |
Accrued expenses | 150,926 | 200,178 |
Income taxes payable | 3,008 | 2,631 |
Liabilities held for sale | 96,370 | |
Total current liabilities | 252,795 | 445,240 |
Long-Term Debt | 400,284 | 390,794 |
Other Non-Current Liabilities | 56,465 | 157,335 |
Deferred Income Taxes | 17,183 | 16,624 |
Commitments and Contingencies (Note 9) | ||
Stockholders' Equity (Deficit): | ||
Preferred stock, $0.01 par value, authorized shares - 50,000,000, issued shares - none | ||
Common stock, $1.00 par value, authorized shares - 250,000,000, issued shares - 176,437,234 | 176,437 | 176,437 |
Capital in excess of par value | 199,100 | 155,984 |
Retained earnings | 1,145,643 | 1,020,633 |
Accumulated other comprehensive loss | -29,986 | -20,879 |
Total Kate Spade & Company, stockholders' deficit, excluding treasury stock | 1,491,194 | 1,332,175 |
Common stock in treasury, at cost - 49,065,798 and 53,501,234 shares | -1,291,583 | -1,364,657 |
Total stockholders' equity (deficit) | 199,611 | -32,482 |
Total Liabilities and Stockholders' Equity (Deficit) | $926,338 | $977,511 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Jan. 03, 2015 | Dec. 28, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, authorized shares | 50,000,000 | 50,000,000 |
Preferred stock, issued shares | 0 | 0 |
Common stock, par value (in dollars per share) | $1 | $1 |
Common stock, authorized shares | 250,000,000 | 250,000,000 |
Common stock, issued shares | 176,437,234 | 176,437,234 |
Common stock in treasury, shares | 49,065,798 | 53,501,234 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Net Sales | $1,138,603 | $803,371 | $544,765 |
Cost of goods sold | 458,332 | 306,781 | 204,833 |
Gross Profit | 680,271 | 496,590 | 339,932 |
Selling, general & administrative expenses | 645,266 | 473,075 | 375,954 |
Impairment of intangible assets | 1,533 | 3,300 | |
Operating Income (Loss) | 33,472 | 20,215 | -36,022 |
Other expense, net | -4,033 | -2,062 | -325 |
Impairment of cost investment | -6,109 | ||
Gain on acquisition of subsidiary | 40,065 | ||
Loss on extinguishment of debt | -16,914 | -1,707 | -9,754 |
Interest expense, net | -20,178 | -47,065 | -51,612 |
Loss Before Benefit for Income Taxes | -7,653 | -36,728 | -57,648 |
Benefit for income taxes | -84,379 | -4,563 | -4,961 |
Income (Loss) from Continuing Operations | 76,726 | -32,165 | -52,687 |
Discontinued operations, net of income tax | 82,434 | 105,160 | -21,818 |
Net income (loss) | $159,160 | $72,995 | ($74,505) |
Earnings per Share, Basic: | |||
Income (Loss) from Continuing Operations (in dollars per share) | $0.61 | ($0.27) | ($0.48) |
Net Income (Loss) (in dollars per share) | $1.26 | $0.60 | ($0.68) |
Earnings per Share, Diluted: | |||
Income (Loss) from Continuing Operations (in dollars per share) | $0.60 | ($0.27) | ($0.48) |
Net Income (Loss) (in dollars per share) | $1.25 | $0.60 | ($0.68) |
Weighted Average Shares, Basic (in shares) | 126,264 | 121,057 | 109,292 |
Weighted Average Shares, Diluted (in shares) | 127,019 | 121,057 | 109,292 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net Income (Loss) | $159,160 | $72,995 | ($74,505) |
Other Comprehensive Income (Loss), Net of Income Taxes: | |||
Cumulative translation adjustment, net of income taxes of $0 | -10,234 | -11,788 | -3,990 |
Unrealized losses on available-for-sale securities, net of income taxes of $0 | -160 | ||
Change in fair value of cash flow hedging derivatives, net of income taxes of $566, $602 and $0, respectively | 1,127 | 983 | |
Comprehensive Income (Loss) | $150,053 | $62,190 | ($78,655) |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Cumulative translation adjustment, income taxes | $0 | $0 | $0 |
Unrealized losses on available-for-sale securities, income taxes | 0 | 0 | 0 |
Change in fair value of cash flow hedges, income taxes | $566 | $602 | $0 |
CONSOLIDATED_STATEMENT_OF_RETA
CONSOLIDATED STATEMENT OF RETAINED EARNINGS, ACCUMULATED COMPREHENSIVE LOSS AND CHANGES IN CAPITAL ACCOUNTS (USD $) | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss [Member] | Treasury Shares | Total |
In Thousands, except Share data, unless otherwise specified | ||||||
BALANCE at Dec. 31, 2011 | $176,437 | $302,330 | $1,246,063 | ($5,924) | ($1,827,892) | ($108,986) |
BALANCE (in shares) at Dec. 31, 2011 | 176,437,234 | 75,592,899 | ||||
Activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost | ||||||
Net income (loss) | -74,505 | -74,505 | ||||
Other Comprehensive Income (Loss), Net of Income Taxes | -4,150 | -4,150 | ||||
Exercise of stock options | -10,642 | -2,929 | 19,776 | 6,205 | ||
Exercise of stock options (in shares) | -1,340,325 | |||||
Restricted shares issued, net of cancellations and shares withheld for taxes | -3,791 | -195 | 2,619 | -1,367 | ||
Restricted shares issued, net of cancellations and shares withheld for taxes (in shares) | -204,278 | |||||
Amortization - share-based compensation | 7,779 | 7,779 | ||||
Exchanges of Convertible Senior Notes, net | -148,658 | -96,883 | 293,635 | 48,094 | ||
Exchanges of Convertible Senior Notes, net (in shares) | -14,197,106 | |||||
BALANCE at Dec. 29, 2012 | 176,437 | 147,018 | 1,071,551 | -10,074 | -1,511,862 | -126,930 |
BALANCE (in shares) at Dec. 29, 2012 | 176,437,234 | 59,851,190 | ||||
Activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost | ||||||
Net income (loss) | 72,995 | 72,995 | ||||
Other Comprehensive Income (Loss), Net of Income Taxes | -10,805 | -10,805 | ||||
Exercise of stock options | -5,959 | 10,782 | 4,823 | |||
Exercise of stock options (in shares) | -544,200 | |||||
Restricted shares issued, net of cancellations and shares withheld for taxes | -5,724 | 3,422 | -2,302 | |||
Restricted shares issued, net of cancellations and shares withheld for taxes (in shares) | -171,577 | |||||
Amortization - share-based compensation | 9,618 | 9,618 | ||||
Exchanges of Convertible Senior Notes, net | -652 | -112,230 | 133,001 | 20,119 | ||
Exchanges of Convertible Senior Notes, net (in shares) | -5,634,179 | |||||
BALANCE at Dec. 28, 2013 | 176,437 | 155,984 | 1,020,633 | -20,879 | -1,364,657 | -32,482 |
BALANCE (in shares) at Dec. 28, 2013 | 176,437,234 | 53,501,234 | ||||
Activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost | ||||||
Net income (loss) | 159,160 | 159,160 | ||||
Other Comprehensive Income (Loss), Net of Income Taxes | -9,107 | -9,107 | ||||
Exercise of stock options | -23,266 | 65,215 | 41,949 | |||
Exercise of stock options (in shares) | -4,101,331 | |||||
Restricted shares issued, net of cancellations and shares withheld for taxes | -10,884 | 7,859 | -3,025 | |||
Restricted shares issued, net of cancellations and shares withheld for taxes (in shares) | -425,105 | |||||
Amortization - share-based compensation | 43,116 | 43,116 | ||||
BALANCE at Jan. 03, 2015 | $176,437 | $199,100 | $1,145,643 | ($29,986) | ($1,291,583) | $199,611 |
BALANCE (in shares) at Jan. 03, 2015 | 176,437,234 | 49,065,798 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOW (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
Cash Flows from Operating Activities: | |||
Net income (loss) | $159,160 | $72,995 | ($74,505) |
Adjustment to arrive at income (loss) from continuing operations | -82,434 | -105,160 | 21,818 |
Income (Loss) from Continuing Operations | 76,726 | -32,165 | -52,687 |
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 54,438 | 38,780 | 35,837 |
Impairment of intangible assets | 1,533 | 3,300 | |
Loss on asset disposals and impairments, including streamlining initiatives, net | 13,063 | 8,110 | 28,685 |
Deferred income taxes | -350 | -3,665 | -6,384 |
Share-based compensation | 37,270 | 7,269 | 6,911 |
Foreign Currency Transaction Gain (Loss), Unrealized | 6,535 | 9,656 | 1,579 |
Business Combination, Bargain Purchase, Gain Recognized, Amount | -40,065 | ||
Gains (Losses) on Extinguishment of Debt | 16,914 | 1,707 | 9,754 |
Other Noncash Income (Expense) | 2,570 | 1,250 | 1,180 |
Changes in assets and liabilities: | |||
Increase in accounts receivable - trade, net | -27,643 | -1,167 | -3,333 |
Increase in inventories, net | -21,903 | -47,115 | -11,978 |
(Increase) decrease in other current and non-current assets | -12,840 | -8,753 | 1,208 |
(Decrease) increase in accounts payable | -9,681 | 21,695 | 3,887 |
Decrease in accrued expenses and other non-current liabilities | -9,006 | -34,337 | -49,680 |
(Decrease) increase in income taxes payable | -83,062 | 2,243 | 814 |
Net cash (used in) provided by operating activities of discontinued operations | -30,200 | 9,161 | 85,630 |
Net cash provided by (used in) operating activities | 14,364 | -24,031 | 11,358 |
Cash Flows from Investing Activities: | |||
Proceeds from sales of property and equipment | 20,264 | ||
Purchases of property and equipment | -93,609 | -65,130 | -46,999 |
Net proceeds from disposition | 4,000 | ||
Payments for purchases of businesses | -32,268 | -41,027 | |
Payments for in-store merchandise shops | -6,344 | -2,461 | -1,366 |
Investments in and advances to equity investees | -2,400 | -5,500 | -5,000 |
Other, net | 17 | -363 | 1,598 |
Net cash provided by (used in) investing activities of discontinued operations | 137,759 | 143,306 | -38,301 |
Net cash provided by (used in) investing activities | 3,155 | 94,116 | -131,095 |
Cash Flows from Financing Activities: | |||
Proceeds from borrowings under revolving credit agreement | 8,411 | 650,553 | 247,097 |
Repayment of borrowings under revolving credit agreement | -4,960 | -647,706 | -247,097 |
Proceeds from issuance of Term Loan | 398,000 | ||
Repayment of Senior Notes | -390,693 | ||
Repayment of Term Loan | -2,000 | ||
Proceeds from issuance of Senior Secured Notes | 164,540 | ||
Repayment of Euro Notes | -158,027 | ||
Proceeds from capital lease | 8,673 | ||
Principal payments under capital lease obligations | -410 | -4,651 | -4,476 |
Proceeds from exercise of stock options | 41,949 | 4,823 | 6,205 |
Payment of deferred financing fees | -9,712 | -5,597 | -7,140 |
Net cash provided by financing activities | 40,585 | 6,095 | 1,102 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | -4,282 | -5,197 | -1,899 |
Net Change in Cash and Cash Equivalents | 53,822 | 70,983 | -120,534 |
Cash and Cash Equivalents at Beginning of Period | 130,222 | 59,402 | 179,936 |
Cash and Cash Equivalents at End of Period | 184,044 | 130,222 | 59,402 |
Less: Cash and Cash Equivalents Held for Sale | 163 | ||
Cash and Cash Equivalents | $184,044 | $130,222 | $59,402 |
BASIS_OF_PRESENTATION_AND_SIGN
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Jan. 03, 2015 | ||
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | ||
Kate Spade & Company and its wholly-owned and majority-owned subsidiaries (the "Company") are engaged primarily in the design and marketing of a broad range of accessories and apparel. The Company operates its kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands through one operating segment in North America and four operating segments internationally: Japan, Southeast Asia, Europe and Latin America. 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 chief operating decision maker ("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, KATE SPADE SATURDAY and JACK SPADE brands in North America. | |
• | KATE SPADE International segment — consists of the Company's kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in International markets (principally in Japan, Southeast Asia, Europe and Latin America). | |
• | Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands; (ii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iii) the licensed LIZ CLAIBORNE NEW YORK brand. | |
On February 5, 2014, the Company, through its Kate Spade, LLC and Kate Spade Hong Kong Ltd. subsidiaries, reacquired existing KATE SPADE businesses in Southeast Asia from Globalluxe Kate Spade HK Limited ("Globalluxe") for $32.3 million, including $2.3 million for working capital and other previously agreed adjustments. In the first quarter of 2015, the Company and Walton Brown, a subsidiary of The Lane Crawford Joyce Group ("LCJG"), agreed to form two joint ventures focused on growing the Company's business in China and Hong Kong, Macau and Taiwan (see Note 2 — Acquisitions and Note 23 — Subsequent Events). | ||
On February 3, 2014, the Company completed the sale of 100.0% of the capital stock of Lucky Brand Dungarees, Inc. ("Lucky Brand") to LBD Acquisition Company, LLC ("LBD Acquisition"), a Delaware limited liability company and affiliate of Leonard Green & Partners, L.P. ("Leonard Green"), for an aggregate payment of $225.0 million, comprised of $140.0 million cash consideration and a three-year $85.0 million note (the "Lucky Brand Note") issued by Lucky Brand Dungarees, LLC ("Lucky Brand LLC") at closing, subject to working capital and other adjustments (the "Lucky Brand Transaction"). The assets and liabilities of the former Lucky Brand business were segregated and reported as held for sale as of December 28, 2013 (see Note 3 — Discontinued Operations). The Lucky Brand Note matures in February 2017 and is guaranteed by substantially all of Lucky Brand LLC's subsidiaries. The Lucky Brand Note is secured by second-priority lien on all accounts receivable and inventory of Lucky Brand LLC and the guarantor subsidiaries and a first-priority lien on all other collateral of Lucky Brand LLC and the guarantors. The accounts receivable and inventory secure Lucky Brand LLC's asset-based revolving loan facility on a first-priority basis, and the other collateral secures that loan facility on a second-priority basis. The principal amount of the Lucky Brand Note increases by $5.0 million per year in equal monthly increments and bears cash interest of $8.0 million per year, payable semiannually in arrears. The Lucky Brand Note is prepayable at any time by Lucky Brand LLC without a prepayment premium, subject to certain restrictions as to the minimum amount that may be prepaid without the Company's consent. | ||
On November 6, 2013, the Company completed the sale of its Juicy Couture brandname and related intellectual property assets (the "Juicy Couture IP") to an affiliate of Authentic Brands Group ("ABG") for a total purchase price of $195.0 million. An additional payment may be payable to the Company in an amount of up to $10.0 million if certain conditions regarding future performance are achieved. The Juicy Couture IP was licensed back to the Company to accommodate the wind-down of operations, which was substantially completed in the second quarter of 2014. The Company's subsidiary, Juicy Couture, Inc., paid guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license. On March 29, 2014, the Company entered into an agreement to sell its Juicy Couture business in Europe to an operating partner of ABG for $8.6 million, subject to working capital adjustments. The transaction closed on April 7, 2014. | ||
On November 19, 2013, the Company entered into an agreement to terminate the lease of the Juicy Couture flagship store on Fifth Avenue in New York City in exchange for $51.0 million. On May 15, 2014, the Company surrendered such premises to the landlord and received proceeds of $45.8 million (net of taxes and fees), in addition to $5.0 million previously received by the Company. | ||
The activities of the Company's former Lucky Brand and Juicy Couture businesses have been segregated and reported as discontinued operations for all periods presented. | ||
Summarized financial data for the aforementioned brands that are classified as discontinued operations are provided in Note 3 — Discontinued Operations. | ||
PRINCIPLES OF CONSOLIDATION | ||
The Consolidated Financial Statements include the accounts of the Company. All inter-company balances and transactions have been eliminated in consolidation. | ||
USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Estimates by their nature are based on judgments and available information. Therefore, actual results could materially differ from those estimates under different assumptions and conditions. | ||
Critical accounting policies are those that are most important to the portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company's most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, goodwill, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods. | ||
Revenue Recognition | ||
The Company recognizes revenue from its direct-to-consumer, wholesale and licensing operations. Retail store and e-commerce revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. The Company does not recognize revenue for estimated gift card breakage. Revenue within the Company's wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. The Company reviews and refines these estimates on a monthly basis based on current experience, trends and retailer performance. The Company's historical estimates of these costs have not differed materially from actual results. Licensing revenues, which amounted to $16.2 million, $17.8 million and $19.6 million during 2014, 2013 and 2012, respectively, are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees. | ||
Income Taxes | ||
Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. The Company also assesses the likelihood of the realization of deferred tax assets and adjusts the carrying amount of these deferred tax assets by a valuation allowance to the extent the Company believes it more likely than not that all or a portion of the deferred tax assets will not be realized. Many factors are considered when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in the Company's effective tax rate in future periods for various reasons including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is the Company's policy to recognize the impact of an uncertain income tax position on its income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense. | ||
Accounts Receivable — Trade, Net | ||
In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on an evaluation of historical and anticipated trends, the financial condition of the Company's customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with the Company's customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. The Company's historical estimates of these costs have not differed materially from actual results. | ||
Inventories, Net | ||
Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. The Company continually evaluates the composition of its inventories by assessing slow-turning, ongoing product as well as prior seasons' fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of the Company's individual product lines, the impact of market trends and economic conditions and the value of current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. The Company's historical estimates of these costs and its provisions have not differed materially from actual results. | ||
Intangibles, Net | ||
Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. The Company's annual impairment test is performed as of the first day of the third fiscal quarter. | ||
The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that an indefinite-lived intangible asset is impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. | ||
The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset's value may be impaired. Impairment testing is based on a review of forecasted operating cash flows. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the Consolidated Statement of Operations. | ||
Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Intangible merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years. | ||
In the fourth quarter of 2014 and the third quarter of 2013, the Company recorded non-cash impairment charges of $1.5 million and $3.3 million, respectively, which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark (see Note 11 — Fair Value Measurements). | ||
As a result of the impairment analysis performed in connection with the Company's purchased trademarks with indefinite lives, no impairment charges were recorded during 2012. | ||
Goodwill | ||
Goodwill is not amortized but rather tested for impairment at least annually. The Company's annual impairment test is performed as of the first day of the third fiscal quarter. | ||
The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that goodwill is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that goodwill is impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of goodwill and perform the quantitative impairment test by comparing the fair value and carrying amount of the related reporting unit. A two-step impairment test is then performed on goodwill. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the market approach, as is typically used for companies providing products where the value of such a company is more dependent on the ability to generate earnings than the value of the assets used in the production process. Under this approach, the Company estimates fair value based on market multiples of revenues and earnings for comparable companies. The Company also uses discounted future cash flow analyses to corroborate these fair value estimates. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step in order to determine the implied fair value of the reporting unit's goodwill and compare it to the carrying value of the reporting unit's goodwill. The activities in the second step include valuing the tangible and intangible assets of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit's goodwill based upon the residual of the summed identified tangible and intangible assets. | ||
As a result of the impairment analysis performed in connection with the Company's goodwill, no impairment charges were recorded during 2014, 2013 or 2012. | ||
During 2014, the Company recorded additional goodwill as a result of the reacquisition of the KATE SPADE business in Southeast Asia; a portion of the goodwill will be reclassified to Investment in unconsolidated subsidiary in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 2 — Acquisitions and Note 23 — Subsequent Events). | ||
Accrued Expenses | ||
Accrued expenses for employee insurance, workers' compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted. | ||
Share-Based Compensation | ||
The Company recognizes compensation expense based on the fair value of employee share-based awards, including stock options, restricted stock and restricted stock with market conditions that impact vesting, net of estimated forfeitures. Determining the fair value of options 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 required in estimating the amount of share-based awards expected to be forfeited prior to vesting. Determining the fair value of shares with market conditions at the grant date requires judgment, including the weighting of historical and estimated implied volatility of the Company's stock price and where appropriate, a market index. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted. | ||
OTHER SIGNIFICANT ACCOUNTING POLICIES | ||
Fair Value Measurements | ||
The Company applies the relevant accounting guidance on fair value measurements to (i) all financial instruments that are being measured and reported on a fair value basis; (ii) non-financial assets and liabilities measured and reported at fair value on a non-recurring basis; and (iii) disclosures of fair value of certain financial assets and liabilities. | ||
The following fair value hierarchy is used in selecting inputs for those instruments measured at fair value that distinguishes between assumptions based on market data (observable) and the Company's assumptions (unobservable inputs). The hierarchy consists of three levels. | ||
Level 1 — Quoted market prices in active markets for identical assets or liabilities; | ||
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and | ||
Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. | ||
The fair values of the Company's Level 2 derivative instruments were primarily based on observable forward exchange rates. Unobservable quantitative inputs used in the valuation of the Company's derivative instruments included volatilities, discount rates and estimated credit losses. | ||
Fair value measurement for the Company's assets assumes the highest and best use (the use that generates the highest returns individually or as a group) for the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. This applies even if the intended use of the asset by the Company is different. | ||
Fair value measurement for the Company's liabilities assumes that the liability is transferred to a market participant at the measurement date and that the nonperformance risk relating to the liability is the same before and after the transaction. Nonperformance risk refers to the risk that the obligation will not be fulfilled and includes the Company's own credit risk. | ||
The Company does not apply fair value measurement to any instruments not required to be measured at fair value on a recurring basis. | ||
Cash and Cash Equivalents | ||
All highly liquid investments with an original maturity of three months or less at the date of purchase are classified as cash equivalents. | ||
Property and Equipment, Net | ||
Property and equipment is stated at cost less accumulated depreciation and amortization. Building improvements are depreciated using the straight-line method over their estimated useful lives of 20 to 39 years. Machinery and equipment and furniture and fixtures are depreciated using the straight-line method over their estimated useful lives of three to seven years. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful lives of the assets. Costs for maintenance and repairs are expensed as incurred. Leased property meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. Amortization of capitalized leased assets is recorded on the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The Company recognizes a liability for the fair value of an asset retirement obligation ("ARO") if the fair value can be reasonably estimated. The Company's ARO's are primarily associated with the removal and disposal of leasehold improvements at the end of a lease term when the Company is contractually obligated to restore a facility to a condition specified in the lease agreement. Amortization of ARO's is recorded on a straight-line basis over the lease term. | ||
The Company capitalizes the costs of software developed or obtained for internal use. Capitalization of software developed or obtained for internal use commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis over five years, when such software is substantially ready for use. | ||
The Company evaluates the recoverability of property and equipment if circumstances indicate an impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows to be generated from such assets, on an undiscounted basis. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of the impaired assets is reduced to fair value through a charge to the Company's Consolidated Statement of Operations. | ||
The Company recorded pretax charges of $10.4 million in 2014, $1.5 million in 2013 and $26.4 million in 2012 to reduce the carrying values of certain property and equipment to their estimated fair values (see Note 11 — Fair Value Measurements). | ||
Operating Leases | ||
The Company leases office space, retail stores and distribution facilities. Many of these operating leases provide for tenant improvement allowances, rent increases and/or contingent rent provisions. Rental expense is recognized on a straight-line basis commencing with the possession date of the property, which is the earlier of the lease commencement date or the date when the Company takes possession of the property. Certain store leases include contingent rents that are based on a percentage of retail sales over stated thresholds. Tenant allowances are amortized on a straight-line basis over the life of the lease as a reduction of rent expense and are included in Selling, general & administrative expenses ("SG&A"). | ||
The Company leases retail stores under leases with terms that are typically five or ten years. The Company amortizes rental abatements, construction allowances and other rental concessions classified as deferred rent on a straight-line basis over the initial term of the lease. The initial lease term can include one renewal under limited circumstances if the renewal is reasonably assured, based on consideration of all of the following factors: (i) a written renewal at the Company's option or an automatic renewal; (ii) there is no minimum sales requirement that could impair the Company's ability to renew; (iii) failure to renew would subject the Company to a substantial penalty; and (iv) there is an established history of renewals in the format or location. | ||
Derivative Instruments | ||
The Company's derivative instruments are recorded in the Consolidated Balance Sheets as either an asset or liability and measured at their fair value. The changes in a derivative's fair value are recognized either currently in earnings or Accumulated other comprehensive loss, depending on whether the derivative qualifies for hedge accounting treatment. The Company tests each derivative for effectiveness at inception of each hedge and at the end of each reporting period. | ||
The Company uses foreign currency forward contracts, collars, options and swap contracts for the purpose of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases by Kate Spade Japan Co., Ltd. ("KSJ"), the Company's wholly-owned subsidiary. These instruments are designated as cash flow hedges. To the extent the hedges are highly effective, the effective portion of the changes in fair value is included in Accumulated other comprehensive loss, net of income taxes, with the corresponding asset or liability recorded in the Consolidated Balance Sheet. The ineffective portion of the cash flow hedge is recognized primarily as a component of Cost of goods sold in current period earnings. Amounts recorded in Accumulated other comprehensive loss are reflected in current period earnings when the hedged transaction affects earnings. If fluctuations in the relative value of the currencies involved in the hedging activities were to move dramatically, such movement could impact the Company's results of operations. | ||
The Company purchases short-term foreign currency contracts to neutralize balance sheet and other expected exposures, including intercompany loans. These derivative instruments do not qualify as cash flow hedges and are recorded at fair value with all gains or losses recognized as a component of SG&A or Other expense income, net in current period earnings (see Note 12 — Derivative Instruments). | ||
Foreign Currency Translation | ||
Assets and liabilities of non-US subsidiaries are translated at period-end exchange rates. Revenues and expenses for each month are translated using that month's average exchange rate and then are combined for the period totals. Resulting translation adjustments are included in Accumulated other comprehensive loss. Gains and losses on translation of intercompany loans with foreign subsidiaries of a long-term investment nature are also included in this component of Stockholders' equity (deficit). | ||
Foreign Currency Transactions | ||
Outstanding balances in foreign currencies are translated at the end of period exchange rates. The resulting exchange differences are recorded in the Consolidated Statements of Operations or Accumulated other comprehensive loss, as appropriate. | ||
Cost of Goods Sold | ||
Cost of goods sold for wholesale operations includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, import costs, third party inspection activities, buying/sourcing agent commissions and provisions for shrinkage. For retail operations, in-bound freight from the Company's warehouse to its own retail stores is also included. Warehousing activities including receiving, storing, picking, packing and general warehousing charges are included in SG&A and, as such, the Company's gross profit may not be comparable to others who may include these expenses as a component of Cost of goods sold. | ||
Advertising, Promotion and Marketing | ||
All costs associated with advertising, promoting and marketing of Company products are expensed during the periods when the activities take place. Costs associated with cooperative advertising programs involving agreements with customers, whereby customers are required to provide documentary evidence of specific performance and when the amount of consideration paid by the Company for these services is at or below fair value, are charged to SG&A. Costs associated with customer cooperative advertising allowances without specific performance guidelines are recorded as a reduction of sales. The Company incurred expenses of $56.9 million, $42.8 million and $22.7 million for advertising, marketing & promotion for all brands in 2014, 2013 and 2012, respectively. | ||
Shipping and Handling Costs | ||
Shipping and handling costs, which are mostly comprised of warehousing activities, are included as a component of SG&A in the Consolidated Statements of Operations. In fiscal years 2014, 2013 and 2012, shipping and handling costs were $32.8 million, $26.4 million and $15.4 million, respectively. | ||
Investments in Unconsolidated Subsidiaries | ||
The Company uses the equity method of accounting for its investments in and its proportionate share in earnings of affiliates that it does not control, but over which it exerts significant influence (see Note 20 — Related Party Transactions). The Company considers whether the fair value of its equity method investments has declined below carrying value whenever adverse events or changes in circumstances indicate the recorded value may not be recoverable. | ||
Cash Dividends and Common Stock Repurchases | ||
On December 16, 2008, the Board of Directors announced the suspension of the Company's quarterly cash dividend indefinitely. | ||
The Company's amended and restated revolving credit agreement currently restricts its ability to pay dividends and repurchase stock (see Note 10 — Debt and Lines of Credit). | ||
Fiscal Year | ||
The Company's fiscal year ends on the Saturday closest to December 31. The 2014 fiscal year, which ended on January 3, 2015, reflected a 53-week period. The 2013 and 2012 fiscal years, which ended December 28, 2013 and December 29, 2012, reflected 52-week periods. | ||
Subsequent Events | ||
The Company's policy is to evaluate all events or transactions that occur from the balance sheet date through the date of the issuance of its financial statements. The Company has evaluated events or transactions that occurred from the balance sheet date through the date the Company issued these financial statements (see Note 23 — Subsequent Events). | ||
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS | ||
On December 29, 2013, the first day of the Company's 2014 fiscal year, the Company adopted new accounting guidance on the presentation of unrecognized tax benefits, which requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or that the tax law of the applicable jurisdiction does not require the entity to use; and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of the new accounting guidance did not affect the Company's financial position, results of operations or cash flows. | ||
ACQUISITIONS
ACQUISITIONS | 12 Months Ended | ||||||
Jan. 03, 2015 | |||||||
ACQUISITIONS | |||||||
ACQUISITIONS | NOTE 2: ACQUISITIONS | ||||||
On February 5, 2014, the Company, through its Kate Spade, LLC and Kate Spade Hong Kong Ltd. subsidiaries, reacquired existing KATE SPADE businesses in Southeast Asia from Globalluxe for a purchase price of $32.3 million, including $2.3 million for working capital and other previously agreed adjustments. The Company's distribution partner operates the KATE SPADE businesses in Singapore, Malaysia, Indonesia and Thailand through distribution agreements and funded approximately $1.5 million to Globalluxe to acquire operating assets in those regions. Globalluxe and its distribution partners operated six stores and one concession in Hong Kong, one concession in Taiwan, one store in Macau, two stores and one concession in Singapore, two stores in Malaysia, three stores and one concession in Indonesia, and two stores and six concessions in Thailand. Prior to the acquisition from Globalluxe, the Company maintained wholesale distribution to Globalluxe. Following the transaction, the Company maintains wholesale distribution to distributors who operate the businesses in Singapore, Malaysia, Indonesia and Thailand. Since the date of the acquisition, the Company has directly owned and operated the businesses in Hong Kong Macau and Taiwan and will continue to do so until the expected conversion of these businesses to a joint venture with Walton Brown (see Note 23 — Subsequent Events). | |||||||
The allocation of the purchase price to the assets acquired and liabilities assumed was based upon the estimated fair values at the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets is reflected as goodwill. Accordingly, the Company recorded $21.8 million of goodwill, which is reflected in the KATE SPADE International reportable segment. The recorded goodwill is deductible for income tax purposes. | |||||||
The following table summarizes the estimated fair values of the assets acquired as of the acquisition date: | |||||||
In thousands | |||||||
Assets acquired: | |||||||
Current assets | $ | 3,549 | |||||
Property and equipment, net | 1,267 | ||||||
Goodwill and intangibles, net(a) | 26,592 | ||||||
Other assets | 860 | ||||||
| | | | | |||
Total assets acquired | $ | 32,268 | |||||
| | | | | |||
| | | | | |||
(a) | A portion of the goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan is expected to be reclassified to Investment in unconsolidated subsidiary in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 23 — Subsequent Events). | ||||||
The following table presents details of the acquired intangible assets: | |||||||
In thousands | Useful Life | Estimated Fair Value | |||||
Reacquired distribution rights | 1.7 years | $ | 4,500 | ||||
Retail customer list | 3 years | 256 | |||||
On October 31, 2012, a subsidiary of the Company acquired the remaining 51.0% interest ("KSJ Buyout") in KSJ held by Sanei International Co., Ltd. ("Sanei"). Prior to the acquisition, KSJ was a joint venture that was formed between Sanei, and KATE SPADE in August 2009. KSJ operated the kate spade new york and JACK SPADE businesses in Japan, and the Company continues to operate such businesses in Japan through its Japanese subsidiary. | |||||||
The purchase price for the KSJ, including post-closing adjustments was 3.308 billion yen or $41.4 million, including $0.4 million of cash acquired. Prior to obtaining control on October 31, 2012, the Company accounted for the investment in KSJ under the equity method. Upon obtaining control, the transaction was accounted for as an "acquisition achieved in stages," in accordance with US GAAP. Accordingly, the Company re-measured the previously held equity interest in KSJ and adjusted it to fair value utilizing an income approach based on expected future after tax cash flows of KSJ, discounted to reflect risk associated with those cash flows and a market approach based on earnings and revenue multiples that other purchasers in the market would have used for that business. The fair value of the Company's equity interest at the acquisition date was $47.2 million. The difference between the fair value of the Company's ownership in KSJ and the Company's carrying value of its investment of $7.1 million resulted in the recognition of a gain of $40.1 million in 2012, which was included on the accompanying Consolidated Statement of Operations as Gain on acquisition of subsidiary. The results of operations for KSJ have been included in the Company's consolidated results since October 31, 2012. KSJ generated $98.3 million and $16.0 million of net sales and $(1.8) million of net loss and $0.7 million of net income for the years ended December 28, 2013 and December 29, 2012, respectively. KSJ also generated $5.7 million and $0.5 million of incremental Adjusted EBITDA for the years ended December 28, 2013 and December 29, 2012, respectively. Adjusted EBITDA is the Company's measure of segment profitability, as discussed in Note 18 — Segment Reporting. Transaction costs related to the acquisition were not significant. | |||||||
The allocation of the purchase price to the assets acquired and liabilities assumed was based upon the estimated fair values at the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets is reflected as goodwill. Accordingly, the Company recorded $63.4 million of goodwill, which is reflected in the KATE SPADE International reportable segment. None of the recorded goodwill is deductible for income tax purposes. | |||||||
The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of the acquisition date: | |||||||
In thousands | |||||||
Assets acquired: | |||||||
Current assets | $ | 23,721 | |||||
Property and equipment, net | 5,608 | ||||||
Goodwill and intangibles, net | 79,374 | ||||||
Other assets | 6,776 | ||||||
| | | | | |||
Total assets acquired | $ | 115,479 | |||||
| | | | | |||
| | | | | |||
Liabilities assumed: | |||||||
Current liabilities | $ | 8,834 | |||||
Non-current liabilities | 17,629 | ||||||
| | | | | |||
Total liabilities assumed | $ | 26,463 | |||||
| | | | | |||
| | | | | |||
The following table presents details of the acquired intangible assets: | |||||||
In thousands | Useful Life | Estimated Fair Value | |||||
Reacquired distribution rights | 3 years | $ | 14,900 | ||||
Retail customer list | 3 years | 1,100 | |||||
The following unaudited pro forma financial information for the year ended December 29, 2012 reflects the results of continuing operations of the Company as if the KSJ Buyout had been completed on January 1, 2012. Pro forma adjustments have been made for changes in depreciation and amortization expenses related to the valuation of the acquired tangible and intangible assets at fair value, the elimination of non-recurring items and the addition of incremental costs related to debt used to finance the acquisition. | |||||||
In thousands, except per share amounts | Fiscal Year Ended | ||||||
December 29, 2012 | |||||||
Net sales | $ | 617,134 | |||||
Gross profit | 388,190 | ||||||
Operating loss | (32,187 | ) | |||||
Loss before benefit for income taxes | (54,251 | ) | |||||
Loss from continuing operations | (50,836 | ) | |||||
Diluted loss per share from continuing operations | (0.47 | ) | |||||
The unaudited pro forma financial information is presented for information purposes only. It is not necessarily indicative of what the Company's financial position or results of operations actually would have been if the Company completed the acquisition at the date indicated, nor does it purport to project the Company's future financial position or operating results. | |||||||
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
DISCONTINUED OPERATIONS | |||||||||||
DISCONTINUED OPERATIONS | NOTE 3: DISCONTINUED OPERATIONS | ||||||||||
The components of Assets held for sale and Liabilities held for sale related to the former Lucky Brand business as of December 28, 2013 were as follows: | |||||||||||
In thousands | December 28, 2013 | ||||||||||
Assets held for sale: | |||||||||||
Cash and cash equivalents | $ | 163 | |||||||||
Accounts receivable — trade, net | 41,709 | ||||||||||
Inventories, net | 80,503 | ||||||||||
Property and Equipment, net | 68,533 | ||||||||||
Other assets | 11,146 | ||||||||||
| | | | | |||||||
Assets held for sale | $ | 202,054 | |||||||||
| | | | | |||||||
| | | | | |||||||
Liabilities held for sale: | |||||||||||
Accounts payable | $ | 52,977 | |||||||||
Accrued expenses | 27,773 | ||||||||||
Other liabilities | 15,620 | ||||||||||
| | | | | |||||||
Liabilities held for sale | $ | 96,370 | |||||||||
| | | | | |||||||
| | | | | |||||||
The Company completed the sale of Lucky Brand in February 2014 and substantially completed the wind-down operations of the Juicy Couture business in the second quarter of 2014. | |||||||||||
The Company recorded pretax and after tax income (charges) of $130.0 million, $143.4 and $(12.2) million in 2014, 2013 and 2012, respectively, to reflect the estimated difference between the carrying value of the net assets disposed and their estimated fair value, less costs to dispose, including transaction costs. | |||||||||||
Summarized results of discontinued operations are as follows: | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
Net sales | $ | 209,519 | $ | 980,488 | $ | 961,950 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Loss before provision for income taxes | $ | (46,923 | ) | $ | (36,382 | ) | $ | (3,056 | ) | ||
Provision for income taxes | 660 | 1,821 | 6,572 | ||||||||
| | | | | | | | | | | |
Loss from discontinued operations, net of income taxes | $ | (47,583 | ) | $ | (38,203 | ) | $ | (9,628 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
Income (loss) on disposal of discontinued operations, net of income taxes | $ | 130,017 | $ | 143,363 | $ | (12,190 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
In connection with the sale of the Juicy Couture IP, the Company initiated actions to reduce staff at Juicy Couture during the fourth quarter of 2013. Also, as a result of the requirement to wind down the Juicy Couture operations, the Company closed Juicy Couture offices and retail locations. These actions, which were substantially completed by the end of the second quarter of 2014, resulted in charges related to asset impairments, severance and other items. For the 2014, 2013, and 2012 fiscal years, the Company recorded charges of $26.6 million, $48.4 million and $9.8 million, respectively, related to its streamlining initiatives within Discontinued operations, net of income taxes. | |||||||||||
INVENTORIES_NET
INVENTORIES, NET | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
INVENTORIES, NET | ||||||||
INVENTORIES, NET | NOTE 4: INVENTORIES, NET | |||||||
Inventories, net consisted of the following: | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Raw materials and work in process | $ | 538 | $ | 1,028 | ||||
Finished goods | 157,703 | 183,606 | ||||||
| | | | | | | | |
Total | $ | 158,241 | $ | 184,634 | ||||
| | | | | | | | |
| | | | | | | | |
PROPERTY_AND_EQUIPMENT_NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
PROPERTY AND EQUIPMENT, NET | ||||||||
PROPERTY AND EQUIPMENT, NET | NOTE 5: PROPERTY AND EQUIPMENT, NET | |||||||
Property and equipment, net consisted of the following: | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Land and buildings | $ | 9,300 | $ | 9,300 | ||||
Machinery and equipment | 140,189 | 171,811 | ||||||
Furniture and fixtures | 61,694 | 83,753 | ||||||
Leasehold improvements | 122,029 | 173,207 | ||||||
| | | | | | | | |
333,212 | 438,071 | |||||||
Less: Accumulated depreciation and amortization | 159,140 | 289,000 | ||||||
| | | | | | | | |
Total property and equipment, net | $ | 174,072 | $ | 149,071 | ||||
| | | | | | | | |
| | | | | | | | |
Depreciation and amortization expense on property and equipment for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, was $38.3 million, $28.0 million and $22.3 million, respectively, which included depreciation for property and equipment under capital leases of $0.8 million, $1.9 million and $2.9 million, respectively. Machinery and equipment under capital leases was $9.3 million as of January 3, 2015 and December 28, 2013. | ||||||||
During the third quarter of 2013, the Company sold its West Chester, OH distribution center (the "Ohio Facility") for net proceeds of $20.3 million and entered into a sale-leaseback arrangement with the buyer for a 10-year term, which was classified as an operating lease. The Company realized a gain of $9.5 million associated with the sale-leaseback, which has been deferred and will be recognized as a reduction to SG&A over the lease term. | ||||||||
During the second quarter of 2013, the Company sold its North Bergen, NJ office for net proceeds of $8.7 million. The Company entered into a sale-leaseback arrangement with the buyer for a 12-year term with two five-year renewal options, which was classified as a capital lease (see Note 9 — Commitments and Contingencies). | ||||||||
GOODWILL_AND_INTANGIBLES_NET
GOODWILL AND INTANGIBLES, NET | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
GOODWILL AND INTANGIBLES, NET | |||||||||||
GOODWILL AND INTANGIBLES, NET | NOTE 6: GOODWILL AND INTANGIBLES, NET | ||||||||||
The following tables disclose the carrying value of all intangible assets: | |||||||||||
In thousands | Weighted Average | January 3, 2015 | December 28, 2013 | ||||||||
Amortization | |||||||||||
Period | |||||||||||
Amortized intangible assets: | |||||||||||
Gross carrying amount: | |||||||||||
Owned trademarks(a) | — | $ | 467 | $ | 2,000 | ||||||
Customer relationships | 11 years | 7,422 | 7,273 | ||||||||
Merchandising rights | 4 years | 12,012 | 6,087 | ||||||||
Reacquired rights(b) | 2 years | 14,371 | 11,299 | ||||||||
Other | 4 years | 2,322 | 2,322 | ||||||||
| | | | | | | | | | ||
Subtotal | 36,594 | 28,981 | |||||||||
| | | | | | | | | | ||
Accumulated amortization: | |||||||||||
Owned trademarks | (467 | ) | (100 | ) | |||||||
Customer relationships | (4,769 | ) | (4,022 | ) | |||||||
Merchandising rights | (4,108 | ) | (2,595 | ) | |||||||
Reacquired rights | (9,604 | ) | (4,394 | ) | |||||||
Other | (2,219 | ) | (2,092 | ) | |||||||
| | | | | | | | | | ||
Subtotal | (21,167 | ) | (13,203 | ) | |||||||
| | | | | | | | | | ||
Net: | |||||||||||
Owned trademarks | — | 1,900 | |||||||||
Customer relationships | 2,653 | 3,251 | |||||||||
Merchandising rights | 7,904 | 3,492 | |||||||||
Reacquired rights | 4,767 | 6,905 | |||||||||
Other | 103 | 230 | |||||||||
| | | | | | | | | | ||
Total amortized intangible assets, net | 15,427 | 15,778 | |||||||||
| | | | | | | | | | ||
Unamortized intangible assets: | |||||||||||
Owned trademarks | 74,900 | 74,900 | |||||||||
| | | | | | | | | | ||
Total intangible assets | $ | 90,327 | $ | 90,678 | |||||||
| | | | | | | | | | ||
| | | | | | | | | | ||
Goodwill | $ | 64,798 | $ | 49,111 | |||||||
| | | | | | | | | | ||
| | | | | | | | | | ||
(a) | The change in the balance reflected a non-cash impairment charge of $1.5 million related to the TRIFARI trademark (see Note 1 — Basis of Presentation and Significant Accounting Policies). | ||||||||||
(b) | The increase in the balance compared to December 28, 2013 primarily reflected the reacquired existing KATE SPADE businesses in Southeast Asia (see Note 2 — Acquisitions and Note 23 — Subsequent Events). | ||||||||||
Amortization expense of intangible assets was $8.2 million, $5.7 million and $2.1 million for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. | |||||||||||
The estimated amortization expense of intangible assets for the next five years is as follows: | |||||||||||
Fiscal Year | Amortization | ||||||||||
Expense | |||||||||||
(In millions) | |||||||||||
2015 | $ | 7.7 | |||||||||
2016 | 2.5 | ||||||||||
2017 | 2.0 | ||||||||||
2018 | 1.3 | ||||||||||
2019 | 0.4 | ||||||||||
The changes in carrying amount of goodwill for the years ended January 3, 2015 and December 28, 2013 were as follows: | |||||||||||
In thousands | Adelington Design | KATE SPADE | Total | ||||||||
Group | International | ||||||||||
Balance as of December 29, 2012 | $ | 1,554 | $ | 58,669 | $ | 60,223 | |||||
Translation adjustment | (107 | ) | (11,005 | ) | (11,112 | ) | |||||
| | | | | | | | | | | |
Balance as of December 28, 2013 | 1,447 | 47,664 | 49,111 | ||||||||
Acquisition of existing KATE SPADE businesses in Southeast Asia | — | 21,836 | 21,836 | ||||||||
Translation adjustment | (132 | ) | (6,017 | ) | (6,149 | ) | |||||
| | | | | | | | | | | |
Balance as of January 3, 2015 | $ | 1,315 | $ | 63,483 | $ | 64,798 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
ACCRUED EXPENSES | ||||||||
ACCRUED EXPENSES | NOTE 7: ACCRUED EXPENSES | |||||||
Accrued expenses consisted of the following: | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Lease obligations | $ | 28,152 | $ | 34,142 | ||||
Payroll, bonuses and other employment related obligations | 27,446 | 45,971 | ||||||
Streamlining initiatives | 13,633 | 17,829 | ||||||
Advertising | 11,026 | 9,883 | ||||||
Taxes, other than taxes on income | 9,275 | 13,762 | ||||||
Deferred income | 7,742 | 6,322 | ||||||
Insurance related | 6,109 | 7,739 | ||||||
Employee benefits | 5,354 | 8,134 | ||||||
Accrued disposition costs | 2,325 | 10,179 | ||||||
Interest | 355 | 8,375 | ||||||
Other | 39,509 | 37,842 | ||||||
| | | | | | | | |
Total | $ | 150,926 | $ | 200,178 | ||||
| | | | | | | | |
| | | | | | | | |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
INCOME TAXES | |||||||||||
INCOME TAXES | NOTE 8: INCOME TAXES | ||||||||||
Loss before benefit for income taxes consisted of the following: | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
United States | $ | (6,165 | ) | $ | (34,370 | ) | $ | (47,259 | ) | ||
International | (1,488 | ) | (2,358 | ) | (10,389 | ) | |||||
| | | | | | | | | | | |
Total | $ | (7,653 | ) | $ | (36,728 | ) | $ | (57,648 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
The (benefit) provision for income taxes was as follows: | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
Current: | |||||||||||
Federal | $ | (77,366 | ) | $ | 686 | $ | 3,344 | ||||
Foreign | 809 | (2,326 | ) | 1,254 | |||||||
State and local | (7,472 | ) | 742 | (3,175 | ) | ||||||
| | | | | | | | | | | |
Total Current(a) | (84,029 | ) | (898 | ) | 1,423 | ||||||
Deferred: | |||||||||||
Federal | 1,883 | (626 | ) | (4,692 | ) | ||||||
Foreign | (2,722 | ) | (437 | ) | (691 | ) | |||||
State and local | 489 | (2,602 | ) | (1,001 | ) | ||||||
| | | | | | | | | | | |
Total Deferred | (350 | ) | (3,665 | ) | (6,384 | ) | |||||
| | | | | | | | | | | |
$ | (84,379 | ) | $ | (4,563 | ) | $ | (4,961 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
(a) | Includes a net $87.4 million reduction in the reserve for uncertain tax positions, resulting from the expiration of the related statutes of limitations in the year ended January 3, 2015. | ||||||||||
The Company files a consolidated federal income tax return. Deferred income tax assets and liabilities represent the tax effects of revenues, costs and expenses, which are recognized for tax purposes in different periods from those used for financial statement purposes. | |||||||||||
The effective income tax rate differed from the statutory federal income tax rate as follows: | |||||||||||
Fiscal Years Ended | |||||||||||
January 3, 2015 | December 28, 2013 | December 29, 2012 | |||||||||
Federal tax at statutory rate | 35 | % | 35 | % | 35 | % | |||||
State and local income taxes, net of federal benefit | 97.6 | 7.2 | 8.4 | ||||||||
Officer and share-based compensation | 226.4 | — | — | ||||||||
Change in valuation allowance | (185.7 | ) | (13.2 | ) | (41.3 | ) | |||||
Unrecognized tax benefits | 1,010.90 | (1.9 | ) | (6.4 | ) | ||||||
Rate differential on foreign income | (46.8 | ) | (15.0 | ) | (5.9 | ) | |||||
Gain on acquisition of subsidiary | — | — | 29.7 | ||||||||
Conversion of debt to equity | — | (1.5 | ) | (3.4 | ) | ||||||
Indefinite-lived intangibles | (31.0 | ) | 4.8 | (4.6 | ) | ||||||
Other, net | (3.9 | ) | (3.0 | ) | (3.0 | ) | |||||
| | | | | | | | | | | |
1,102.50 | % | 12.4 | % | 8.5 | % | ||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The components of net deferred taxes arising from temporary differences were as follows: | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | |||||||||
Deferred tax assets: | |||||||||||
Inventory valuation | $ | 9,212 | $ | 6,088 | |||||||
Streamlining initiatives | — | 10,003 | |||||||||
Deferred compensation | 2,053 | 3,009 | |||||||||
Nondeductible accruals | 10,363 | 83,661 | |||||||||
Share-based compensation | 11,827 | 7,322 | |||||||||
Net operating loss carryforward | 300,825 | 249,399 | |||||||||
Tax credit carryforward | 34 | 53,495 | |||||||||
Goodwill | 5,603 | 6,885 | |||||||||
Capital loss carryforward | 68,839 | 72,788 | |||||||||
Other | 15,906 | 19,339 | |||||||||
| | | | | | | | ||||
Total deferred tax assets | 424,662 | 511,989 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Trademarks and other intangibles | (17,622 | ) | (16,636 | ) | |||||||
Property and equipment | (5,632 | ) | (12,633 | ) | |||||||
Other | (2,746 | ) | (1,584 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (26,000 | ) | (30,853 | ) | |||||||
| | | | | | | | ||||
Less: Valuation allowance | (415,173 | ) | (497,485 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (16,511 | ) | $ | (16,349 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
The table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of January 3, 2015, and December 28, 2013, that arose from tax deductions related to share-based compensation that are greater than the compensation expense recognized for financial reporting. The deferred tax adjustment of that difference was $44.7 million as of January 3, 2015. | |||||||||||
As of January 3, 2015, the Company and its domestic subsidiaries had net operating loss and foreign tax credit carryforwards of $787.6 million (federal tax effected amount of $275.6 million) for federal income tax purposes that may be used to reduce future federal taxable income. As of January 3, 2015 the cumulative amount of tax deductions related to share-based compensation and the corresponding compensation expense adjustment for financial reporting was $115.0 million (federal tax effected amount of $40.2 million). The net operating loss for federal income tax purposes will begin to expire in 2028. | |||||||||||
As of January 3, 2015, the Company and certain of its domestic subsidiaries recorded a $53.7 million deferred tax asset related to net operating loss carryforwards for state income tax purposes that may be used to reduce future state taxable income. The net operating loss carryforwards for state income tax purposes begin to expire in 2015. | |||||||||||
As of January 3, 2015, certain of the Company's foreign subsidiaries recorded an $11.7 million deferred tax asset related to net operating loss carryforwards for foreign income tax purposes that may be used to reduce future foreign taxable income. The net operating loss carryforwards for foreign income tax purposes begin to expire in 2015. | |||||||||||
As of January 3, 2015, the Company had total deferred tax assets related to net operating loss carryforwards of $300.8 million, of which $235.4 million, $53.7 million and $11.7 million were attributable to federal, domestic state and local, and foreign subsidiaries, respectively. | |||||||||||
As of January 3, 2015, the Company and its subsidiaries recorded valuation allowances in the amount of $415.2 million against its net operating loss and other deferred tax assets due to of its history of pretax losses and inability to carry back tax losses or credits for refunds. This represents a total decrease in the valuation allowance of $82.3 million compared to the balance at December 28, 2013. | |||||||||||
The Company has not provided for deferred taxes on the outside basis difference in its investments in foreign subsidiaries that are essentially permanent in duration. As of January 3, 2015, there were no unremitted earnings. It is not practicable to determine the amount of income taxes that would be payable in the event such outside basis differences reverse or unremitted earnings are repatriated. | |||||||||||
The Company has not provided deferred taxes on the outside basis difference in its investment in Lucky Brand Dungarees, Inc. The Company's outside basis difference would result in the recording of a deferred tax asset with an offsetting valuation allowance. Due to the terms of the stock purchase agreement for the purchase of Lucky Brand Dungarees, Inc. shares, the buyer caused the Company to treat the transaction as a deemed sale of assets, and as a result, the deferred tax asset would not be recognizable. | |||||||||||
Changes in the amounts of unrecognized tax benefits are summarized as follows: | |||||||||||
Fiscal Years Ended | |||||||||||
January 3, 2015 | December 28, 2013 | December 29, 2012 | |||||||||
In thousands | |||||||||||
Balance as of beginning of period | $ | 84,108 | $ | 85,999 | $ | 103,982 | |||||
Increases from prior period positions | 32 | 1,436 | 535 | ||||||||
Decreases from prior period positions | — | (4,348 | ) | (630 | ) | ||||||
Increases from current period positions | — | 2,000 | 37 | ||||||||
Decreases relating to settlements with taxing authorities | — | (153 | ) | (17,765 | ) | ||||||
Reduction due to the lapse of the applicable statute of limitations | (74,916 | ) | (826 | ) | (160 | ) | |||||
| | | | | | | | | | | |
Balance as of end of period(a) | $ | 9,224 | $ | 84,108 | $ | 85,999 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
(a) | As of January 3, 2015 and December 28, 2013, liabilities associated with the amounts are included within Income taxes payable and Other non-current liabilities on the accompanying Consolidated Balance Sheets. | ||||||||||
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. For the year ended January 3, 2015, the Company decreased its accruals for interest and penalties by $10.6 million and $1.6 million, respectively. For the year ended December 28, 2013, the Company increased its accruals for interest and penalties by $2.5 million and $0.1 million, respectively. For the year ended December 29, 2012, the Company increased its accrual for interest and penalties by $3.3 million and $0.2 million, respectively. At January 3, 2015 and December 28, 2013, the accrual for interest was $1.8 million and $12.4 million, respectively and the accrual for penalties was $1.1 million and $2.7 million, respectively. | |||||||||||
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $9.2 million. The Company expects to reduce the liability for unrecognized tax benefits by an amount between $1.4 million and $3.6 million within the next 12 months due to either settlement or the expiration of the statute of limitations. | |||||||||||
The Company files tax returns in the US Federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which the Company has unrecognized tax benefits, is audited and finally resolved. While it is difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that the unrecognized tax benefits reflect the most likely outcome. These unrecognized tax benefits, as well as the related interest, are adjusted in light of changing facts and circumstances. Favorable resolution would be recognized as a reduction to the effective tax rate in the period of resolution. | |||||||||||
The number of years with open tax audits varies depending upon the tax jurisdiction. The major tax jurisdictions include the US, Japan, United Kingdom, Canada and Brazil. The Company is generally no longer subject to US Federal examination by the Internal Revenue Service ("IRS") for the years before 2009 and, with few exceptions, this applies to tax examinations by state authorities for the years before 2009. The Company filed amended US Federal tax returns for 2005, 2006 and 2007 to convert expiring foreign tax credits into foreign tax deductions. The result of the amended returns increased the Company's US Federal net operating loss carryforwards by $47.0 million. As a result, the IRS has the ability to reopen its past examinations of those years. In addition, the IRS and other taxing authorities can also subject the Company's net operating loss carryforwards to further review when such net operation loss carryforwards are utilized. | |||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | NOTE 9: COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||
Leases | |||||||||||||||||||||||
The Company leases office, showroom, warehouse/distribution, retail space and computers and other equipment under various non-cancelable operating lease agreements, which extend through 2027. Rental expense for 2014, 2013 and 2012 was $87.0 million, $54.3 million and $33.0 million, respectively, excluding certain costs such as real estate taxes and common area maintenance. | |||||||||||||||||||||||
At January 3, 2015, minimum aggregate rental commitments under non-cancelable operating and capital leases were as follows: | |||||||||||||||||||||||
Fiscal Year | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total | ||||||||||||||||
In millions | |||||||||||||||||||||||
Operating leases | $ | 65.4 | $ | 60.9 | $ | 59.0 | $ | 55.4 | $ | 50.7 | $ | 194.9 | $ | 486.3 | |||||||||
Capital leases | 1.9 | 2.1 | 2.1 | 2.2 | 2.2 | 13.1 | 23.6 | ||||||||||||||||
Certain rental commitments have renewal options extending through the fiscal year 2027. Some of these renewals are subject to adjustments in future periods. Many of the leases call for additional charges, some of which are based upon various escalations, and, in the case of retail leases, the sales of the individual stores above base levels. Future rental commitments for leases have not been reduced by minimum non-cancelable sublease rentals aggregating $33.3 million. | |||||||||||||||||||||||
During the second quarter of 2013, the Company entered into a sale-leaseback agreement for its North Bergen, NJ office with a 12-year term and two five-year renewal options. This leaseback was classified as a capital lease and recorded at fair value. | |||||||||||||||||||||||
In connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to third parties, for which the Company or certain subsidiaries of the Company remain secondarily liable for the remaining obligations on 185 such leases. As of January 3, 2015, the future aggregate payments under these leases amounted to $152.0 million and extended to various dates through 2025. | |||||||||||||||||||||||
Buying/Sourcing | |||||||||||||||||||||||
Pursuant to a buying/sourcing agency agreement, Li & Fung Limited ("Li & Fung") acts as the primary global apparel and accessories buying/sourcing agent, with the exception of its jewelry product lines. The Company pays Li & Fung an agency commission based on the cost of product purchases using Li & Fung as its buying/sourcing agent. The Company is obligated to use Li & Fung as its buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. The Company's agreement with Li & Fung is not exclusive; however, the Company is required to source a specified percentage of product purchases from Li & Fung. | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
No single customer accounted for 10.0% of net sales in 2014. As of January 3, 2015, Nordstrom Inc. and The TJX Companies Inc., each accounted for greater than 10.0% of total accounts receivable, with a combined total of 39.6%. | |||||||||||||||||||||||
At January 3, 2015, the Company had short-term commitments for the purchase of raw materials and for the production of finished goods totaling $156.4 million. | |||||||||||||||||||||||
The Company is a party to several pending legal proceedings and claims. Although the outcome of any such actions cannot be determined with certainty, management is of the opinion that the final outcome of any of these actions should not have a material adverse effect on the Company's financial position, results of operations, liquidity or cash flows. | |||||||||||||||||||||||
DEBT_AND_LINES_OF_CREDIT
DEBT AND LINES OF CREDIT | 12 Months Ended | |||||||||||||||||||
Jan. 03, 2015 | ||||||||||||||||||||
DEBT AND LINES OF CREDIT | ||||||||||||||||||||
DEBT AND LINES OF CREDIT | NOTE 10: DEBT AND LINES OF CREDIT | |||||||||||||||||||
Long-term debt consisted of the following: | ||||||||||||||||||||
January 3, 2015 | December 28, 2013 | |||||||||||||||||||
In thousands | ||||||||||||||||||||
10.5% Senior Secured Notes, due April 2019(a) | $ | — | $ | 382,209 | ||||||||||||||||
Term Loan credit facility, due April 2021(a)(b) | 396,158 | — | ||||||||||||||||||
Revolving credit facility | 6,000 | 2,997 | ||||||||||||||||||
Capital lease obligations | 8,585 | 8,995 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total debt | 410,743 | 394,201 | ||||||||||||||||||
Less: Short-term borrowings(c) | 10,459 | 3,407 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Long-term debt | $ | 400,284 | $ | 390,794 | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
(a) | The Senior Notes were refinanced in the second quarter of 2014 with proceeds from the issuance of term loans in an aggregate principal amount of $400.0 million (collectively, the "Term Loan"). | |||||||||||||||||||
(b) | The balance as of January 3, 2015 included an unamortized debt discount of $1.8 million. | |||||||||||||||||||
(c) | At January 3, 2015, the balance consisted of $4.0 million of Term Loan amortization payments, outstanding borrowings under the Company's amended and restated revolving credit facility (as amended to date, the "ABL Facility") and obligations under capital leases. At December 28, 2013, the balance consisted of outstanding borrowings under the ABL Facility and obligations under capital leases. | |||||||||||||||||||
Convertible Notes | ||||||||||||||||||||
During the first quarter of 2013, a holder of $11.2 million aggregate principal amount of the Company's 6.0% Convertible Senior Notes due June 2014 (the "Convertible Notes") converted all of such outstanding Convertible Notes into 3,171,670 shares of the Company's common stock. During the third quarter of 2013, holders of the remaining $8.8 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 2,462,509 shares of the Company's common stock. The Company recognized pretax losses of $1.7 million and $4.6 million on the extinguishment of debt related to the Convertible Notes for the years ended December 28, 2013 and December 29, 2012. | ||||||||||||||||||||
Senior Notes | ||||||||||||||||||||
On April 7, 2011, the Company completed an offering of $220.0 million principal amount of 10.5% Senior Secured Notes due April 2019 (the "Original Notes," together with the June 2012 issuance of $152.0 million aggregate principal amount of 10.5% Senior Notes (the "Additional Notes"), the "Senior Notes"). The Company used the net proceeds of $212.9 million from such issuance of the Original Notes primarily to fund a tender offer of then outstanding 128.5 million euro aggregate principal amount of 5.0% Euro Notes due July 8, 2013 (the "Euro Notes") on April 8, 2011. The remaining proceeds were used for general corporate purposes. On June 8, 2012, the Company completed the offering of the Additional Notes, at 108.25% of par value. The Company used a portion of the net proceeds of $160.6 million from the offering of the Additional Notes to repay outstanding borrowings under its ABL Facility and to fund the redemption of 52.9 million euro aggregate principal amount of Euro Notes on July 12, 2012. The Company used the remaining proceeds to fund a portion of the KSJ Buyout. In 2012, the Company recognized a $5.1 million pretax loss on extinguishment of debt related to the Euro Notes redemptions. | ||||||||||||||||||||
On April 14, 2014, the Company redeemed $37.2 million aggregate principal amount of the Senior Notes at a price equal to 103.0% of their aggregate principal amount, plus accrued interest using cash on hand. On May 12, 2014, the Company redeemed the remaining $334.8 million aggregate principal amount of the Senior Notes at a price equal to 105.25% of their aggregate principal amount, plus accrued interest, with the proceeds from the Term Loan. The Company recognized a $16.9 million loss on extinguishment of debt related to these transactions in the second quarter of 2014. | ||||||||||||||||||||
Term Loan | ||||||||||||||||||||
On April 10, 2014, the Company entered into a term loan credit agreement (the "Term Loan Credit Agreement"), which provides for the Term Loan in an aggregate principal amount of $400.0 million, maturing in April 2021. The Term Loan is subject to amortization payments of $1.0 million per quarter, which commenced on October 1, 2014, with the balance due at maturity. Interest on the outstanding principal amount of the Term Loan accrues at a rate equal to LIBOR (with a floor of 1.0%) plus 3.0% per annum, payable in cash. The Term Loan was funded on May 12, 2014, and the Company used $354.8 million of the net proceeds of $392.0 million from the Term Loan to redeem the Company's remaining outstanding Senior Notes on May 12, 2014, as discussed above. The Term Loan and other obligations under the Term Loan Credit Agreement are guaranteed by certain of the Company's restricted subsidiaries (the "Guarantors"), which include (i) all of the Company's existing material domestic restricted subsidiaries, (ii) all future wholly owned restricted subsidiaries of the Company (other than foreign subsidiaries, CFCs, CFC holding companies and subsidiaries of any of the foregoing and certain immaterial subsidiaries) and (iii) all future non-wholly owned restricted subsidiaries of the Company that guarantee capital markets debt securities or term indebtedness of the Company or any Guarantor. | ||||||||||||||||||||
The Term Loan Credit Agreement permits the Company to incur, from time to time, additional incremental term loans under the Term Loan Credit Agreement (subject to obtaining commitments for such term loans) and other pari passu lien indebtedness, subject to an overall limit of $100.0 million plus such additional amount that would cause the Company's consolidated net total secured debt ratio not to exceed 3.75 to 1.0 on a pro forma basis. Any such incremental term loans and other pari passu lien indebtedness are permitted to share in the collateral described below on a pari passu basis with the Term Loan. The Term Loan may be prepaid, at the Company's option, in whole or in part, at any time at par plus accrued interest; provided that if the Term Loan is prepaid or refinanced in connection with a repricing transaction within six months after the initial borrowing, a 1.0% penalty is applicable. | ||||||||||||||||||||
Subject to certain permitted liens and other exclusions and exceptions, the Term Loan is secured (i) on a first-priority basis by a lien on the Company's KATE SPADE trademarks and certain related rights owned by the Company and the Guarantors (the "Term Priority Collateral") and (ii) by a second-priority security interest in the Company's and the Guarantors' other assets (the "ABL Priority Collateral" and together with the Term Priority Collateral, the "Collateral"), which secure the Company's ABL Facility on a first-priority basis. | ||||||||||||||||||||
The Term Loan is required to be prepaid in an amount equal to 50.0% of the Company's Excess Cash Flow (as defined in the Term Loan Credit Agreement) with respect to each fiscal year ending on or after January 2, 2016. The percentage of Excess Cash Flow that must be so applied is reduced to 25.0% if the Company's consolidated net total debt ratio is less than 2.75 to 1.0 and to 0% if the Company's consolidated net total debt ratio is less than 2.25 to 1.0. Lenders may elect not to accept mandatory prepayments. | ||||||||||||||||||||
The Term Loan Credit Agreement limits the Company's and restricted subsidiaries' ability to, among other things, incur indebtedness, make dividend payments or other restricted payments, create liens, sell assets (including securities of the Company's restricted subsidiaries), permit certain restrictions on dividends and transfers of assets by the Company's restricted subsidiaries, enter into certain types of transactions with shareholders and affiliates and enter into mergers, consolidations or sales of all or substantially all of the Company's assets, in each case subject to certain designated exceptions and qualifications. The Term Loan Credit Agreement also contains certain affirmative covenants and events of default that are customary for credit agreements governing term loans. | ||||||||||||||||||||
ABL Facility | ||||||||||||||||||||
In May 2014, the Company terminated its prior revolving credit agreement and completed a fourth amendment to and restatement of the ABL Facility, which extended the maturity date of the facility to May 2019. Availability under the ABL Facility shall be an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of the Company's eligible cash, accounts receivable and inventory. The ABL Facility also includes a swingline subfacility of $30.0 million, a multicurrency subfacility of $35.0 million and the option to expand the facility by up to $100.0 million under certain specified conditions. A portion of the ABL Facility up to $125.0 million is available for the issuance of letters of credit, and standby letters of credit may not exceed $40.0 million in the aggregate. The ABL Facility allows two borrowing options: one borrowing option with interest rates based on euro currency rates and a second borrowing option with interest rates based on the alternate base rate, as defined in the ABL Facility, with a spread based on the aggregate availability under the ABL Facility. | ||||||||||||||||||||
The ABL Facility is guaranteed by substantially all of the Company's current domestic subsidiaries, certain of the Company's future domestic subsidiaries and certain of the Company's foreign subsidiaries. The ABL Facility is secured by a first-priority lien on substantially all of the assets of the Company and the other borrowers and guarantors (other than certain trademark collateral in which the lenders under the Term Loan Credit Agreement have a first-priority lien, which trademark collateral secures the obligations under the ABL Facility on a second-priority lien basis). | ||||||||||||||||||||
The ABL Facility limits the Company's, and its restricted subsidiaries' ability to, among other things, incur additional indebtedness, create liens, undergo certain fundamental changes, make investments, sell certain assets, enter into hedging transactions, make restricted payments and pay certain indebtedness, enter into transactions with affiliates, permit certain restrictions on dividends and transfers of assets by the Company's restricted subsidiaries and enter into sale and leaseback transactions. These covenants are subject to important exceptions and qualifications, and many of the covenants are subject to an exception based on meeting the fixed charge coverage ratio and/or certain minimum availability tests. The ABL Facility also contains representations and warranties (some of which are brought down to the time of each borrowing made), affirmative covenants and events of default that are customary for asset-based revolving credit agreements. | ||||||||||||||||||||
In addition, the terms and conditions of the ABL Facility: (i) provide for a decrease in fees and interest rates compared to the Company's previous asset-based revolving loan facility (including eurocurrency spreads of 1.50% to 2.00% over LIBOR, depending on the level of aggregate availability), (ii) require the Company to maintain pro forma compliance with a fixed charge coverage ratio of 1.0:1.0 on a trailing four-quarter basis if availability under the ABL Facility for three consecutive business days falls below the greater of $15.0 million and 10.0% of the lesser of the aggregate commitments and the borrowing base and (iii) require the Company to apply substantially all cash collections to reduce outstanding borrowings under the ABL Facility if availability under the ABL Facility for three consecutive business days falls below the greater of $20.0 million and 12.5% of the lesser of the aggregate commitments and the borrowing base. | ||||||||||||||||||||
The funds available under the ABL Facility may be used for working capital and for general corporate purposes. The Company currently believes that the financial institutions under the ABL Facility are able to fulfill their commitments, although such ability to fulfill commitments will depend on the financial condition of the Company's lenders at the time of borrowing. | ||||||||||||||||||||
As of January 3, 2015, availability under the Company's ABL Facility was as follows: | ||||||||||||||||||||
Total | Borrowing | Outstanding | Letters of | Available | Excess | |||||||||||||||
Facility(a) | Base(a) | Borrowings | Credit | Capacity | Capacity(b) | |||||||||||||||
Issued | ||||||||||||||||||||
In thousands | ||||||||||||||||||||
Revolving credit facility(a) | $ | 200,000 | $ | 249,832 | $ | 6,000 | $ | 13,140 | $ | 180,860 | $ | 160,860 | ||||||||
(a) | Availability under the ABL Facility is the lesser of $200.0 million or a borrowing base that is computed monthly and comprised of the Company's eligible cash, accounts receivable and inventory. | |||||||||||||||||||
(b) | Excess capacity represents available capacity reduced by the minimum required aggregate borrowing availability under the ABL Facility of $20.0 million. | |||||||||||||||||||
Capital Lease Obligations | ||||||||||||||||||||
In the second quarter of 2013, the Company entered into a sale-leaseback agreement for its office building in North Bergen, NJ, which included a sale price of $8.7 million and total lease payments of $26.9 million over a 12-year lease term. The Company's capital lease obligations of $8.6 million and $9.0 million as of January 3, 2015 and December 28, 2013, respectively, included $0.5 million and $0.4 million within Short-term borrowings on the accompanying Consolidated Balance Sheets. | ||||||||||||||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | ||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||
FAIR VALUE MEASUREMENTS | |||||||||||||||||
FAIR VALUE MEASUREMENTS | NOTE 11: FAIR VALUE MEASUREMENTS | ||||||||||||||||
As discussed in Note 1 — Basis of Presentation and Significant Accounting Policies, the Company utilizes a three level hierarchy that defines the assumptions used to measure certain assets and liabilities at fair value. | |||||||||||||||||
The following table presents the financial assets and liabilities the Company measures at fair value on a recurring basis, based on such fair value hierarchy: | |||||||||||||||||
Level 2 | |||||||||||||||||
January 3, 2015 | December 28, 2013 | ||||||||||||||||
In thousands | |||||||||||||||||
Financial Assets: | |||||||||||||||||
Derivatives | $ | 3,193 | $ | 1,701 | |||||||||||||
Financial Liabilities: | |||||||||||||||||
Derivatives | $ | — | $ | — | |||||||||||||
The fair values of the Company's Level 2 derivative instruments were primarily based on observable forward exchange rates. Unobservable quantitative inputs used in the valuation of the Company's derivative instruments included volatilities, discount rates and estimated credit losses. | |||||||||||||||||
The following table presensts the non-financial assets the Company measured at fair value on a non-recurring basis in 2014, based on such fair value hierarchy: | |||||||||||||||||
Fair Value Measured and Recorded at | |||||||||||||||||
Net Carrying | Reporting Date Using: | Total Losses — | |||||||||||||||
Value as of | Year Ended | ||||||||||||||||
January 3, 2015 | Level 1 | Level 2 | Level 3 | January 3, 2015 | |||||||||||||
In thousands | |||||||||||||||||
Property and equipment | $ | 4,127 | $ | — | $ | — | $ | 4,127 | $ | 10,358 | |||||||
Intangibles, net | — | — | — | — | 1,533 | ||||||||||||
As a result of the Company's decision to close all KATE SPADE SATURDAY retail operations and JACK SPADE retail stores in the first half of 2015 (see Note 13 — Streamlining Initiatives and Note 23 — Subsequent Events), as well as a result of a decline in the respective future anticipated cash flows of certain retail locations of kate spade new york, KATE SPADE SATURDAY and JACK SPADE, the Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. | |||||||||||||||||
In the fourth quarter of 2014, the Company recorded a non-cash impairment charge of $1.5 million to reduce the carrying balance of the TRIFARI trademark to zero, due to the expected exit of that brand. | |||||||||||||||||
The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2013, based on such fair value hierarchy: | |||||||||||||||||
Fair Value Measured and Recorded at Reporting Date Using: | |||||||||||||||||
Net Carrying | Total Losses — | ||||||||||||||||
Value as of | Year Ended | ||||||||||||||||
December 28, 2013 | Level 1 | Level 2 | Level 3 | December 28, 2013 | |||||||||||||
In thousands | |||||||||||||||||
Property and equipment | $ | 15,706 | $ | — | $ | — | $ | 15,706 | $ | 1,480 | |||||||
Intangibles, net | 1,900 | — | — | 1,900 | 3,300 | ||||||||||||
Other assets | — | — | — | — | 6,109 | ||||||||||||
The Company performed impairment analyses on certain property and equipment as a result of a decline in the respective future anticipated cash flows of certain retail locations of JACK SPADE and the decision to revise the Company's plan to outsource its distribution function (see Note 13 — Streamlining Initiatives). The Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. | |||||||||||||||||
In the third quarter of 2013, the Company recorded a non-cash impairment charge of $3.3 million, which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark. The Company estimated the fair value of the trademark using the income-based relief-from-royalty valuation method which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use a comparable asset. The Company assumed a market royalty rate of 3.5%, a discount rate of 14.0% and a long term growth rate of 2.0%. | |||||||||||||||||
Subsequent to the sale of its former global Mexx business, the Company retained a noncontrolling ownership interest in such business and accounted for its investment at cost (see Note 17 — Additional Financial Information). In the second quarter of 2013, the Company performed an impairment test based on market multiples of comparable transactions and determined that the carrying value of the investment exceeded its fair value, resulting in an impairment charge, which was recorded in Impairment of cost investment on the accompanying Consolidated Statement of Operations. | |||||||||||||||||
The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2012, based on such fair value hierarchy: | |||||||||||||||||
Fair Value Measured and Recorded at | |||||||||||||||||
Net Carrying | Reporting Date Using: | Total Losses — | |||||||||||||||
Value as of | Year Ended | ||||||||||||||||
December 29, 2012 | Level 1 | Level 2 | Level 3 | December 29, 2012 | |||||||||||||
In thousands | |||||||||||||||||
Property and equipment | $ | 22,710 | $ | — | $ | — | $ | 22,710 | $ | 26,413 | |||||||
In connection with a change in the pattern of use and then likely disposal of the Company's New Jersey corporate office, an impairment analysis was performed on the associated property and equipment. As a result of a decline in the estimated fair value of the Company's Ohio distribution center, impairment analyses were performed on the associated property and equipment. The Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. | |||||||||||||||||
The fair values of the Company's Level 3 Property and equipment and Intangible assets are based on either a market approach or an income approach using the Company's forecasted cash flows over the estimated useful lives of such assets, as appropriate. | |||||||||||||||||
The fair values and carrying values of the Company's debt instruments are detailed as follows: | |||||||||||||||||
December 28, 2013 | |||||||||||||||||
January 3, 2015 | |||||||||||||||||
In thousands | Fair Value | Carrying Value | Fair Value | Carrying Value | |||||||||||||
10.5% Senior Secured Notes due April 2019(a) | $ | — | $ | — | $ | 400,830 | $ | 382,209 | |||||||||
Term Loan credit facility, due April 2021(a) | 384,786 | 396,158 | — | — | |||||||||||||
Revolving credit facility(b) | 6,000 | 6,000 | 2,997 | 2,997 | |||||||||||||
(a) | Carrying values include unamortized debt discount or premium. | ||||||||||||||||
(b) | Borrowings under the revolving credit facility bear interest based on market rate; accordingly, its fair value approximates its carrying value. | ||||||||||||||||
The fair values of the Company's debt instruments were estimated using market observable inputs, including quoted prices in active markets, market indices and interest rate measurements. Within the hierarchy of fair value measurements, these are Level 2 fair values. The fair values of cash and cash equivalents, receivables and accounts payable approximate their carrying values due to the short-term nature of these instruments. | |||||||||||||||||
As of January 3, 2015, the carrying amount of the Lucky Brand Note was $89.0 million, including initial principal of $85.0 million and accrued payment in kind of $4.0 million. In evaluating its fair value, the Company considered various facts and circumstances, including (i) known changes in market values of comparable instruments in active markets; (ii) the inability to transfer the Lucky Brand Note and the lack of an active market to do so; and (iii) entity specific factors related to the issuer of the Lucky Brand Note including the absence of any factors that would suggest that the counterparty may be unable to meet its obligations under the terms of the Lucky Brand Note. | |||||||||||||||||
Based on those factors and the inherent subjectivity in evaluating fair value of the Lucky Brand Note and similar instruments, the Company concluded that providing a range of fair value was appropriate. The Company determined the range of fair value of the Lucky Brand Note, including accrued payment in kind, to be between $79.0 million and $89.0 million. The low end of such range was determined using two methods. The Company reviewed the average change in fair value of comparable instruments in active markets and also estimated an implied discount based on the non-transferable nature of the Lucky Brand Note. The high end of the range considered entity specific circumstances and assumed LGP would pay the Lucky Brand Note in full. | |||||||||||||||||
DERIVATIVE_INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended | |||||||||||||||||
Jan. 03, 2015 | ||||||||||||||||||
DERIVATIVE INSTRUMENTS | ||||||||||||||||||
DERIVATIVE INSTRUMENTS | NOTE 12: DERIVATIVE INSTRUMENTS | |||||||||||||||||
In order to reduce exposures related to changes in foreign currency exchange rates, the Company uses forward contracts and may utilize foreign currency collars, options and swap contracts for purposes of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases by KSJ. As of January 3, 2015, the Company had forward contracts maturing through March 2016 to sell 4.3 billion yen for $39.1 million. | ||||||||||||||||||
The Company uses foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with intercompany loans. As of January 3, 2015, the Company had forward contracts to sell 4.0 billion yen for $33.4 million maturing through March 2015. Transaction gains of $4.5 million, $8.5 million and $1.0 million related to these derivative instruments for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively, were reflected within Other expense, net on the accompanying Consolidated Statements of Operations. | ||||||||||||||||||
The following table summarizes the fair value and presentation in the Consolidated Financial Statements for derivatives designated as hedging instruments and derivatives not designated as hedging instruments: | ||||||||||||||||||
Foreign Currency Contracts Designated as Hedging Instruments | ||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Period | Balance Sheet | Notional | Fair Value | Balance Sheet | Notional | Fair Value | ||||||||||||
Location | Amount | Location | Amount | |||||||||||||||
In thousands | ||||||||||||||||||
January 3, 2015 | Other current assets | $ | 39,100 | $ | 3,066 | Accrued expenses | $ | — | $ | — | ||||||||
December 28, 2013 | Other current assets | 21,050 | 1,317 | Accrued expenses | — | — | ||||||||||||
The following table summarizes the fair value and presentation in the Consolidated Financial Statements for derivatives not designated as hedging instruments: | ||||||||||||||||||
Foreign Currency Contracts Not Designated as Hedging Instruments | ||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Period | Balance Sheet | Notional | Fair Value | Balance Sheet | Notional | Fair Value | ||||||||||||
Location | Amount | Location | Amount | |||||||||||||||
In thousands | ||||||||||||||||||
January 3, 2015 | Other current assets | $ | 33,350 | $ | 127 | Accrued expenses | $ | — | $ | — | ||||||||
December 28, 2013 | Other current assets | 38,403 | 384 | Accrued expenses | — | — | ||||||||||||
The following table summarizes the effect of foreign currency exchange contracts on the Consolidated Financial Statements: | ||||||||||||||||||
Amount of Gain or | Location of Gain or | Amount of Gain or | Amount of Gain or | |||||||||||||||
(Loss) Recognized in | (Loss) Reclassified | (Loss) Reclassified | (Loss) Recognized in | |||||||||||||||
Accumulated OCI | from Accumulated | from Accumulated | Operations on | |||||||||||||||
on Derivative | OCI into Operations | OCI into Operations | Derivative | |||||||||||||||
(Effective Portion) | (Effective and | (Effective Portion) | (Ineffective Portion) | |||||||||||||||
Ineffective Portion) | ||||||||||||||||||
In thousands | ||||||||||||||||||
Fiscal year ended January 3, 2015 | $ | 2,854 | Cost of goods sold | $ | 1,161 | $ | — | |||||||||||
Fiscal year ended December 28, 2013 | 2,911 | Cost of goods sold | 1,326 | — | ||||||||||||||
Fiscal year ended December 29, 2012 | — | Cost of goods sold | — | — | ||||||||||||||
STREAMLINING_INITIATIVES
STREAMLINING INITIATIVES | 12 Months Ended | ||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||
STREAMLINING INITIATIVES | |||||||||||||||||
STREAMLINING INITIATIVES | NOTE 13: STREAMLINING INITIATIVES | ||||||||||||||||
2014 Actions | |||||||||||||||||
On January 29, 2015, the Company announced it will discontinue KATE SPADE SATURDAY as a standalone brand, including retail stores and its e-commerce website and that it will close its JACK SPADE retail stores. These actions are expected to be completed in the first half of 2015. Based on a probability weighted approach, the Company recorded non-cash asset impairment charges in 2014 and expects to incur additional asset impairment charges as well as contract termination costs and employee related costs in 2015 (see Note 23 — Subsequent Events). | |||||||||||||||||
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 2014. As discussed in Note 14 — 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, the Company recorded charges related to contract terminations and other charges in the first quarter of 2014. | |||||||||||||||||
The Company expects to pay approximately $7.8 million of accrued streamlining costs during 2015. In addition, the Company expects to pay $5.9 million of accrued streamlining costs related to discontinued operations in 2015. A summary rollforward and components of the Company's streamlining initiatives were as follows: | |||||||||||||||||
In thousands | Payroll and | Contract | Asset | Other Costs | Total | ||||||||||||
Related Costs | Termination | Write-Downs | |||||||||||||||
Costs | |||||||||||||||||
Balance at December 31, 2011 | $ | 7,352 | $ | 18,012 | $ | — | $ | 30,967 | $ | 56,331 | |||||||
2012 provision | 9,158 | 2,681 | 27,783 | 3,571 | 43,193 | ||||||||||||
2012 asset write-downs | — | — | (27,783 | ) | — | (27,783 | ) | ||||||||||
Translation difference | 25 | 49 | — | 9 | 83 | ||||||||||||
2012 spending | (11,976 | ) | (16,499 | ) | — | (18,783 | ) | (47,258 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Balance at December 29, 2012 | 4,559 | 4,243 | — | 15,764 | 24,566 | ||||||||||||
2013 provision(a) | 5,657 | 6 | 1,744 | 3,194 | 10,601 | ||||||||||||
2013 asset write-downs | — | — | (1,744 | ) | — | (1,744 | ) | ||||||||||
Translation difference | (7 | ) | 12 | — | 18 | 23 | |||||||||||
2013 spending(a) | (7,173 | ) | (2,110 | ) | — | (7,269 | ) | (16,552 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Balance at December 28, 2013 | 3,036 | 2,151 | — | 11,707 | 16,894 | ||||||||||||
2014 provision(a) | 33,729 | 1,540 | 6,367 | 316 | 41,952 | ||||||||||||
2014 asset write-downs | — | — | (6,367 | ) | — | (6,367 | ) | ||||||||||
Translation difference | — | — | — | (3 | ) | (3 | ) | ||||||||||
2014 spending(a) | (34,685 | ) | (2,704 | ) | — | (5,190 | ) | (42,579 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Balance at January 3, 2015(b) | $ | 2,080 | $ | 987 | $ | — | $ | 6,830 | $ | 9,897 | |||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
(a) | Payroll and related costs provision and spending include $17.3 million and $2.8 million in 2014 and 2013, respectively, of non-cash share-based compensation expense. | ||||||||||||||||
(b) | The balance in other costs at January 3, 2015 includes $6.8 million for a withdrawal liability incurred in 2011 related to a multi-employer pension plan that the Company will pay through June 1, 2016. | ||||||||||||||||
Expenses associated with the Company's streamlining actions were primarily recorded in SG&A in the Consolidated Statements of Operations and impacted reportable segments and Corporate as follows: | |||||||||||||||||
Fiscal Years Ended | |||||||||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||||||||
KATE SPADE North America | $ | 7,319 | $ | 791 | $ | 2,519 | |||||||||||
KATE SPADE International | 1,567 | — | — | ||||||||||||||
Adelington Design Group | 982 | 272 | 3,112 | ||||||||||||||
Other(a) | 32,084 | 9,538 | 37,562 | ||||||||||||||
| | | | | | | | | | | |||||||
Total | $ | 41,952 | $ | 10,601 | $ | 43,193 | |||||||||||
| | | | | | | | | | | |||||||
| | | | | | | | | | | |||||||
(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. | ||||||||||||||||
SHAREBASED_COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended | |||||||||||||
Jan. 03, 2015 | ||||||||||||||
SHARE-BASED COMPENSATION | ||||||||||||||
SHARE-BASED COMPENSATION | NOTE 14: SHARE-BASED COMPENSATION | |||||||||||||
The Company issues stock options, restricted shares, restricted share units and shares with performance features to employees under share-based compensation plans, which are described herein. | ||||||||||||||
Compensation expense for stock options and restricted stock awards is measured at fair value on the date of grant based on the number of shares granted. The fair value of stock options is estimated based on the Binomial lattice pricing model; the fair value of restricted shares is based on the quoted market price on the date of the grant. Stock option expense is recognized using the straight-line attribution basis over the entire vesting period of the award. Restricted share, restricted share unit and performance share expense is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. Expense is recognized net of estimated forfeitures. | ||||||||||||||
During 2014, 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, upon their separation from the Company. Compensation expense related to the Company's share-based payment awards totaled $37.3 million, $7.3 million and $6.9 million for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. Compensation expense included $17.3 million and $2.8 million for the years ended January 3, 2015 and December 28, 2013, respectively, that was classified as restructuring. | ||||||||||||||
Stock Plans | ||||||||||||||
In March 1992, March 2000, March 2002, March 2005, May 2011 and May 2013 the Company adopted the "1992 Plan," the "2000 Plan," the "2002 Plan," the "2005 Plan," the "2011 Plan" and the "2013 Plan" respectively, under which options (both nonqualified options and incentive stock options) to acquire shares of common stock may be granted to officers, other key employees, consultants and outside directors, in each case as selected by the Company's Compensation Committee (the "Committee"). Payment by option holders upon exercise of an option may be made in cash or, with the consent of the Committee, by delivering previously acquired shares of Company common stock or any other method approved by the Committee. If previously acquired shares are tendered as payment, the shares are subject to a six-month holding period, as well as specific authorization by the Committee. To date, this type of exercise has not been approved or transacted. The Committee has the authority under all of the plans to allow for a cashless exercise option, commonly referred to as a "broker-assisted exercise." Under this method of exercise, participating employees must make a valid exercise of their stock options through a designated broker. Based on the exercise and information provided by the Company, the broker sells the shares on the open market. The employees receive cash upon settlement, some of which is used to pay the purchase price. Neither the stock-for-stock nor broker-assisted cashless exercise option are generally available to executive officers or directors of the Company. Although there are none currently outstanding, stock appreciation rights may be granted in connection with all or any part of any option granted under the plans and may also be granted without a grant of a stock option. Vesting schedules will be accelerated upon a change of control of the Company. Options and stock appreciation rights generally may not be transferred during the lifetime of a holder. | ||||||||||||||
Awards under the 2002 and 2005 Plans may also be made in the form of dividend equivalent rights, restricted stock, unrestricted stock performance shares and restricted stock units. Exercise prices for awards under the 2000, 2002, 2005, 2011 and 2013 Plans are determined by the Committee; to date, all stock options have been granted at an exercise price not less than the closing market value of the underlying shares on the date of grant. | ||||||||||||||
Awards granted under plans no longer in use by the Company, including the 2002, 2000 and 1992 Plans, remain in effect in accordance with their terms. The 2005 Plan provides for the issuance of up to 5.0 million shares of common stock with respect to options, stock appreciation rights and other awards. The 2005 Plan expires in 2015. The 2011 Plan provides for the issuance of up to 3.0 million shares of common stock, of which no more than 1.5 million shares may be awarded pursuant to grants of restricted stock, restricted stock units, unrestricted stock and performance shares. The 2011 Plan expires in 2021. The 2013 Plan provides for the issuance of up to 9.5 million shares of common stock. The 2013 Plan expires in 2023. As of January 3, 2015, 6.8 million shares were available for future grant under the 2005, 2011 and 2013 Plans. | ||||||||||||||
The Company delivers treasury shares upon the exercise of stock options and vesting of restricted shares. The difference between the cost of the treasury shares and the exercise price of the options has been reflected on a first-in, first-out basis. | ||||||||||||||
Stock Options | ||||||||||||||
The Company grants stock options to certain domestic and international employees. These options are subject to transfer restrictions and risk of forfeiture until earned by continuing employment. Stock options are issued at the current market price and have a three-year vesting period and a contractual term of 7-10 years. | ||||||||||||||
The Company utilizes the Binomial lattice pricing model to estimate the fair value of options granted. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates and to allow for actual exercise behavior of option holders. | ||||||||||||||
Fiscal Years Ended | ||||||||||||||
Valuation Assumptions: | December 28, 2013 | December 29, 2012 | ||||||||||||
Weighted-average fair value of options granted | $10.32 | $6.04 | ||||||||||||
Expected volatility | 59.50% | 63.30% | ||||||||||||
Weighted-average volatility | 59.50% | 63.30% | ||||||||||||
Expected term (in years) | 4.9 | 5.1 | ||||||||||||
Dividend yield | — | — | ||||||||||||
Risk-free rate | 0.1% to 3.9% | 0.2% to 3.8% | ||||||||||||
Expected annual forfeiture | 12.40% | 13.50% | ||||||||||||
Expected volatilities are based on a term structure of implied volatility, which assumes changes in volatility over the life of an option. The Company utilizes historical optionee behavioral data to estimate the option exercise and termination rates that are used in the valuation model. The expected term represents an estimate of the period of time options are expected to remain outstanding. The expected term provided in the above table represents an option weighted-average expected term based on the estimated behavior of distinct groups of employees who received options in 2014, 2013 and 2012. The range of risk-free rates is based on a forward curve of interest rates at the time of option grant. | ||||||||||||||
A summary of award activity under the Company's stock option plans as of January 3, 2015 and changes therein during the fiscal year then ended are as follows: | ||||||||||||||
Shares | Weighted Average | Weighted Average | Aggregate | |||||||||||
Exercise Price | Remaining | Intrinsic Value | ||||||||||||
Contractual Term | (In thousands) | |||||||||||||
Outstanding at December 28, 2013 | 5,166,375 | $ | 11.26 | 3.4 | $ | 108,498 | ||||||||
Exercised | (4,010,331 | ) | 10.46 | 98,734 | ||||||||||
Cancelled/expired | (125,075 | ) | 37.21 | |||||||||||
| | | | | | | | | | | | | | |
Outstanding at January 3, 2015 | 1,030,969 | $ | 11.25 | 3.9 | $ | 21,613 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Vested or expected to vest at January 3, 2015 | 1,020,053 | $ | 11.16 | 3.9 | $ | 21,477 | ||||||||
Exercisable at January 3, 2015 | 537,404 | $ | 6.85 | 3.1 | $ | 13,628 | ||||||||
The intrinsic value per option exercised was $24.62 and $16.46 for the fiscal years ended January 3, 2015 and December 28, 2013, respectively, and was insignificant for the fiscal year ended December 29, 2012. | ||||||||||||||
As of January 3, 2015, there were approximately 0.5 million nonvested stock options with a weighted average exercise price of $16.03 and there was $0.6 million of total unrecognized compensation cost related to nonvested stock options granted under the Company's stock option plans. That expense is expected to be recognized over a weighted average period of 0.8 years. The total fair value of shares vested for the years ended January 3, 2015, December 28, 2013 and December 29, 2012 was $3.2 million, $4.9 million and $4.1 million, respectively. | ||||||||||||||
Restricted Stock | ||||||||||||||
The Company grants restricted shares and restricted share units to certain domestic and international employees. These shares are subject to transfer restrictions and risk of forfeiture until earned by continued employment. These shares generally vest 50% on the second anniversary date from the date of grant and 50% on the third anniversary date from the date of grant. | ||||||||||||||
The Company grants performance shares to certain of its employees, including the Company's executive officers. Performance shares are earned based on the achievement of certain profit or other targets aligned with the Company's strategy. | ||||||||||||||
In 2014, the Company granted 1,291,487 market share units ("MSUs") to a group of key executives with an aggregate grant date fair value of $64.9 million as staking grants ("Staking Grants") and as part of an annual long-term incentive plan ("LTIP"). The Staking Grants have a grant date fair value of $54.8 million and vest 50% on the third anniversary of grant and 50% on the fifth anniversary of grant. The MSUs included in the LTIP represent a portion of the awards granted under that plan, have a grant date fair value of $10.1 million and vest 50% on each of the second and third anniversaries of the grant date. The MSUs issued as Staking Grants and as part of the LTIP have a minimum earnout of 30% of target. The MSUs earned will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company's stock price over the vesting periods. | ||||||||||||||
The fair value for the MSUs granted was calculated using the Monte Carlo simulation model. For the year ended January 3, 2015, the following assumptions were used in determining fair value: | ||||||||||||||
Valuation Assumptions: | Fiscal Year Ended | |||||||||||||
January 3, 2015 | ||||||||||||||
Weighted-average fair value | $ | |||||||||||||
50.24 | ||||||||||||||
Expected volatility | 52.3% | |||||||||||||
Dividend yield | — | |||||||||||||
Risk-free rate | 1.68% | |||||||||||||
Weighted-average expected annual forfeiture | 4.8% | |||||||||||||
The other portion of the LTIP consists of an award of 202,541 performance shares that vests on the third anniversary of the grant date. The number of performance shares earned will vary from zero to 200% of the number of awards granted depending on the Company's Total Shareholder Return ("TSR") relative to the TSR of the S&P Mid-Cap 400 Index. The performance shares have a grant date fair value of $8.9 million that was calculated using a Monte Carlo simulation model. For the year ended January 3, 2015, the following assumptions were used in determining fair value: | ||||||||||||||
Valuation Assumptions | Fiscal Year Ended | |||||||||||||
January 3, 2015 | ||||||||||||||
Weighted-average fair value | $ | |||||||||||||
43.93 | ||||||||||||||
Expected volatility | 44.2% | |||||||||||||
Dividend yield | — | |||||||||||||
Risk-free rate | 0.66% | |||||||||||||
Weighted-average expected annual forfeiture | 4.0% | |||||||||||||
In 2012, the Company granted 535,000 performance share units with a two year performance period and a three year service period, subject to a market condition adjustment, to a group of key executives. The performance criteria included certain earnings metrics for consecutive periods through December 2013. These awards were determined to be unearned by the Compensation Committee based upon the review of performance at the conclusion of fiscal 2013, and were cancelled according to their terms. | ||||||||||||||
Each of the Company's non-employee Directors received an annual grant of shares of common stock with a value of $100,000 as part of an annual retainer for serving on the Board of Directors, with the exception of the Chairman of the Board, who received an annual grant of shares of common stock with a value of $150,000. Retainer shares are non-transferable until the first anniversary of the grant, with 25% becoming transferable on each of the first and second anniversary of the grant and 50% becoming transferable on the third anniversary, subject to certain exceptions. | ||||||||||||||
A summary of award activity under the Company's restricted stock plans as of January 3, 2015 and changes therein during the fiscal year then ended are as follows: | ||||||||||||||
Shares | Weighted Average | |||||||||||||
Grant Date Fair | ||||||||||||||
Value | ||||||||||||||
Nonvested stock at December 28, 2013 | 1,035,250 | $ | 14.93 | |||||||||||
Granted | 1,637,778 | 48.05 | ||||||||||||
Vested | (406,500 | ) | 17.01 | |||||||||||
Cancelled(a) | (546,954 | ) | 16.8 | |||||||||||
| | | | | | | | |||||||
Nonvested stock at January 3, 2015 | 1,719,574 | $ | 45.39 | |||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Expected to vest as of January 3, 2015(b) | 1,492,428 | $ | 45.42 | |||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
(a) | Includes performance shares granted to a group of key executives with certain performance conditions, measured through December 2013 and a market and service condition through December 2014. These shares which were contingently issuable based on 2013 performance were deemed not earned and cancelled. | |||||||||||||
(b) | Excludes the potential impact of the performance share multiplier, which will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company's stock price over the vesting periods and zero to 200% of the number of LTIP awards granted depending on the Company's TSR relative to the TSR of the S&P Mid-Cap 400 Index. | |||||||||||||
The weighted average grant date fair value of restricted shares granted in the years ended January 3, 2015, December 28, 2013 and December 29, 2012 was $48.05, $21.79 and $11.91, respectively. | ||||||||||||||
As of January 3, 2015, there was $48.6 million of total unrecognized compensation cost related to nonvested stock awards granted under the restricted stock plans. That expense is expected to be recognized over a weighted average period of 2.7 years. The total fair value of shares vested during the years ended January 3, 2015, December 28, 2013 and December 29, 2012 was $6.9 million, $1.6 million and $2.3 million, respectively. | ||||||||||||||
PROFITSHARING_RETIREMENT_SAVIN
PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS | 12 Months Ended |
Jan. 03, 2015 | |
PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS | |
PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS | NOTE 15: PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS |
The Company maintains a qualified defined contribution plan for its eligible employees. This plan allows deferred arrangements under section 401(k) of the Internal Revenue Code and provides for employer-matching contributions. The plan contains provisions for a discretionary profit sharing component, although such a contribution was not made for 2014, 2013 or 2012. | |
The Company's aggregate 401(k)/Profit Sharing Plan contribution expense, which is included in SG&A in the accompanying Consolidated Statements of Operations, was $1.4 million, $1.3 million and $1.1 million for the fiscal years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. | |
The Company has a non-qualified supplemental retirement plan for certain employees whose benefits under the 401(k)/Profit Sharing Plan are expected to be constrained by the operation of certain Internal Revenue Code limitations. The supplemental plan provides a benefit equal to the difference between the contribution that would be made for an employee under the tax-qualified plan absent such limitations and the actual contribution under that plan. The supplemental plan also allows certain employees to defer up to 50% of their base salary and up to 100% of their annual bonus. The Company established an irrevocable "rabbi" trust to which the Company makes periodic contributions to provide a source of funds to assist in meeting its obligations under the supplemental plan. The principal of the trust, and earnings thereon, are to be used exclusively for the participants under the plan, subject to the claims of the Company's general creditors. | |
EARNINGS_PER_COMMON_SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
EARNINGS PER COMMON SHARE | |||||||||||
EARNINGS PER COMMON SHARE | NOTE 16: EARNINGS PER COMMON SHARE | ||||||||||
The following table sets forth the computation of basic and diluted earnings (loss) per common share: | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands, except per share data | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
Income (loss) from continuing operations | $ | 76,726 | $ | (32,165 | ) | $ | (52,687 | ) | |||
Income (loss) from discontinued operations, net of income taxes | 82,434 | 105,160 | (21,818 | ) | |||||||
| | | | | | | | | | | |
Net income (loss) | $ | 159,160 | $ | 72,995 | $ | (74,505 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic weighted average shares outstanding | 126,264 | 121,057 | 109,292 | ||||||||
Stock options and nonvested shares(a)(b) | 755 | — | — | ||||||||
Convertible Notes(c) | — | — | — | ||||||||
| | | | | | | | | | | |
Diluted weighted average shares outstanding | 127,019 | 121,057 | 109,292 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Earnings (loss) per share: | |||||||||||
Basic | |||||||||||
Income (loss) from continuing operations | $ | 0.61 | $ | (0.27 | ) | $ | (0.48 | ) | |||
Income (loss) from discontinued operations | 0.65 | 0.87 | (0.20 | ) | |||||||
| | | | | | | | | | | |
Net income (loss) | $ | 1.26 | $ | 0.6 | $ | (0.68 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted | |||||||||||
Income (loss) from continuing operations | $ | 0.6 | $ | (0.27 | ) | $ | (0.48 | ) | |||
Income (loss) from discontinued operations | 0.65 | 0.87 | (0.20 | ) | |||||||
| | | | | | | | | | | |
Net income (loss) | $ | 1.25 | $ | 0.6 | $ | (0.68 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
(a) | Because the Company incurred a loss from continuing operations for the years ended December 28, 2013 and December 29, 2012, outstanding stock options and nonvested shares are antidilutive. Accordingly, for the years ended December 28, 2013 and December 29, 2012, approximately 5.2 million and 5.8 million outstanding stock options, respectively, and approximately 0.5 million and 0.5 million outstanding nonvested shares, respectively, were excluded from the computation of diluted loss per share. | ||||||||||
(b) | Excludes approximately 0.5 million and 1.2 million nonvested shares for the years ended December 28, 2013 and December 29, 2012, respectively, for which the performance criteria were not achieved. | ||||||||||
(c) | Because the Company incurred a loss from continuing operations for the years ended December 28, 2013 and December 29, 2012, approximately 1.5 million and 12.3 million, respectively, potentially dilutive shares issuable upon conversion of the Convertible Notes were considered antidilutive for such period and were excluded from the computation of diluted loss per share. | ||||||||||
ADDITIONAL_FINANCIAL_INFORMATI
ADDITIONAL FINANCIAL INFORMATION | 12 Months Ended |
Jan. 03, 2015 | |
ADDITIONAL FINANCIAL INFORMATION | |
ADDITIONAL FINANCIAL INFORMATION | NOTE 17: ADDITIONAL FINANCIAL INFORMATION |
Licensing-Related Transactions | |
In November 2011, in connection with the Company's sale of its LIZ CLAIBORNE brand and certain rights to its MONET brand to JCPenney, the Company entered into an agreement with JCPenney to develop exclusive brands for JCPenney, which included payment to the Company of a $20.0 million refundable advance. The agreement terminated by its terms without being exercised on February 1, 2013, and the $20.0 million advance was refunded to JCPenney on February 8, 2013, pursuant to the terms of the agreement. | |
Following the sale of the Liz Claiborne brand name, the Company maintains: (i) an exclusive supplier arrangement to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry; (ii) a royalty-free license through July 2020 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC through the 2009 previously existing license between the Company and QVC; and (iii) a royalty-free license through July 2020 to use the LIZWEAR brand to design, manufacture and distribute LIZWEAR-branded products to the club store channel. | |
Other Expense, Net | |
Other expense, net primarily consisted of (i) foreign currency transaction (losses) gains of $(1.6) million, $(1.1) million and $1.3 million for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively; and (ii) equity in earnings of investments in equity investees. | |
Consolidated Statements of Cash Flows Supplementary Disclosures | |
During the years ended January 3, 2015, December 28, 2013 and December 29, 2012, net income tax refunds (payments) were $1.0 million, $2.4 million and $(1.1) million, respectively. During the years ended January 3, 2015, December 28, 2013 and December 29, 2012, the Company made interest payments of $34.1 million, $43.6 million and $38.7 million, respectively. The Company received interest payments of $4.0 million for the year ended January 3, 2015. As of January 3, 2015, December 28, 2013 and December 29, 2012, the Company accrued capital expenditures totaling $9.8 million, $13.3 million and $7.7 million, respectively. | |
On February 3, 2014, the Company received a three-year $85.0 million note issued by Lucky Brand LLC (see Note 1 — Basis of Presentation), which is reflected in Note Receivable on the accompanying Condensed Consolidated Balance Sheet. | |
During 2013 holders of $19.9 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 5,634,179 shares of the Company's common stock. | |
During 2012, holders of $49.4 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 14,197,106 shares of the Company's common stock. | |
During 2013, the Company received net proceeds of $4.0 million from the sale of its noncontrolling interest in Mexx Lifestyle B.V. to Gores, which is reflected as Net proceeds from disposition on the accompanying Consolidated Statement of Cash Flows. | |
During 2014, the Company made business acquisition payments of $32.3 million related to the reacquisition of the KATE SPADE businesses in Southeast Asia (see Note 2 — Acquisitions and Note 23 — Subsequent Events). | |
During 2012, the Company made business acquisition payments of $41.0 million related to the KSJ Buyout. | |
SEGMENT_REPORTING
SEGMENT REPORTING | 12 Months Ended | ||||||||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||||||||
SEGMENT REPORTING | |||||||||||||||||||||||
SEGMENT REPORTING | NOTE 18: SEGMENT REPORTING | ||||||||||||||||||||||
In conjunction with the sale of Lucky Brand and the substantial completion of the Juicy Couture wind-down in the second quarter of 2014, the Company disaggregated its former KATE SPADE reportable segment into two reportable segments, KATE SPADE North America and KATE SPADE International. The Company operates its kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands through one operating segment in North America and four operating segments internationally: Japan, Southeast Asia, Europe and Latin America. 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, KATE SPADE SATURDAY and JACK SPADE brands in North America. | ||||||||||||||||||||||
• | KATE SPADE International segment — consists of the Company's kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in International markets (principally in Japan, Southeast Asia, Europe and Latin America). | ||||||||||||||||||||||
• | Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands; (ii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iii) the licensed LIZ CLAIBORNE NEW YORK brand. | ||||||||||||||||||||||
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; and (iii) losses on asset disposals and impairments. The costs of all corporate departments that serve the respective segment are fully allocated. The Company does not allocate amounts reported below Operating income (loss) to its reportable segments, other than 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. | |||||||||||||||||||||||
Net Sales | % to Total | Depreciation | Adjusted | % of Sales | Segment | Expenditures | |||||||||||||||||
and | EBITDA(b) | Assets | for Long- | ||||||||||||||||||||
Amortization | Lived Assets | ||||||||||||||||||||||
Expense(a) | |||||||||||||||||||||||
Dollars in thousands | |||||||||||||||||||||||
Fiscal Year Ended January 3, 2015 | |||||||||||||||||||||||
KATE SPADE North America | $ | 891,766 | 78.3 | % | $ | 31,905 | $ | 143,009 | 16 | % | $ | 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 | % | $ | 54,438 | $ | 132,221 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Fiscal Year Ended | |||||||||||||||||||||||
December 28, 2013 | |||||||||||||||||||||||
KATE SPADE North America | $ | 597,748 | 74.4 | % | $ | 23,961 | $ | 70,250 | 11.8 | % | $ | 377,102 | $ | 58,089 | |||||||||
KATE SPADE International | 145,404 | 18.1 | % | 8,476 | (815 | ) | (0.6 | )% | 149,395 | 9,139 | |||||||||||||
Adelington Design Group | 60,219 | 7.5 | % | 625 | 12,008 | 19.9 | % | 22,130 | 363 | ||||||||||||||
Corporate and Other | — | — | 5,718 | (4,334 | ) | — | 428,884 | — | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Totals | $ | 803,371 | 100 | % | $ | 38,780 | $ | 67,591 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Fiscal Year Ended | |||||||||||||||||||||||
December 29, 2012 | |||||||||||||||||||||||
KATE SPADE North America | $ | 411,507 | 75.5 | % | $ | 21,364 | $ | 24,924 | 6.1 | % | $ | 41,885 | |||||||||||
KATE SPADE International | 50,418 | 9.3 | % | 2,260 | 3,454 | 6.9 | % | 47,115 | |||||||||||||||
Adelington Design Group | 82,840 | 15.2 | % | 958 | 17,694 | 21.4 | % | 392 | |||||||||||||||
Corporate and Other | — | — | 11,255 | (4,332 | ) | — | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Totals | $ | 544,765 | 100 | % | $ | 35,837 | $ | 89,392 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(a) | For the years ended January 3, 2015, December 28, 2013 and December 29, 2012, $5.2 million, $3.6 million and $9.7 million, respectively, of Corporate depreciation and amortization was recorded within Interest expense, net on the accompanying Consolidated Statements of Operations. | ||||||||||||||||||||||
(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 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||||||||||||||
Reportable Segments Adjusted EBITDA: | |||||||||||||||||||||||
KATE SPADE North America | $ | 143,009 | $ | 70,250 | $ | 24,924 | |||||||||||||||||
KATE SPADE International(a) | 810 | (815 | ) | 3,454 | |||||||||||||||||||
Adelington Design Group | 4,092 | 12,008 | 17,694 | ||||||||||||||||||||
Other | (940 | ) | (4,334 | ) | (4,332 | ) | |||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total Reportable Segments Adjusted EBITDA | 146,971 | 77,109 | 41,740 | ||||||||||||||||||||
Depreciation and amortization, net(b) | (48,441 | ) | (35,088 | ) | (25,641 | ) | |||||||||||||||||
Charges due to streamlining initiatives(c), brand-exiting activities, acquisition related costs, impairment of intangible assets and loss on asset disposals and impairments, net | (30,371 | ) | (15,716 | ) | (46,455 | ) | |||||||||||||||||
Share-based compensation(d) | (37,270 | ) | (7,269 | ) | (6,911 | ) | |||||||||||||||||
Equity loss included in Reportable Segments Adjusted EBITDA | 2,583 | 1,179 | 1,245 | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Operating Income (Loss) | 33,472 | 20,215 | (36,022 | ) | |||||||||||||||||||
Other expense, net(a) | (4,033 | ) | (2,062 | ) | (325 | ) | |||||||||||||||||
Impairment of cost investment | — | (6,109 | ) | — | |||||||||||||||||||
Gain on acquisition of subsidiary | — | — | 40,065 | ||||||||||||||||||||
Loss on extinguishment of debt | (16,914 | ) | (1,707 | ) | (9,754 | ) | |||||||||||||||||
Interest expense, net | (20,178 | ) | (47,065 | ) | (51,612 | ) | |||||||||||||||||
Benefit for income taxes | (84,379 | ) | (4,563 | ) | (4,961 | ) | |||||||||||||||||
| | | | | | | | | | | |||||||||||||
Income (Loss) from Continuing Operations | $ | 76,726 | $ | (32,165 | ) | $ | (52,687 | ) | |||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
(a) | Amounts include equity in the losses of equity method investees of $2.6 million, $1.2 million and $1.2 million in 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||
(b) | Excludes amortization included in Interest expense, net. | ||||||||||||||||||||||
(c) | See Note 13 — Streamlining Initiatives for a discussion of streamlining charges. | ||||||||||||||||||||||
(d) | Includes share-based compensation expense of $17.3 million and $2.8 million in 2014 and 2013, respectively, that was classified as restructuring. | ||||||||||||||||||||||
GEOGRAPHIC DATA | |||||||||||||||||||||||
Dollars in thousands | Net Sales | % to Total | Long-Lived | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
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 | % | $ | 211,602 | |||||||||||||||||
International | 154,965 | 19.3 | % | 77,258 | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total | $ | 803,371 | 100.0 | % | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
Fiscal Year Ended December 29, 2012 | |||||||||||||||||||||||
Domestic | $ | 493,556 | 90.6 | % | |||||||||||||||||||
International | 51,209 | 9.4 | % | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total | $ | 544,765 | 100.0 | % | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | NOTE 19: ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||
Accumulated other comprehensive loss is comprised of the effects of foreign currency translation and gains on cash flow hedging derivatives, as detailed below: | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Cumulative translation adjustment, net of income taxes of $0 | $ | (32,096 | ) | $ | (21,862 | ) | ||
Gains on cash flow hedging derivatives, net of income taxes of $1,168 and $602, respectively | 2,110 | 983 | ||||||
| | | | | | | | |
Accumulated other comprehensive loss, net of income taxes | $ | (29,986 | ) | $ | (20,879 | ) | ||
| | | | | | | | |
| | | | | | | | |
The following table presents the change in each component of Accumulated other comprehensive loss, net of income taxes: | ||||||||
In thousands | Cumulative | Unrealized | ||||||
Translation | Gains on | |||||||
Adjustment | Cash Flow | |||||||
Hedging | ||||||||
Derivatives | ||||||||
Balance as of December 29, 2012 | $ | (10,074 | ) | $ | — | |||
Other comprehensive (loss) income before reclassification | (11,788 | ) | 1,805 | |||||
Amounts reclassified from accumulated other comprehensive loss | — | (822 | ) | |||||
| | | | | | | | |
Balance as of December 28, 2013 | (21,862 | ) | 983 | |||||
Other comprehensive (loss) income before reclassification | (10,234 | ) | 1,847 | |||||
Amounts reclassified from accumulated other comprehensive loss | — | (720 | ) | |||||
| | | | | | | | |
Balance as of January 3, 2015 | $ | (32,096 | ) | $ | 2,110 | |||
| | | | | | | | |
| | | | | | | | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jan. 03, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 20: RELATED PARTY TRANSACTIONS |
In June 2011, the Company established a joint venture in China with E-Land Fashion China Holdings, Limited ("E-Land"). The joint venture is a Hong Kong limited liability company and its purpose is to market and distribute small leather goods and other fashion products and accessories in China under the kate spade brand. The joint venture operates under the name of KS China Co., Limited ("KSC") (see Note 23 — Subsequent Events). The Company accounted for its 40.0% interest in KSC under the equity method of accounting. The Company made capital contributions to KSC of $2.4 million, $5.5 million and $5.0 million and 2014, 2013 and 2012, respectively. | |
On November 20, 2009, the Company and Sanei established a joint venture under the name of KSJ. During the fourth quarter of 2012, the Company acquired the remaining 51.0% interest in KSJ (see Note 2 — Acquisition). | |
Kenneth P. Kopelman (a Director of the Company) is a partner in the law firm Kramer, Levin, Naftalis & Frankel LLP, which provided legal services to the Company in 2014, 2013 and 2012. The fees for such services were not significant in such periods. The foregoing transactions between the Company and this entity were effected on an arm's-length basis, with services provided at fair market value. | |
The Company believes that each of the transactions described above was effected on terms no less favorable to the Company than those that would have been realized in transactions with unaffiliated entities or individuals. | |
RECENT_ACCOUNTING_PRONOUNCEMEN
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Jan. 03, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 21: RECENT ACCOUNTING PRONOUNCEMENTS |
In April 2014, new accounting guidance on the reporting of discontinued operations was issued, which revises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This guidance is effective for interim and annual periods beginning on or after December 15, 2014 and will be applied to future disposal transactions. | |
In May 2014, new accounting guidance on the accounting for revenue recognition was issued, which requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for interim and annual periods beginning on or after December 15, 2016. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of the new guidance on its financial statements. | |
In June 2014, new accounting guidance on the accounting for share-based compensation was issued, which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This guidance further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the requisite service has already been rendered. This guidance is effective for interim and annual periods beginning on or after December 15, 2015. The adoption of the new guidance is not expected to affect the Company's financial position, results of operations or cash flows. | |
In August 2014, new accounting guidance on the disclosure of an entity's ability to continue as a going concern was issued, which requires disclosure regarding management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for the annual period ending after December 15, 2016, and for interim and annual periods thereafter. The adoption of the new guidance is not expected to affect the Company's financial position, results of operations or cash flows. | |
UNAUDITED_QUARTERLY_RESULTS
UNAUDITED QUARTERLY RESULTS | 12 Months Ended | |||||||||||||||||||||||||
Jan. 03, 2015 | ||||||||||||||||||||||||||
UNAUDITED QUARTERLY RESULTS | ||||||||||||||||||||||||||
UNAUDITED QUARTERLY RESULTS | NOTE 22: UNAUDITED QUARTERLY RESULTS | |||||||||||||||||||||||||
Unaudited quarterly financial information for 2014 and 2013 is set forth in the table below. Certain amounts related to the first quarter of 2014 and 2013 have been revised from those previously reported in the Company's Quarterly Report on Form 10-Q in order to present the results of Juicy Couture as discontinued operations. | ||||||||||||||||||||||||||
March | June | September | December | |||||||||||||||||||||||
In thousands, except per share data | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Net sales | $ | 223,614 | $ | 156,449 | $ | 265,998 | $ | 178,881 | $ | 250,417 | $ | 192,612 | $ | 398,574 | $ | 275,429 | ||||||||||
Gross profit | 136,823 | 98,096 | 155,910 | 110,478 | 157,314 | 118,222 | 230,224 | 169,794 | ||||||||||||||||||
(Loss) income from continuing operations | -38,408 | (b) | -23,745 | (c) | -13,983 | (d) | -23,588 | (e) | 2,623 | (f) | -14,165 | (g) | 126,494 | (h) | 29,333 | (i) | ||||||||||
Income (loss) from discontinued operations, net of income taxes | 84,578 | (28,429 | ) | 9,579 | (19,549 | ) | (11,753 | ) | (2,701 | ) | 30 | 155,839 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 46,170 | $ | (52,174 | ) | $ | (4,404 | ) | $ | (43,137 | ) | $ | (9,130 | ) | $ | (16,866 | ) | $ | 126,524 | $ | 185,172 | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic earnings per share:(a) | ||||||||||||||||||||||||||
(Loss) income from continuing operations | $ | (0.31 | ) | $ | (0.20 | ) | $ | (0.11 | ) | $ | (0.20 | ) | $ | 0.02 | $ | (0.12 | ) | $ | 0.99 | $ | 0.24 | |||||
Income (loss) from discontinued operations | 0.68 | (0.24 | ) | 0.08 | (0.16 | ) | (0.09 | ) | (0.02 | ) | — | 1.27 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 0.37 | $ | (0.44 | ) | $ | (0.03 | ) | $ | (0.36 | ) | $ | (0.07 | ) | $ | (0.14 | ) | $ | 0.99 | $ | 1.51 | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted earnings per share:(a) | ||||||||||||||||||||||||||
(Loss) income from continuing operations | $ | (0.31 | ) | $ | (0.20 | ) | $ | (0.11 | ) | $ | (0.20 | ) | $ | 0.02 | $ | (0.12 | ) | $ | 0.99 | $ | 0.23 | |||||
Income (loss) from discontinued operations | 0.68 | (0.24 | ) | 0.08 | (0.16 | ) | (0.09 | ) | (0.02 | ) | — | 1.25 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 0.37 | $ | (0.44 | ) | $ | (0.03 | ) | $ | (0.36 | ) | $ | (0.07 | ) | $ | (0.14 | ) | $ | 0.99 | $ | 1.48 | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic weighted average shares outstanding(a) | 124,403 | 119,032 | 126,664 | 120,013 | 126,971 | 122,396 | 127,160 | 122,785 | ||||||||||||||||||
Diluted weighted average shares outstanding(a) | 124,403 | 119,032 | 126,664 | 120,013 | 127,610 | 122,396 | 127,741 | 125,219 | ||||||||||||||||||
(a) | Because the Company incurred a loss from continuing operations in the first three quarters of 2013 and first two quarters of 2014, outstanding stock options and nonvested shares are antidilutive for such periods. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods. | |||||||||||||||||||||||||
(b) | Included pretax expenses related to streamlining initiatives of $28.9 million. | |||||||||||||||||||||||||
(c) | Included pretax expenses related to streamlining initiatives of $2.9 million. | |||||||||||||||||||||||||
(d) | Included pretax expenses related to streamlining initiatives of $4.9 million. | |||||||||||||||||||||||||
(e) | Included pretax expenses related to streamlining initiatives of $1.4 million. | |||||||||||||||||||||||||
(f) | Included pretax expenses related to streamlining initiatives of $1.1 million. | |||||||||||||||||||||||||
(g) | Included a pretax credit related to streamlining initiatives of $1.0 million | |||||||||||||||||||||||||
(h) | Included pretax expenses related to streamlining initiatives of $7.1 million. | |||||||||||||||||||||||||
(i) | Included pretax expenses related to streamlining initiatives of $7.3 million. | |||||||||||||||||||||||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jan. 03, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 23: SUBSEQUENT EVENTS |
In the first quarter of 2015, the Company and Walton Brown agreed to form two joint ventures focused on growing the Company's business in China and Hong Kong, Macau and Taiwan. Following the formation of the joint ventures, both Kate Spade Hong Kong, Limited, a wholly-owned subsidiary of the Company, and Walton Brown will own 50% of the shares of KSC and KS HMT Co., Limited, the holding company for the KATE SPADE businesses in Hong Kong, Macau and Taiwan. | |
With an equal partnership structure, the Company and Walton Brown will actively manage the business together. The joint ventures each have an initial term of 10 years. To effectuate the new joint ventures, (i) the Company will acquire E-Land's 60% interest in KSC for an aggregate payment of $36.0 million, comprised of approximately $10.0 million to acquire E-Land's interest in KSC and approximately $26.0 million to terminate related contracts and (ii) the Company will receive approximately $21.0 million from LCJG for their interests in the joint ventures, subject to adjustments. These transactions are expected to close in the first quarter of 2015. The Company will no longer consolidate the operations for the businesses in Hong Kong, Macau and Taiwan, which had net sales of approximately $34.0 million in 2014, and will account for its investments in the joint ventures under the equity method of accounting. | |
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 will be absorbing key elements of KATE SPADE SATURDAY's success into kate spade new york and 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, KATE SPADE SATURDAY's 16 Company-owned and three partnered store locations are expected to be closed during the first half of 2015. The Company will also be closing JACK SPADE's 12 Company-owned stores during the first half of 2015. KATE SPADE SATURDAY's e-commerce site will remain active during the wind-down phase until the label is incorporated and reintroduced into the kate spade new york brand. The Company expects total restructuring charges of $32.0 – $39.0 million relating to these actions, including: (i) estimated contract assignment and termination costs of $21.0 – $25.0 million and (ii) estimated employee-related costs (including severance) of $4.0 – $5.0 million; and (iii) non-cash asset impairment charges of $7.0 – $9.0 million. | |
SCHEDULE_II_VALUATION_AND_QUAL
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | ||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |||||||||||||||||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||||
Additions | |||||||||||||||||
In thousands | Balance at | Charged to | Charged to | Deductions | Balance at | ||||||||||||
Beginning | Costs and | Other Accounts | End of Period | ||||||||||||||
of Period | Expenses | ||||||||||||||||
YEAR ENDED JANUARY 3, 2015 | |||||||||||||||||
Accounts receivable — allowance for doubtful accounts | $ | 1,800 | $ | 1,189 | $ | — | $ | 1,273 | (a) | $ | 1,716 | ||||||
Allowance for returns | 7,230 | 80,453 | — | 80,004 | 7,679 | ||||||||||||
Allowance for discounts | 32 | 208 | — | 166 | 74 | ||||||||||||
Deferred tax valuation allowance | 497,485 | — | — | 82,312 | 415,173 | ||||||||||||
YEAR ENDED DECEMBER 28, 2013 | |||||||||||||||||
Accounts receivable — allowance for doubtful accounts | $ | 1,625 | $ | 229 | $ | — | $ | 54 | (a) | $ | 1,800 | ||||||
Allowance for returns | 8,501 | 85,083 | — | 86,354 | 7,230 | ||||||||||||
Allowance for discounts | 533 | 371 | — | 872 | 32 | ||||||||||||
Deferred tax valuation allowance | 545,565 | — | — | 48,080 | 497,485 | ||||||||||||
YEAR ENDED DECEMBER 29, 2012 | |||||||||||||||||
Accounts receivable — allowance for doubtful accounts | $ | 340 | $ | 1,555 | $ | — | $ | 270 | (a) | $ | 1,625 | ||||||
Allowance for returns | 8,053 | 109,493 | — | 109,045 | 8,501 | ||||||||||||
Allowance for discounts | 569 | 3,626 | — | 3,662 | 533 | ||||||||||||
Deferred tax valuation allowance | 494,745 | 50,820 | — | — | 545,565 | ||||||||||||
(a) | Uncollectible accounts written off, less recoveries. | ||||||||||||||||
BASIS_OF_PRESENTATION_AND_SIGN1
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Jan. 03, 2015 | ||
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | NATURE OF OPERATIONS AND BASIS OF PRESENTATION | |
Kate Spade & Company and its wholly-owned and majority-owned subsidiaries (the "Company") are engaged primarily in the design and marketing of a broad range of accessories and apparel. The Company operates its kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands through one operating segment in North America and four operating segments internationally: Japan, Southeast Asia, Europe and Latin America. 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 chief operating decision maker ("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, KATE SPADE SATURDAY and JACK SPADE brands in North America. | |
• | KATE SPADE International segment — consists of the Company's kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in International markets (principally in Japan, Southeast Asia, Europe and Latin America). | |
• | Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands; (ii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iii) the licensed LIZ CLAIBORNE NEW YORK brand. | |
On February 5, 2014, the Company, through its Kate Spade, LLC and Kate Spade Hong Kong Ltd. subsidiaries, reacquired existing KATE SPADE businesses in Southeast Asia from Globalluxe Kate Spade HK Limited ("Globalluxe") for $32.3 million, including $2.3 million for working capital and other previously agreed adjustments. In the first quarter of 2015, the Company and Walton Brown, a subsidiary of The Lane Crawford Joyce Group ("LCJG"), agreed to form two joint ventures focused on growing the Company's business in China and Hong Kong, Macau and Taiwan (see Note 2 — Acquisitions and Note 23 — Subsequent Events). | ||
On February 3, 2014, the Company completed the sale of 100.0% of the capital stock of Lucky Brand Dungarees, Inc. ("Lucky Brand") to LBD Acquisition Company, LLC ("LBD Acquisition"), a Delaware limited liability company and affiliate of Leonard Green & Partners, L.P. ("Leonard Green"), for an aggregate payment of $225.0 million, comprised of $140.0 million cash consideration and a three-year $85.0 million note (the "Lucky Brand Note") issued by Lucky Brand Dungarees, LLC ("Lucky Brand LLC") at closing, subject to working capital and other adjustments (the "Lucky Brand Transaction"). The assets and liabilities of the former Lucky Brand business were segregated and reported as held for sale as of December 28, 2013 (see Note 3 — Discontinued Operations). The Lucky Brand Note matures in February 2017 and is guaranteed by substantially all of Lucky Brand LLC's subsidiaries. The Lucky Brand Note is secured by second-priority lien on all accounts receivable and inventory of Lucky Brand LLC and the guarantor subsidiaries and a first-priority lien on all other collateral of Lucky Brand LLC and the guarantors. The accounts receivable and inventory secure Lucky Brand LLC's asset-based revolving loan facility on a first-priority basis, and the other collateral secures that loan facility on a second-priority basis. The principal amount of the Lucky Brand Note increases by $5.0 million per year in equal monthly increments and bears cash interest of $8.0 million per year, payable semiannually in arrears. The Lucky Brand Note is prepayable at any time by Lucky Brand LLC without a prepayment premium, subject to certain restrictions as to the minimum amount that may be prepaid without the Company's consent. | ||
On November 6, 2013, the Company completed the sale of its Juicy Couture brandname and related intellectual property assets (the "Juicy Couture IP") to an affiliate of Authentic Brands Group ("ABG") for a total purchase price of $195.0 million. An additional payment may be payable to the Company in an amount of up to $10.0 million if certain conditions regarding future performance are achieved. The Juicy Couture IP was licensed back to the Company to accommodate the wind-down of operations, which was substantially completed in the second quarter of 2014. The Company's subsidiary, Juicy Couture, Inc., paid guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license. On March 29, 2014, the Company entered into an agreement to sell its Juicy Couture business in Europe to an operating partner of ABG for $8.6 million, subject to working capital adjustments. The transaction closed on April 7, 2014. | ||
On November 19, 2013, the Company entered into an agreement to terminate the lease of the Juicy Couture flagship store on Fifth Avenue in New York City in exchange for $51.0 million. On May 15, 2014, the Company surrendered such premises to the landlord and received proceeds of $45.8 million (net of taxes and fees), in addition to $5.0 million previously received by the Company. | ||
The activities of the Company's former Lucky Brand and Juicy Couture businesses have been segregated and reported as discontinued operations for all periods presented. | ||
Summarized financial data for the aforementioned brands that are classified as discontinued operations are provided in Note 3 — Discontinued Operations. | ||
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION | |
The Consolidated Financial Statements include the accounts of the Company. All inter-company balances and transactions have been eliminated in consolidation. | ||
USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES | USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Estimates by their nature are based on judgments and available information. Therefore, actual results could materially differ from those estimates under different assumptions and conditions. | ||
Critical accounting policies are those that are most important to the portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company's most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, goodwill, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods. | ||
Revenue Recognition | ||
Revenue Recognition | ||
The Company recognizes revenue from its direct-to-consumer, wholesale and licensing operations. Retail store and e-commerce revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. The Company does not recognize revenue for estimated gift card breakage. Revenue within the Company's wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. The Company reviews and refines these estimates on a monthly basis based on current experience, trends and retailer performance. The Company's historical estimates of these costs have not differed materially from actual results. Licensing revenues, which amounted to $16.2 million, $17.8 million and $19.6 million during 2014, 2013 and 2012, respectively, are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees. | ||
Income Taxes | ||
Income Taxes | ||
Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. The Company also assesses the likelihood of the realization of deferred tax assets and adjusts the carrying amount of these deferred tax assets by a valuation allowance to the extent the Company believes it more likely than not that all or a portion of the deferred tax assets will not be realized. Many factors are considered when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in the Company's effective tax rate in future periods for various reasons including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is the Company's policy to recognize the impact of an uncertain income tax position on its income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense. | ||
Accounts Receivable - Trade, Net | ||
Accounts Receivable — Trade, Net | ||
In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on an evaluation of historical and anticipated trends, the financial condition of the Company's customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with the Company's customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. The Company's historical estimates of these costs have not differed materially from actual results. | ||
Inventories, Net | ||
Inventories, Net | ||
Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. The Company continually evaluates the composition of its inventories by assessing slow-turning, ongoing product as well as prior seasons' fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of the Company's individual product lines, the impact of market trends and economic conditions and the value of current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. The Company's historical estimates of these costs and its provisions have not differed materially from actual results. | ||
Intangibles, Net | ||
Intangibles, Net | ||
Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. The Company's annual impairment test is performed as of the first day of the third fiscal quarter. | ||
The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that an indefinite-lived intangible asset is impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. | ||
The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset's value may be impaired. Impairment testing is based on a review of forecasted operating cash flows. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the Consolidated Statement of Operations. | ||
Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Intangible merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years. | ||
In the fourth quarter of 2014 and the third quarter of 2013, the Company recorded non-cash impairment charges of $1.5 million and $3.3 million, respectively, which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark (see Note 11 — Fair Value Measurements). | ||
As a result of the impairment analysis performed in connection with the Company's purchased trademarks with indefinite lives, no impairment charges were recorded during 2012. | ||
Goodwill | ||
Goodwill | ||
Goodwill is not amortized but rather tested for impairment at least annually. The Company's annual impairment test is performed as of the first day of the third fiscal quarter. | ||
The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that goodwill is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that goodwill is impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of goodwill and perform the quantitative impairment test by comparing the fair value and carrying amount of the related reporting unit. A two-step impairment test is then performed on goodwill. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the market approach, as is typically used for companies providing products where the value of such a company is more dependent on the ability to generate earnings than the value of the assets used in the production process. Under this approach, the Company estimates fair value based on market multiples of revenues and earnings for comparable companies. The Company also uses discounted future cash flow analyses to corroborate these fair value estimates. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step in order to determine the implied fair value of the reporting unit's goodwill and compare it to the carrying value of the reporting unit's goodwill. The activities in the second step include valuing the tangible and intangible assets of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit's goodwill based upon the residual of the summed identified tangible and intangible assets. | ||
As a result of the impairment analysis performed in connection with the Company's goodwill, no impairment charges were recorded during 2014, 2013 or 2012. | ||
During 2014, the Company recorded additional goodwill as a result of the reacquisition of the KATE SPADE business in Southeast Asia; a portion of the goodwill will be reclassified to Investment in unconsolidated subsidiary in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 2 — Acquisitions and Note 23 — Subsequent Events). | ||
Accrued Expenses | ||
Accrued Expenses | ||
Accrued expenses for employee insurance, workers' compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted. | ||
Share-Based Compensation | ||
Share-Based Compensation | ||
The Company recognizes compensation expense based on the fair value of employee share-based awards, including stock options, restricted stock and restricted stock with market conditions that impact vesting, net of estimated forfeitures. Determining the fair value of options 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 required in estimating the amount of share-based awards expected to be forfeited prior to vesting. Determining the fair value of shares with market conditions at the grant date requires judgment, including the weighting of historical and estimated implied volatility of the Company's stock price and where appropriate, a market index. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted. | ||
Fair Value Measurements | Fair Value Measurements | |
The Company applies the relevant accounting guidance on fair value measurements to (i) all financial instruments that are being measured and reported on a fair value basis; (ii) non-financial assets and liabilities measured and reported at fair value on a non-recurring basis; and (iii) disclosures of fair value of certain financial assets and liabilities. | ||
The following fair value hierarchy is used in selecting inputs for those instruments measured at fair value that distinguishes between assumptions based on market data (observable) and the Company's assumptions (unobservable inputs). The hierarchy consists of three levels. | ||
Level 1 — Quoted market prices in active markets for identical assets or liabilities; | ||
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and | ||
Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. | ||
The fair values of the Company's Level 2 derivative instruments were primarily based on observable forward exchange rates. Unobservable quantitative inputs used in the valuation of the Company's derivative instruments included volatilities, discount rates and estimated credit losses. | ||
Fair value measurement for the Company's assets assumes the highest and best use (the use that generates the highest returns individually or as a group) for the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. This applies even if the intended use of the asset by the Company is different. | ||
Fair value measurement for the Company's liabilities assumes that the liability is transferred to a market participant at the measurement date and that the nonperformance risk relating to the liability is the same before and after the transaction. Nonperformance risk refers to the risk that the obligation will not be fulfilled and includes the Company's own credit risk. | ||
The Company does not apply fair value measurement to any instruments not required to be measured at fair value on a recurring basis. | ||
Cash and Cash Equivalents | ||
Cash and Cash Equivalents | ||
All highly liquid investments with an original maturity of three months or less at the date of purchase are classified as cash equivalents. | ||
Property and Equipment, Net | ||
Property and Equipment, Net | ||
Property and equipment is stated at cost less accumulated depreciation and amortization. Building improvements are depreciated using the straight-line method over their estimated useful lives of 20 to 39 years. Machinery and equipment and furniture and fixtures are depreciated using the straight-line method over their estimated useful lives of three to seven years. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful lives of the assets. Costs for maintenance and repairs are expensed as incurred. Leased property meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. Amortization of capitalized leased assets is recorded on the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The Company recognizes a liability for the fair value of an asset retirement obligation ("ARO") if the fair value can be reasonably estimated. The Company's ARO's are primarily associated with the removal and disposal of leasehold improvements at the end of a lease term when the Company is contractually obligated to restore a facility to a condition specified in the lease agreement. Amortization of ARO's is recorded on a straight-line basis over the lease term. | ||
The Company capitalizes the costs of software developed or obtained for internal use. Capitalization of software developed or obtained for internal use commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis over five years, when such software is substantially ready for use. | ||
The Company evaluates the recoverability of property and equipment if circumstances indicate an impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows to be generated from such assets, on an undiscounted basis. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of the impaired assets is reduced to fair value through a charge to the Company's Consolidated Statement of Operations. | ||
The Company recorded pretax charges of $10.4 million in 2014, $1.5 million in 2013 and $26.4 million in 2012 to reduce the carrying values of certain property and equipment to their estimated fair values (see Note 11 — Fair Value Measurements). | ||
Operating Leases | ||
Operating Leases | ||
The Company leases office space, retail stores and distribution facilities. Many of these operating leases provide for tenant improvement allowances, rent increases and/or contingent rent provisions. Rental expense is recognized on a straight-line basis commencing with the possession date of the property, which is the earlier of the lease commencement date or the date when the Company takes possession of the property. Certain store leases include contingent rents that are based on a percentage of retail sales over stated thresholds. Tenant allowances are amortized on a straight-line basis over the life of the lease as a reduction of rent expense and are included in Selling, general & administrative expenses ("SG&A"). | ||
The Company leases retail stores under leases with terms that are typically five or ten years. The Company amortizes rental abatements, construction allowances and other rental concessions classified as deferred rent on a straight-line basis over the initial term of the lease. The initial lease term can include one renewal under limited circumstances if the renewal is reasonably assured, based on consideration of all of the following factors: (i) a written renewal at the Company's option or an automatic renewal; (ii) there is no minimum sales requirement that could impair the Company's ability to renew; (iii) failure to renew would subject the Company to a substantial penalty; and (iv) there is an established history of renewals in the format or location. | ||
Derivative Instruments | ||
Derivative Instruments | ||
The Company's derivative instruments are recorded in the Consolidated Balance Sheets as either an asset or liability and measured at their fair value. The changes in a derivative's fair value are recognized either currently in earnings or Accumulated other comprehensive loss, depending on whether the derivative qualifies for hedge accounting treatment. The Company tests each derivative for effectiveness at inception of each hedge and at the end of each reporting period. | ||
The Company uses foreign currency forward contracts, collars, options and swap contracts for the purpose of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases by Kate Spade Japan Co., Ltd. ("KSJ"), the Company's wholly-owned subsidiary. These instruments are designated as cash flow hedges. To the extent the hedges are highly effective, the effective portion of the changes in fair value is included in Accumulated other comprehensive loss, net of income taxes, with the corresponding asset or liability recorded in the Consolidated Balance Sheet. The ineffective portion of the cash flow hedge is recognized primarily as a component of Cost of goods sold in current period earnings. Amounts recorded in Accumulated other comprehensive loss are reflected in current period earnings when the hedged transaction affects earnings. If fluctuations in the relative value of the currencies involved in the hedging activities were to move dramatically, such movement could impact the Company's results of operations. | ||
The Company purchases short-term foreign currency contracts to neutralize balance sheet and other expected exposures, including intercompany loans. These derivative instruments do not qualify as cash flow hedges and are recorded at fair value with all gains or losses recognized as a component of SG&A or Other expense income, net in current period earnings (see Note 12 — Derivative Instruments). | ||
Foreign Currency Translation | ||
Foreign Currency Translation | ||
Assets and liabilities of non-US subsidiaries are translated at period-end exchange rates. Revenues and expenses for each month are translated using that month's average exchange rate and then are combined for the period totals. Resulting translation adjustments are included in Accumulated other comprehensive loss. Gains and losses on translation of intercompany loans with foreign subsidiaries of a long-term investment nature are also included in this component of Stockholders' equity (deficit). | ||
Foreign Currency Transactions | ||
Foreign Currency Transactions | ||
Outstanding balances in foreign currencies are translated at the end of period exchange rates. The resulting exchange differences are recorded in the Consolidated Statements of Operations or Accumulated other comprehensive loss, as appropriate. | ||
Cost of Goods Sold | ||
Cost of Goods Sold | ||
Cost of goods sold for wholesale operations includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, import costs, third party inspection activities, buying/sourcing agent commissions and provisions for shrinkage. For retail operations, in-bound freight from the Company's warehouse to its own retail stores is also included. Warehousing activities including receiving, storing, picking, packing and general warehousing charges are included in SG&A and, as such, the Company's gross profit may not be comparable to others who may include these expenses as a component of Cost of goods sold. | ||
Advertising, Promotion and Marketing | ||
Advertising, Promotion and Marketing | ||
All costs associated with advertising, promoting and marketing of Company products are expensed during the periods when the activities take place. Costs associated with cooperative advertising programs involving agreements with customers, whereby customers are required to provide documentary evidence of specific performance and when the amount of consideration paid by the Company for these services is at or below fair value, are charged to SG&A. Costs associated with customer cooperative advertising allowances without specific performance guidelines are recorded as a reduction of sales. The Company incurred expenses of $56.9 million, $42.8 million and $22.7 million for advertising, marketing & promotion for all brands in 2014, 2013 and 2012, respectively. | ||
Shipping and Handling Costs | ||
Shipping and Handling Costs | ||
Shipping and handling costs, which are mostly comprised of warehousing activities, are included as a component of SG&A in the Consolidated Statements of Operations. In fiscal years 2014, 2013 and 2012, shipping and handling costs were $32.8 million, $26.4 million and $15.4 million, respectively. | ||
Investments in Unconsolidated Subsidiaries | ||
Investments in Unconsolidated Subsidiaries | ||
The Company uses the equity method of accounting for its investments in and its proportionate share in earnings of affiliates that it does not control, but over which it exerts significant influence (see Note 20 — Related Party Transactions). The Company considers whether the fair value of its equity method investments has declined below carrying value whenever adverse events or changes in circumstances indicate the recorded value may not be recoverable. | ||
Cash Dividends and Common Stock Repurchases | ||
Cash Dividends and Common Stock Repurchases | ||
On December 16, 2008, the Board of Directors announced the suspension of the Company's quarterly cash dividend indefinitely. | ||
The Company's amended and restated revolving credit agreement currently restricts its ability to pay dividends and repurchase stock (see Note 10 — Debt and Lines of Credit). | ||
Fiscal Year | ||
Fiscal Year | ||
The Company's fiscal year ends on the Saturday closest to December 31. The 2014 fiscal year, which ended on January 3, 2015, reflected a 53-week period. The 2013 and 2012 fiscal years, which ended December 28, 2013 and December 29, 2012, reflected 52-week periods. | ||
Subsequent Events | ||
Subsequent Events | ||
The Company's policy is to evaluate all events or transactions that occur from the balance sheet date through the date of the issuance of its financial statements. The Company has evaluated events or transactions that occurred from the balance sheet date through the date the Company issued these financial statements (see Note 23 — Subsequent Events). | ||
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS | RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS | |
On December 29, 2013, the first day of the Company's 2014 fiscal year, the Company adopted new accounting guidance on the presentation of unrecognized tax benefits, which requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or that the tax law of the applicable jurisdiction does not require the entity to use; and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of the new accounting guidance did not affect the Company's financial position, results of operations or cash flows. | ||
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 12 Months Ended | ||||||
Jan. 03, 2015 | |||||||
Summary of the estimated fair values of the assets acquired | |||||||
In thousands | |||||||
Assets acquired: | |||||||
Current assets | $ | 3,549 | |||||
Property and equipment, net | 1,267 | ||||||
Goodwill and intangibles, net(a) | 26,592 | ||||||
Other assets | 860 | ||||||
| | | | | |||
Total assets acquired | $ | 32,268 | |||||
| | | | | |||
| | | | | |||
(a) | A portion of the goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan is expected to be reclassified to Investment in unconsolidated subsidiary in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 23 — Subsequent Events). | ||||||
Schedule of the acquired intangible assets | |||||||
In thousands | Useful Life | Estimated Fair Value | |||||
Reacquired distribution rights | 1.7 years | $ | 4,500 | ||||
Retail customer list | 3 years | 256 | |||||
Schedule of unaudited pro forma financial information reflecting the results of continuing operations of the Company as if the KSJ Buyout had been completed on January 1, 2012 | |||||||
In thousands, except per share amounts | Fiscal Year Ended | ||||||
December 29, 2012 | |||||||
Net sales | $ | 617,134 | |||||
Gross profit | 388,190 | ||||||
Operating loss | (32,187 | ) | |||||
Loss before benefit for income taxes | (54,251 | ) | |||||
Loss from continuing operations | (50,836 | ) | |||||
Diluted loss per share from continuing operations | (0.47 | ) | |||||
KATE SPADE International | |||||||
Summary of the estimated fair values of the assets acquired | |||||||
In thousands | |||||||
Assets acquired: | |||||||
Current assets | $ | 23,721 | |||||
Property and equipment, net | 5,608 | ||||||
Goodwill and intangibles, net | 79,374 | ||||||
Other assets | 6,776 | ||||||
| | | | | |||
Total assets acquired | $ | 115,479 | |||||
| | | | | |||
| | | | | |||
Liabilities assumed: | |||||||
Current liabilities | $ | 8,834 | |||||
Non-current liabilities | 17,629 | ||||||
| | | | | |||
Total liabilities assumed | $ | 26,463 | |||||
| | | | | |||
| | | | | |||
Schedule of the acquired intangible assets | |||||||
In thousands | Useful Life | Estimated Fair Value | |||||
Reacquired distribution rights | 3 years | $ | 14,900 | ||||
Retail customer list | 3 years | 1,100 | |||||
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
DISCONTINUED OPERATIONS | |||||||||||
Schedule of components of Assets held for sale and Liabilities held for sale | |||||||||||
In thousands | December 28, 2013 | ||||||||||
Assets held for sale: | |||||||||||
Cash and cash equivalents | $ | 163 | |||||||||
Accounts receivable — trade, net | 41,709 | ||||||||||
Inventories, net | 80,503 | ||||||||||
Property and Equipment, net | 68,533 | ||||||||||
Other assets | 11,146 | ||||||||||
| | | | | |||||||
Assets held for sale | $ | 202,054 | |||||||||
| | | | | |||||||
| | | | | |||||||
Liabilities held for sale: | |||||||||||
Accounts payable | $ | 52,977 | |||||||||
Accrued expenses | 27,773 | ||||||||||
Other liabilities | 15,620 | ||||||||||
| | | | | |||||||
Liabilities held for sale | $ | 96,370 | |||||||||
| | | | | |||||||
| | | | | |||||||
Summary of results of discontinued operations | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
Net sales | $ | 209,519 | $ | 980,488 | $ | 961,950 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Loss before provision for income taxes | $ | (46,923 | ) | $ | (36,382 | ) | $ | (3,056 | ) | ||
Provision for income taxes | 660 | 1,821 | 6,572 | ||||||||
| | | | | | | | | | | |
Loss from discontinued operations, net of income taxes | $ | (47,583 | ) | $ | (38,203 | ) | $ | (9,628 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
Income (loss) on disposal of discontinued operations, net of income taxes | $ | 130,017 | $ | 143,363 | $ | (12,190 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
INVENTORIES_NET_Tables
INVENTORIES, NET (Tables) | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
INVENTORIES, NET | ||||||||
Schedule of inventories, net | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Raw materials and work in process | $ | 538 | $ | 1,028 | ||||
Finished goods | 157,703 | 183,606 | ||||||
| | | | | | | | |
Total | $ | 158,241 | $ | 184,634 | ||||
| | | | | | | | |
| | | | | | | | |
PROPERTY_AND_EQUIPMENT_NET_Tab
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
PROPERTY AND EQUIPMENT, NET | ||||||||
Schedule of property and equipment, net | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Land and buildings | $ | 9,300 | $ | 9,300 | ||||
Machinery and equipment | 140,189 | 171,811 | ||||||
Furniture and fixtures | 61,694 | 83,753 | ||||||
Leasehold improvements | 122,029 | 173,207 | ||||||
| | | | | | | | |
333,212 | 438,071 | |||||||
Less: Accumulated depreciation and amortization | 159,140 | 289,000 | ||||||
| | | | | | | | |
Total property and equipment, net | $ | 174,072 | $ | 149,071 | ||||
| | | | | | | | |
| | | | | | | | |
GOODWILL_AND_INTANGIBLES_NET_T
GOODWILL AND INTANGIBLES, NET (Tables) | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
GOODWILL AND INTANGIBLES, NET | |||||||||||
Schedule of carrying value of all intangible assets | |||||||||||
In thousands | Weighted Average | January 3, 2015 | December 28, 2013 | ||||||||
Amortization | |||||||||||
Period | |||||||||||
Amortized intangible assets: | |||||||||||
Gross carrying amount: | |||||||||||
Owned trademarks(a) | — | $ | 467 | $ | 2,000 | ||||||
Customer relationships | 11 years | 7,422 | 7,273 | ||||||||
Merchandising rights | 4 years | 12,012 | 6,087 | ||||||||
Reacquired rights(b) | 2 years | 14,371 | 11,299 | ||||||||
Other | 4 years | 2,322 | 2,322 | ||||||||
| | | | | | | | | | ||
Subtotal | 36,594 | 28,981 | |||||||||
| | | | | | | | | | ||
Accumulated amortization: | |||||||||||
Owned trademarks | (467 | ) | (100 | ) | |||||||
Customer relationships | (4,769 | ) | (4,022 | ) | |||||||
Merchandising rights | (4,108 | ) | (2,595 | ) | |||||||
Reacquired rights | (9,604 | ) | (4,394 | ) | |||||||
Other | (2,219 | ) | (2,092 | ) | |||||||
| | | | | | | | | | ||
Subtotal | (21,167 | ) | (13,203 | ) | |||||||
| | | | | | | | | | ||
Net: | |||||||||||
Owned trademarks | — | 1,900 | |||||||||
Customer relationships | 2,653 | 3,251 | |||||||||
Merchandising rights | 7,904 | 3,492 | |||||||||
Reacquired rights | 4,767 | 6,905 | |||||||||
Other | 103 | 230 | |||||||||
| | | | | | | | | | ||
Total amortized intangible assets, net | 15,427 | 15,778 | |||||||||
| | | | | | | | | | ||
Unamortized intangible assets: | |||||||||||
Owned trademarks | 74,900 | 74,900 | |||||||||
| | | | | | | | | | ||
Total intangible assets | $ | 90,327 | $ | 90,678 | |||||||
| | | | | | | | | | ||
| | | | | | | | | | ||
Goodwill | $ | 64,798 | $ | 49,111 | |||||||
| | | | | | | | | | ||
| | | | | | | | | | ||
(a) | The change in the balance reflected a non-cash impairment charge of $1.5 million related to the TRIFARI trademark (see Note 1 — Basis of Presentation and Significant Accounting Policies). | ||||||||||
(b) | The increase in the balance compared to December 28, 2013 primarily reflected the reacquired existing KATE SPADE businesses in Southeast Asia (see Note 2 — Acquisitions and Note 23 — Subsequent Events). | ||||||||||
Schedule of estimated amortization expense for intangible assets for the next five fiscal years | |||||||||||
Fiscal Year | Amortization | ||||||||||
Expense | |||||||||||
(In millions) | |||||||||||
2015 | $ | 7.7 | |||||||||
2016 | 2.5 | ||||||||||
2017 | 2.0 | ||||||||||
2018 | 1.3 | ||||||||||
2019 | 0.4 | ||||||||||
Schedule of changes in carrying amount of goodwill | |||||||||||
In thousands | Adelington Design | KATE SPADE | Total | ||||||||
Group | International | ||||||||||
Balance as of December 29, 2012 | $ | 1,554 | $ | 58,669 | $ | 60,223 | |||||
Translation adjustment | (107 | ) | (11,005 | ) | (11,112 | ) | |||||
| | | | | | | | | | | |
Balance as of December 28, 2013 | 1,447 | 47,664 | 49,111 | ||||||||
Acquisition of existing KATE SPADE businesses in Southeast Asia | — | 21,836 | 21,836 | ||||||||
Translation adjustment | (132 | ) | (6,017 | ) | (6,149 | ) | |||||
| | | | | | | | | | | |
Balance as of January 3, 2015 | $ | 1,315 | $ | 63,483 | $ | 64,798 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
ACCRUED EXPENSES | ||||||||
Schedule of accrued expenses | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Lease obligations | $ | 28,152 | $ | 34,142 | ||||
Payroll, bonuses and other employment related obligations | 27,446 | 45,971 | ||||||
Streamlining initiatives | 13,633 | 17,829 | ||||||
Advertising | 11,026 | 9,883 | ||||||
Taxes, other than taxes on income | 9,275 | 13,762 | ||||||
Deferred income | 7,742 | 6,322 | ||||||
Insurance related | 6,109 | 7,739 | ||||||
Employee benefits | 5,354 | 8,134 | ||||||
Accrued disposition costs | 2,325 | 10,179 | ||||||
Interest | 355 | 8,375 | ||||||
Other | 39,509 | 37,842 | ||||||
| | | | | | | | |
Total | $ | 150,926 | $ | 200,178 | ||||
| | | | | | | | |
| | | | | | | | |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
INCOME TAXES | |||||||||||
Schedule of Loss before benefit for income taxes | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
United States | $ | (6,165 | ) | $ | (34,370 | ) | $ | (47,259 | ) | ||
International | (1,488 | ) | (2,358 | ) | (10,389 | ) | |||||
| | | | | | | | | | | |
Total | $ | (7,653 | ) | $ | (36,728 | ) | $ | (57,648 | ) | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of (benefit) provision for income taxes | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
Current: | |||||||||||
Federal | $ | (77,366 | ) | $ | 686 | $ | 3,344 | ||||
Foreign | 809 | (2,326 | ) | 1,254 | |||||||
State and local | (7,472 | ) | 742 | (3,175 | ) | ||||||
| | | | | | | | | | | |
Total Current(a) | (84,029 | ) | (898 | ) | 1,423 | ||||||
Deferred: | |||||||||||
Federal | 1,883 | (626 | ) | (4,692 | ) | ||||||
Foreign | (2,722 | ) | (437 | ) | (691 | ) | |||||
State and local | 489 | (2,602 | ) | (1,001 | ) | ||||||
| | | | | | | | | | | |
Total Deferred | (350 | ) | (3,665 | ) | (6,384 | ) | |||||
| | | | | | | | | | | |
$ | (84,379 | ) | $ | (4,563 | ) | $ | (4,961 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
(a) | Includes a net $87.4 million reduction in the reserve for uncertain tax positions, resulting from the expiration of the related statutes of limitations in the year ended January 3, 2015. | ||||||||||
Schedule of effective income tax rate differed from the statutory federal income tax rate | |||||||||||
Fiscal Years Ended | |||||||||||
January 3, 2015 | December 28, 2013 | December 29, 2012 | |||||||||
Federal tax at statutory rate | 35 | % | 35 | % | 35 | % | |||||
State and local income taxes, net of federal benefit | 97.6 | 7.2 | 8.4 | ||||||||
Officer and share-based compensation | 226.4 | — | — | ||||||||
Change in valuation allowance | (185.7 | ) | (13.2 | ) | (41.3 | ) | |||||
Unrecognized tax benefits | 1,010.90 | (1.9 | ) | (6.4 | ) | ||||||
Rate differential on foreign income | (46.8 | ) | (15.0 | ) | (5.9 | ) | |||||
Gain on acquisition of subsidiary | — | — | 29.7 | ||||||||
Conversion of debt to equity | — | (1.5 | ) | (3.4 | ) | ||||||
Indefinite-lived intangibles | (31.0 | ) | 4.8 | (4.6 | ) | ||||||
Other, net | (3.9 | ) | (3.0 | ) | (3.0 | ) | |||||
| | | | | | | | | | | |
1,102.50 | % | 12.4 | % | 8.5 | % | ||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of components of net deferred taxes arising from temporary differences | |||||||||||
In thousands | January 3, 2015 | December 28, 2013 | |||||||||
Deferred tax assets: | |||||||||||
Inventory valuation | $ | 9,212 | $ | 6,088 | |||||||
Streamlining initiatives | — | 10,003 | |||||||||
Deferred compensation | 2,053 | 3,009 | |||||||||
Nondeductible accruals | 10,363 | 83,661 | |||||||||
Share-based compensation | 11,827 | 7,322 | |||||||||
Net operating loss carryforward | 300,825 | 249,399 | |||||||||
Tax credit carryforward | 34 | 53,495 | |||||||||
Goodwill | 5,603 | 6,885 | |||||||||
Capital loss carryforward | 68,839 | 72,788 | |||||||||
Other | 15,906 | 19,339 | |||||||||
| | | | | | | | ||||
Total deferred tax assets | 424,662 | 511,989 | |||||||||
| | | | | | | | ||||
Deferred tax liabilities: | |||||||||||
Trademarks and other intangibles | (17,622 | ) | (16,636 | ) | |||||||
Property and equipment | (5,632 | ) | (12,633 | ) | |||||||
Other | (2,746 | ) | (1,584 | ) | |||||||
| | | | | | | | ||||
Total deferred tax liabilities | (26,000 | ) | (30,853 | ) | |||||||
| | | | | | | | ||||
Less: Valuation allowance | (415,173 | ) | (497,485 | ) | |||||||
| | | | | | | | ||||
Net deferred tax liability | $ | (16,511 | ) | $ | (16,349 | ) | |||||
| | | | | | | | ||||
| | | | | | | | ||||
Summary of changes in the amounts of unrecognized tax benefits | |||||||||||
Fiscal Years Ended | |||||||||||
January 3, 2015 | December 28, 2013 | December 29, 2012 | |||||||||
In thousands | |||||||||||
Balance as of beginning of period | $ | 84,108 | $ | 85,999 | $ | 103,982 | |||||
Increases from prior period positions | 32 | 1,436 | 535 | ||||||||
Decreases from prior period positions | — | (4,348 | ) | (630 | ) | ||||||
Increases from current period positions | — | 2,000 | 37 | ||||||||
Decreases relating to settlements with taxing authorities | — | (153 | ) | (17,765 | ) | ||||||
Reduction due to the lapse of the applicable statute of limitations | (74,916 | ) | (826 | ) | (160 | ) | |||||
| | | | | | | | | | | |
Balance as of end of period(a) | $ | 9,224 | $ | 84,108 | $ | 85,999 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
(a) | As of January 3, 2015 and December 28, 2013, liabilities associated with the amounts are included within Income taxes payable and Other non-current liabilities on the accompanying Consolidated Balance Sheets. | ||||||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||||||||||
Schedule of minimum aggregate rental commitments under non-cancelable operating and capital leases | |||||||||||||||||||||||
Fiscal Year | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total | ||||||||||||||||
In millions | |||||||||||||||||||||||
Operating leases | $ | 65.4 | $ | 60.9 | $ | 59.0 | $ | 55.4 | $ | 50.7 | $ | 194.9 | $ | 486.3 | |||||||||
Capital leases | 1.9 | 2.1 | 2.1 | 2.2 | 2.2 | 13.1 | 23.6 | ||||||||||||||||
DEBT_AND_LINES_OF_CREDIT_Table
DEBT AND LINES OF CREDIT (Tables) | 12 Months Ended | |||||||||||||||||||
Jan. 03, 2015 | ||||||||||||||||||||
DEBT AND LINES OF CREDIT | ||||||||||||||||||||
Schedule of long-term debt | ||||||||||||||||||||
January 3, 2015 | December 28, 2013 | |||||||||||||||||||
In thousands | ||||||||||||||||||||
10.5% Senior Secured Notes, due April 2019(a) | $ | — | $ | 382,209 | ||||||||||||||||
Term Loan credit facility, due April 2021(a)(b) | 396,158 | — | ||||||||||||||||||
Revolving credit facility | 6,000 | 2,997 | ||||||||||||||||||
Capital lease obligations | 8,585 | 8,995 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total debt | 410,743 | 394,201 | ||||||||||||||||||
Less: Short-term borrowings(c) | 10,459 | 3,407 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Long-term debt | $ | 400,284 | $ | 390,794 | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
(a) | The Senior Notes were refinanced in the second quarter of 2014 with proceeds from the issuance of term loans in an aggregate principal amount of $400.0 million (collectively, the "Term Loan"). | |||||||||||||||||||
(b) | The balance as of January 3, 2015 included an unamortized debt discount of $1.8 million. | |||||||||||||||||||
(c) | At January 3, 2015, the balance consisted of $4.0 million of Term Loan amortization payments, outstanding borrowings under the Company's amended and restated revolving credit facility (as amended to date, the "ABL Facility") and obligations under capital leases. At December 28, 2013, the balance consisted of outstanding borrowings under the ABL Facility and obligations under capital leases. | |||||||||||||||||||
Schedule of availability under the Company's ABL Facility | ||||||||||||||||||||
Total | Borrowing | Outstanding | Letters of | Available | Excess | |||||||||||||||
Facility(a) | Base(a) | Borrowings | Credit | Capacity | Capacity(b) | |||||||||||||||
Issued | ||||||||||||||||||||
In thousands | ||||||||||||||||||||
Revolving credit facility(a) | $ | 200,000 | $ | 249,832 | $ | 6,000 | $ | 13,140 | $ | 180,860 | $ | 160,860 | ||||||||
(a) | Availability under the ABL Facility is the lesser of $200.0 million or a borrowing base that is computed monthly and comprised of the Company's eligible cash, accounts receivable and inventory. | |||||||||||||||||||
(b) | Excess capacity represents available capacity reduced by the minimum required aggregate borrowing availability under the ABL Facility of $20.0 million. | |||||||||||||||||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||
FAIR VALUE MEASUREMENTS | |||||||||||||||||
Schedule of financial assets and liabilities of the Company measured at fair value on recurring basis | |||||||||||||||||
Level 2 | |||||||||||||||||
January 3, 2015 | December 28, 2013 | ||||||||||||||||
In thousands | |||||||||||||||||
Financial Assets: | |||||||||||||||||
Derivatives | $ | 3,193 | $ | 1,701 | |||||||||||||
Financial Liabilities: | |||||||||||||||||
Derivatives | $ | — | $ | — | |||||||||||||
Schedule of non-financial assets of the Company measured at fair value on non-recurring basis | |||||||||||||||||
Fair Value Measured and Recorded at | |||||||||||||||||
Net Carrying | Reporting Date Using: | Total Losses — | |||||||||||||||
Value as of | Year Ended | ||||||||||||||||
January 3, 2015 | Level 1 | Level 2 | Level 3 | January 3, 2015 | |||||||||||||
In thousands | |||||||||||||||||
Property and equipment | $ | 4,127 | $ | — | $ | — | $ | 4,127 | $ | 10,358 | |||||||
Intangibles, net | — | — | — | — | 1,533 | ||||||||||||
Fair Value Measured and Recorded at Reporting Date Using: | |||||||||||||||||
Net Carrying | Total Losses — | ||||||||||||||||
Value as of | Year Ended | ||||||||||||||||
December 28, 2013 | Level 1 | Level 2 | Level 3 | December 28, 2013 | |||||||||||||
In thousands | |||||||||||||||||
Property and equipment | $ | 15,706 | $ | — | $ | — | $ | 15,706 | $ | 1,480 | |||||||
Intangibles, net | 1,900 | — | — | 1,900 | 3,300 | ||||||||||||
Other assets | — | — | — | — | 6,109 | ||||||||||||
Fair Value Measured and Recorded at | |||||||||||||||||
Net Carrying | Reporting Date Using: | Total Losses — | |||||||||||||||
Value as of | Year Ended | ||||||||||||||||
December 29, 2012 | Level 1 | Level 2 | Level 3 | December 29, 2012 | |||||||||||||
In thousands | |||||||||||||||||
Property and equipment | $ | 22,710 | $ | — | $ | — | $ | 22,710 | $ | 26,413 | |||||||
Schedule of fair values and carrying values of the Company's debt instruments | |||||||||||||||||
December 28, 2013 | |||||||||||||||||
January 3, 2015 | |||||||||||||||||
In thousands | Fair Value | Carrying Value | Fair Value | Carrying Value | |||||||||||||
10.5% Senior Secured Notes due April 2019(a) | $ | — | $ | — | $ | 400,830 | $ | 382,209 | |||||||||
Term Loan credit facility, due April 2021(a) | 384,786 | 396,158 | — | — | |||||||||||||
Revolving credit facility(b) | 6,000 | 6,000 | 2,997 | 2,997 | |||||||||||||
(a) | Carrying values include unamortized debt discount or premium. | ||||||||||||||||
(b) | Borrowings under the revolving credit facility bear interest based on market rate; accordingly, its fair value approximates its carrying value. | ||||||||||||||||
DERIVATIVE_INSTRUMENTS_Tables
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended | |||||||||||||||||
Jan. 03, 2015 | ||||||||||||||||||
DERIVATIVE INSTRUMENTS | ||||||||||||||||||
Summary of effect of foreign currency exchange contracts on Condensed Consolidated Financial Statements | ||||||||||||||||||
Amount of Gain or | Location of Gain or | Amount of Gain or | Amount of Gain or | |||||||||||||||
(Loss) Recognized in | (Loss) Reclassified | (Loss) Reclassified | (Loss) Recognized in | |||||||||||||||
Accumulated OCI | from Accumulated | from Accumulated | Operations on | |||||||||||||||
on Derivative | OCI into Operations | OCI into Operations | Derivative | |||||||||||||||
(Effective Portion) | (Effective and | (Effective Portion) | (Ineffective Portion) | |||||||||||||||
Ineffective Portion) | ||||||||||||||||||
In thousands | ||||||||||||||||||
Fiscal year ended January 3, 2015 | $ | 2,854 | Cost of goods sold | $ | 1,161 | $ | — | |||||||||||
Fiscal year ended December 28, 2013 | 2,911 | Cost of goods sold | 1,326 | — | ||||||||||||||
Fiscal year ended December 29, 2012 | — | Cost of goods sold | — | — | ||||||||||||||
Designated as Hedging Instrument | ||||||||||||||||||
DERIVATIVE INSTRUMENTS | ||||||||||||||||||
Summary of fair value and presentation in Condensed Consolidated Financial Statements for derivatives designated as hedging instruments and derivatives not designated as hedging instruments | ||||||||||||||||||
Foreign Currency Contracts Designated as Hedging Instruments | ||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Period | Balance Sheet | Notional | Fair Value | Balance Sheet | Notional | Fair Value | ||||||||||||
Location | Amount | Location | Amount | |||||||||||||||
In thousands | ||||||||||||||||||
January 3, 2015 | Other current assets | $ | 39,100 | $ | 3,066 | Accrued expenses | $ | — | $ | — | ||||||||
December 28, 2013 | Other current assets | 21,050 | 1,317 | Accrued expenses | — | — | ||||||||||||
Not Designated as Hedging Instrument | ||||||||||||||||||
DERIVATIVE INSTRUMENTS | ||||||||||||||||||
Summary of fair value and presentation in Condensed Consolidated Financial Statements for derivatives designated as hedging instruments and derivatives not designated as hedging instruments | ||||||||||||||||||
Foreign Currency Contracts Not Designated as Hedging Instruments | ||||||||||||||||||
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Period | Balance Sheet | Notional | Fair Value | Balance Sheet | Notional | Fair Value | ||||||||||||
Location | Amount | Location | Amount | |||||||||||||||
In thousands | ||||||||||||||||||
January 3, 2015 | Other current assets | $ | 33,350 | $ | 127 | Accrued expenses | $ | — | $ | — | ||||||||
December 28, 2013 | Other current assets | 38,403 | 384 | Accrued expenses | — | — | ||||||||||||
STREAMLINING_INITIATIVES_Table
STREAMLINING INITIATIVES (Tables) | 12 Months Ended | ||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||
STREAMLINING INITIATIVES | |||||||||||||||||
Summary rollforward of the liability for streamlining initiatives | |||||||||||||||||
In thousands | Payroll and | Contract | Asset | Other Costs | Total | ||||||||||||
Related Costs | Termination | Write-Downs | |||||||||||||||
Costs | |||||||||||||||||
Balance at December 31, 2011 | $ | 7,352 | $ | 18,012 | $ | — | $ | 30,967 | $ | 56,331 | |||||||
2012 provision | 9,158 | 2,681 | 27,783 | 3,571 | 43,193 | ||||||||||||
2012 asset write-downs | — | — | (27,783 | ) | — | (27,783 | ) | ||||||||||
Translation difference | 25 | 49 | — | 9 | 83 | ||||||||||||
2012 spending | (11,976 | ) | (16,499 | ) | — | (18,783 | ) | (47,258 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Balance at December 29, 2012 | 4,559 | 4,243 | — | 15,764 | 24,566 | ||||||||||||
2013 provision(a) | 5,657 | 6 | 1,744 | 3,194 | 10,601 | ||||||||||||
2013 asset write-downs | — | — | (1,744 | ) | — | (1,744 | ) | ||||||||||
Translation difference | (7 | ) | 12 | — | 18 | 23 | |||||||||||
2013 spending(a) | (7,173 | ) | (2,110 | ) | — | (7,269 | ) | (16,552 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Balance at December 28, 2013 | 3,036 | 2,151 | — | 11,707 | 16,894 | ||||||||||||
2014 provision(a) | 33,729 | 1,540 | 6,367 | 316 | 41,952 | ||||||||||||
2014 asset write-downs | — | — | (6,367 | ) | — | (6,367 | ) | ||||||||||
Translation difference | — | — | — | (3 | ) | (3 | ) | ||||||||||
2014 spending(a) | (34,685 | ) | (2,704 | ) | — | (5,190 | ) | (42,579 | ) | ||||||||
| | | | | | | | | | | | | | | | | |
Balance at January 3, 2015(b) | $ | 2,080 | $ | 987 | $ | — | $ | 6,830 | $ | 9,897 | |||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
(a) | Payroll and related costs provision and spending include $17.3 million and $2.8 million in 2014 and 2013, respectively, of non-cash share-based compensation expense. | ||||||||||||||||
(b) | The balance in other costs at January 3, 2015 includes $6.8 million for a withdrawal liability incurred in 2011 related to a multi-employer pension plan that the Company will pay through June 1, 2016. | ||||||||||||||||
Schedule of expenses associated with the Company's streamlining actions | |||||||||||||||||
Fiscal Years Ended | |||||||||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||||||||
KATE SPADE North America | $ | 7,319 | $ | 791 | $ | 2,519 | |||||||||||
KATE SPADE International | 1,567 | — | — | ||||||||||||||
Adelington Design Group | 982 | 272 | 3,112 | ||||||||||||||
Other(a) | 32,084 | 9,538 | 37,562 | ||||||||||||||
| | | | | | | | | | | |||||||
Total | $ | 41,952 | $ | 10,601 | $ | 43,193 | |||||||||||
| | | | | | | | | | | |||||||
| | | | | | | | | | | |||||||
(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. | ||||||||||||||||
SHAREBASED_COMPENSATION_Tables
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended | |||||||||||||
Jan. 03, 2015 | ||||||||||||||
SHARE-BASED COMPENSATION | ||||||||||||||
Schedule of valuation assumptions used to estimate fair value of stock options granted using the Binomial lattice pricing model | ||||||||||||||
Fiscal Years Ended | ||||||||||||||
Valuation Assumptions: | December 28, 2013 | December 29, 2012 | ||||||||||||
Weighted-average fair value of options granted | $10.32 | $6.04 | ||||||||||||
Expected volatility | 59.50% | 63.30% | ||||||||||||
Weighted-average volatility | 59.50% | 63.30% | ||||||||||||
Expected term (in years) | 4.9 | 5.1 | ||||||||||||
Dividend yield | — | — | ||||||||||||
Risk-free rate | 0.1% to 3.9% | 0.2% to 3.8% | ||||||||||||
Expected annual forfeiture | 12.40% | 13.50% | ||||||||||||
Summary of award activity under stock option plans | ||||||||||||||
Shares | Weighted Average | Weighted Average | Aggregate | |||||||||||
Exercise Price | Remaining | Intrinsic Value | ||||||||||||
Contractual Term | (In thousands) | |||||||||||||
Outstanding at December 28, 2013 | 5,166,375 | $ | 11.26 | 3.4 | $ | 108,498 | ||||||||
Exercised | (4,010,331 | ) | 10.46 | 98,734 | ||||||||||
Cancelled/expired | (125,075 | ) | 37.21 | |||||||||||
| | | | | | | | | | | | | | |
Outstanding at January 3, 2015 | 1,030,969 | $ | 11.25 | 3.9 | $ | 21,613 | ||||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Vested or expected to vest at January 3, 2015 | 1,020,053 | $ | 11.16 | 3.9 | $ | 21,477 | ||||||||
Exercisable at January 3, 2015 | 537,404 | $ | 6.85 | 3.1 | $ | 13,628 | ||||||||
Schedule of valuation assumptions used to determine fair value for the MSUs granted using the Monte Carlo simulation model | ||||||||||||||
Valuation Assumptions: | Fiscal Year Ended | |||||||||||||
January 3, 2015 | ||||||||||||||
Weighted-average fair value | $ | |||||||||||||
50.24 | ||||||||||||||
Expected volatility | 52.3% | |||||||||||||
Dividend yield | — | |||||||||||||
Risk-free rate | 1.68% | |||||||||||||
Weighted-average expected annual forfeiture | 4.8% | |||||||||||||
Schedule of valuation assumptions used to determine fair value of performance share units granted using the Monte Carlo simulation model | ||||||||||||||
Valuation Assumptions | Fiscal Year Ended | |||||||||||||
January 3, 2015 | ||||||||||||||
Weighted-average fair value | $ | |||||||||||||
43.93 | ||||||||||||||
Expected volatility | 44.2% | |||||||||||||
Dividend yield | — | |||||||||||||
Risk-free rate | 0.66% | |||||||||||||
Weighted-average expected annual forfeiture | 4.0% | |||||||||||||
Summary of award activity under restricted stock plans | ||||||||||||||
Shares | Weighted Average | |||||||||||||
Grant Date Fair | ||||||||||||||
Value | ||||||||||||||
Nonvested stock at December 28, 2013 | 1,035,250 | $ | 14.93 | |||||||||||
Granted | 1,637,778 | 48.05 | ||||||||||||
Vested | (406,500 | ) | 17.01 | |||||||||||
Cancelled(a) | (546,954 | ) | 16.8 | |||||||||||
| | | | | | | | |||||||
Nonvested stock at January 3, 2015 | 1,719,574 | $ | 45.39 | |||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
Expected to vest as of January 3, 2015(b) | 1,492,428 | $ | 45.42 | |||||||||||
| | | | | | | | |||||||
| | | | | | | | |||||||
(a) | Includes performance shares granted to a group of key executives with certain performance conditions, measured through December 2013 and a market and service condition through December 2014. These shares which were contingently issuable based on 2013 performance were deemed not earned and cancelled. | |||||||||||||
(b) | Excludes the potential impact of the performance share multiplier, which will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company's stock price over the vesting periods and zero to 200% of the number of LTIP awards granted depending on the Company's TSR relative to the TSR of the S&P Mid-Cap 400 Index. | |||||||||||||
EARNINGS_PER_COMMON_SHARE_Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended | ||||||||||
Jan. 03, 2015 | |||||||||||
EARNINGS PER COMMON SHARE | |||||||||||
Schedule of computation of basic and diluted (loss) earnings per common share | |||||||||||
Fiscal Years Ended | |||||||||||
In thousands, except per share data | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||
Income (loss) from continuing operations | $ | 76,726 | $ | (32,165 | ) | $ | (52,687 | ) | |||
Income (loss) from discontinued operations, net of income taxes | 82,434 | 105,160 | (21,818 | ) | |||||||
| | | | | | | | | | | |
Net income (loss) | $ | 159,160 | $ | 72,995 | $ | (74,505 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic weighted average shares outstanding | 126,264 | 121,057 | 109,292 | ||||||||
Stock options and nonvested shares(a)(b) | 755 | — | — | ||||||||
Convertible Notes(c) | — | — | — | ||||||||
| | | | | | | | | | | |
Diluted weighted average shares outstanding | 127,019 | 121,057 | 109,292 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Earnings (loss) per share: | |||||||||||
Basic | |||||||||||
Income (loss) from continuing operations | $ | 0.61 | $ | (0.27 | ) | $ | (0.48 | ) | |||
Income (loss) from discontinued operations | 0.65 | 0.87 | (0.20 | ) | |||||||
| | | | | | | | | | | |
Net income (loss) | $ | 1.26 | $ | 0.6 | $ | (0.68 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted | |||||||||||
Income (loss) from continuing operations | $ | 0.6 | $ | (0.27 | ) | $ | (0.48 | ) | |||
Income (loss) from discontinued operations | 0.65 | 0.87 | (0.20 | ) | |||||||
| | | | | | | | | | | |
Net income (loss) | $ | 1.25 | $ | 0.6 | $ | (0.68 | ) | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
(a) | Because the Company incurred a loss from continuing operations for the years ended December 28, 2013 and December 29, 2012, outstanding stock options and nonvested shares are antidilutive. Accordingly, for the years ended December 28, 2013 and December 29, 2012, approximately 5.2 million and 5.8 million outstanding stock options, respectively, and approximately 0.5 million and 0.5 million outstanding nonvested shares, respectively, were excluded from the computation of diluted loss per share. | ||||||||||
(b) | Excludes approximately 0.5 million and 1.2 million nonvested shares for the years ended December 28, 2013 and December 29, 2012, respectively, for which the performance criteria were not achieved. | ||||||||||
(c) | Because the Company incurred a loss from continuing operations for the years ended December 28, 2013 and December 29, 2012, approximately 1.5 million and 12.3 million, respectively, potentially dilutive shares issuable upon conversion of the Convertible Notes were considered antidilutive for such period and were excluded from the computation of diluted loss per share. | ||||||||||
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 12 Months Ended | ||||||||||||||||||||||
Jan. 03, 2015 | |||||||||||||||||||||||
SEGMENT REPORTING | |||||||||||||||||||||||
Schedule of segment reporting information, by segment | |||||||||||||||||||||||
Net Sales | % to Total | Depreciation | Adjusted | % of Sales | Segment | Expenditures | |||||||||||||||||
and | EBITDA(b) | Assets | for Long- | ||||||||||||||||||||
Amortization | Lived Assets | ||||||||||||||||||||||
Expense(a) | |||||||||||||||||||||||
Dollars in thousands | |||||||||||||||||||||||
Fiscal Year Ended January 3, 2015 | |||||||||||||||||||||||
KATE SPADE North America | $ | 891,766 | 78.3 | % | $ | 31,905 | $ | 143,009 | 16 | % | $ | 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 | % | $ | 54,438 | $ | 132,221 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Fiscal Year Ended | |||||||||||||||||||||||
December 28, 2013 | |||||||||||||||||||||||
KATE SPADE North America | $ | 597,748 | 74.4 | % | $ | 23,961 | $ | 70,250 | 11.8 | % | $ | 377,102 | $ | 58,089 | |||||||||
KATE SPADE International | 145,404 | 18.1 | % | 8,476 | (815 | ) | (0.6 | )% | 149,395 | 9,139 | |||||||||||||
Adelington Design Group | 60,219 | 7.5 | % | 625 | 12,008 | 19.9 | % | 22,130 | 363 | ||||||||||||||
Corporate and Other | — | — | 5,718 | (4,334 | ) | — | 428,884 | — | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Totals | $ | 803,371 | 100 | % | $ | 38,780 | $ | 67,591 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Fiscal Year Ended | |||||||||||||||||||||||
December 29, 2012 | |||||||||||||||||||||||
KATE SPADE North America | $ | 411,507 | 75.5 | % | $ | 21,364 | $ | 24,924 | 6.1 | % | $ | 41,885 | |||||||||||
KATE SPADE International | 50,418 | 9.3 | % | 2,260 | 3,454 | 6.9 | % | 47,115 | |||||||||||||||
Adelington Design Group | 82,840 | 15.2 | % | 958 | 17,694 | 21.4 | % | 392 | |||||||||||||||
Corporate and Other | — | — | 11,255 | (4,332 | ) | — | — | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Totals | $ | 544,765 | 100 | % | $ | 35,837 | $ | 89,392 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(a) | For the years ended January 3, 2015, December 28, 2013 and December 29, 2012, $5.2 million, $3.6 million and $9.7 million, respectively, of Corporate depreciation and amortization was recorded within Interest expense, net on the accompanying Consolidated Statements of Operations. | ||||||||||||||||||||||
(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. | ||||||||||||||||||||||
Schedule of reconciliation to Income (Loss) from Continuing Operations | |||||||||||||||||||||||
Fiscal Years Ended | |||||||||||||||||||||||
In thousands | January 3, 2015 | December 28, 2013 | December 29, 2012 | ||||||||||||||||||||
Reportable Segments Adjusted EBITDA: | |||||||||||||||||||||||
KATE SPADE North America | $ | 143,009 | $ | 70,250 | $ | 24,924 | |||||||||||||||||
KATE SPADE International(a) | 810 | (815 | ) | 3,454 | |||||||||||||||||||
Adelington Design Group | 4,092 | 12,008 | 17,694 | ||||||||||||||||||||
Other | (940 | ) | (4,334 | ) | (4,332 | ) | |||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total Reportable Segments Adjusted EBITDA | 146,971 | 77,109 | 41,740 | ||||||||||||||||||||
Depreciation and amortization, net(b) | (48,441 | ) | (35,088 | ) | (25,641 | ) | |||||||||||||||||
Charges due to streamlining initiatives(c), brand-exiting activities, acquisition related costs, impairment of intangible assets and loss on asset disposals and impairments, net | (30,371 | ) | (15,716 | ) | (46,455 | ) | |||||||||||||||||
Share-based compensation(d) | (37,270 | ) | (7,269 | ) | (6,911 | ) | |||||||||||||||||
Equity loss included in Reportable Segments Adjusted EBITDA | 2,583 | 1,179 | 1,245 | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Operating Income (Loss) | 33,472 | 20,215 | (36,022 | ) | |||||||||||||||||||
Other expense, net(a) | (4,033 | ) | (2,062 | ) | (325 | ) | |||||||||||||||||
Impairment of cost investment | — | (6,109 | ) | — | |||||||||||||||||||
Gain on acquisition of subsidiary | — | — | 40,065 | ||||||||||||||||||||
Loss on extinguishment of debt | (16,914 | ) | (1,707 | ) | (9,754 | ) | |||||||||||||||||
Interest expense, net | (20,178 | ) | (47,065 | ) | (51,612 | ) | |||||||||||||||||
Benefit for income taxes | (84,379 | ) | (4,563 | ) | (4,961 | ) | |||||||||||||||||
| | | | | | | | | | | |||||||||||||
Income (Loss) from Continuing Operations | $ | 76,726 | $ | (32,165 | ) | $ | (52,687 | ) | |||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
(a) | Amounts include equity in the losses of equity method investees of $2.6 million, $1.2 million and $1.2 million in 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||
(b) | Excludes amortization included in Interest expense, net. | ||||||||||||||||||||||
(c) | See Note 13 — Streamlining Initiatives for a discussion of streamlining charges. | ||||||||||||||||||||||
(d) | Includes share-based compensation expense of $17.3 million and $2.8 million in 2014 and 2013, respectively, that was classified as restructuring. | ||||||||||||||||||||||
Schedule of geographic data | |||||||||||||||||||||||
Dollars in thousands | Net Sales | % to Total | Long-Lived | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
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 | % | $ | 211,602 | |||||||||||||||||
International | 154,965 | 19.3 | % | 77,258 | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total | $ | 803,371 | 100.0 | % | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
Fiscal Year Ended December 29, 2012 | |||||||||||||||||||||||
Domestic | $ | 493,556 | 90.6 | % | |||||||||||||||||||
International | 51,209 | 9.4 | % | ||||||||||||||||||||
| | | | | | | | | | | |||||||||||||
Total | $ | 544,765 | 100.0 | % | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||
| | | | | | | | | | | |||||||||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended | |||||||
Jan. 03, 2015 | ||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ||||||||
Schedule of accumulated other comprehensive loss | ||||||||
In thousands | January 3, 2015 | December 28, 2013 | ||||||
Cumulative translation adjustment, net of income taxes of $0 | $ | (32,096 | ) | $ | (21,862 | ) | ||
Gains on cash flow hedging derivatives, net of income taxes of $1,168 and $602, respectively | 2,110 | 983 | ||||||
| | | | | | | | |
Accumulated other comprehensive loss, net of income taxes | $ | (29,986 | ) | $ | (20,879 | ) | ||
| | | | | | | | |
| | | | | | | | |
Schedule of the change in each component of Accumulated other comprehensive (loss) income, net of income taxes | ||||||||
In thousands | Cumulative | Unrealized | ||||||
Translation | Gains on | |||||||
Adjustment | Cash Flow | |||||||
Hedging | ||||||||
Derivatives | ||||||||
Balance as of December 29, 2012 | $ | (10,074 | ) | $ | — | |||
Other comprehensive (loss) income before reclassification | (11,788 | ) | 1,805 | |||||
Amounts reclassified from accumulated other comprehensive loss | — | (822 | ) | |||||
| | | | | | | | |
Balance as of December 28, 2013 | (21,862 | ) | 983 | |||||
Other comprehensive (loss) income before reclassification | (10,234 | ) | 1,847 | |||||
Amounts reclassified from accumulated other comprehensive loss | — | (720 | ) | |||||
| | | | | | | | |
Balance as of January 3, 2015 | $ | (32,096 | ) | $ | 2,110 | |||
| | | | | | | | |
| | | | | | | | |
UNAUDITED_QUARTERLY_RESULTS_Ta
UNAUDITED QUARTERLY RESULTS (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Jan. 03, 2015 | ||||||||||||||||||||||||||
UNAUDITED QUARTERLY RESULTS | ||||||||||||||||||||||||||
Schedule of unaudited quarterly financial information | ||||||||||||||||||||||||||
March | June | September | December | |||||||||||||||||||||||
In thousands, except per share data | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Net sales | $ | 223,614 | $ | 156,449 | $ | 265,998 | $ | 178,881 | $ | 250,417 | $ | 192,612 | $ | 398,574 | $ | 275,429 | ||||||||||
Gross profit | 136,823 | 98,096 | 155,910 | 110,478 | 157,314 | 118,222 | 230,224 | 169,794 | ||||||||||||||||||
(Loss) income from continuing operations | -38,408 | (b) | -23,745 | (c) | -13,983 | (d) | -23,588 | (e) | 2,623 | (f) | -14,165 | (g) | 126,494 | (h) | 29,333 | (i) | ||||||||||
Income (loss) from discontinued operations, net of income taxes | 84,578 | (28,429 | ) | 9,579 | (19,549 | ) | (11,753 | ) | (2,701 | ) | 30 | 155,839 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 46,170 | $ | (52,174 | ) | $ | (4,404 | ) | $ | (43,137 | ) | $ | (9,130 | ) | $ | (16,866 | ) | $ | 126,524 | $ | 185,172 | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic earnings per share:(a) | ||||||||||||||||||||||||||
(Loss) income from continuing operations | $ | (0.31 | ) | $ | (0.20 | ) | $ | (0.11 | ) | $ | (0.20 | ) | $ | 0.02 | $ | (0.12 | ) | $ | 0.99 | $ | 0.24 | |||||
Income (loss) from discontinued operations | 0.68 | (0.24 | ) | 0.08 | (0.16 | ) | (0.09 | ) | (0.02 | ) | — | 1.27 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 0.37 | $ | (0.44 | ) | $ | (0.03 | ) | $ | (0.36 | ) | $ | (0.07 | ) | $ | (0.14 | ) | $ | 0.99 | $ | 1.51 | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted earnings per share:(a) | ||||||||||||||||||||||||||
(Loss) income from continuing operations | $ | (0.31 | ) | $ | (0.20 | ) | $ | (0.11 | ) | $ | (0.20 | ) | $ | 0.02 | $ | (0.12 | ) | $ | 0.99 | $ | 0.23 | |||||
Income (loss) from discontinued operations | 0.68 | (0.24 | ) | 0.08 | (0.16 | ) | (0.09 | ) | (0.02 | ) | — | 1.25 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 0.37 | $ | (0.44 | ) | $ | (0.03 | ) | $ | (0.36 | ) | $ | (0.07 | ) | $ | (0.14 | ) | $ | 0.99 | $ | 1.48 | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic weighted average shares outstanding(a) | 124,403 | 119,032 | 126,664 | 120,013 | 126,971 | 122,396 | 127,160 | 122,785 | ||||||||||||||||||
Diluted weighted average shares outstanding(a) | 124,403 | 119,032 | 126,664 | 120,013 | 127,610 | 122,396 | 127,741 | 125,219 | ||||||||||||||||||
(a) | Because the Company incurred a loss from continuing operations in the first three quarters of 2013 and first two quarters of 2014, outstanding stock options and nonvested shares are antidilutive for such periods. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods. | |||||||||||||||||||||||||
(b) | Included pretax expenses related to streamlining initiatives of $28.9 million. | |||||||||||||||||||||||||
(c) | Included pretax expenses related to streamlining initiatives of $2.9 million. | |||||||||||||||||||||||||
(d) | Included pretax expenses related to streamlining initiatives of $4.9 million. | |||||||||||||||||||||||||
(e) | Included pretax expenses related to streamlining initiatives of $1.4 million. | |||||||||||||||||||||||||
(f) | Included pretax expenses related to streamlining initiatives of $1.1 million. | |||||||||||||||||||||||||
(g) | Included a pretax credit related to streamlining initiatives of $1.0 million | |||||||||||||||||||||||||
(h) | Included pretax expenses related to streamlining initiatives of $7.1 million. | |||||||||||||||||||||||||
(i) | Included pretax expenses related to streamlining initiatives of $7.3 million. | |||||||||||||||||||||||||
BASIS_OF_PRESENTATION_AND_SIGN2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||||||
Jul. 05, 2014 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Nov. 19, 2013 | Apr. 07, 2014 | Nov. 19, 2013 | Feb. 03, 2014 | Nov. 06, 2013 | Nov. 06, 2013 | Nov. 06, 2013 | Feb. 05, 2014 | Oct. 31, 2012 | Oct. 31, 2012 | Feb. 05, 2014 | Oct. 31, 2012 | Jul. 05, 2014 | Jul. 05, 2014 | Feb. 03, 2014 | Feb. 03, 2014 | Feb. 03, 2014 | Feb. 03, 2014 | |
item | USD ($) | USD ($) | USD ($) | Juicy Couture Disposal Group | Juicy Couture Disposal Group | Juicy Couture Disposal Group | LBD Acquisition | ABG | ABG | ABG | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | Domestic | International | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | |
item | USD ($) | USD ($) | USD ($) | Lucky Brand | Juicy Couture | Juicy Couture | Juicy Couture | USD ($) | USD ($) | JPY (¥) | USD ($) | item | item | LBD Acquisition | LBD Acquisition | LBD Acquisition | LBD Acquisition | |||||
Lucky Brand Note | USD ($) | Minimum | Maximum | Lucky Brand | Lucky Brand | Lucky Brand | Lucky Brand | |||||||||||||||
USD ($) | USD ($) | USD ($) | USD ($) | Lucky Brand Note | Lucky Brand Note | |||||||||||||||||
USD ($) | ||||||||||||||||||||||
Revenue Recognition | ||||||||||||||||||||||
Licensing revenues | $16,200,000 | $17,800,000 | $19,600,000 | |||||||||||||||||||
Number of reportable segments resulting from disaggregation of former KATE SPADE segment | 2 | |||||||||||||||||||||
Number of Operating Segments | 1 | 4 | ||||||||||||||||||||
Number of reportable segments | 3 | 1 | 4 | |||||||||||||||||||
Percentage of ownership interest in business sold | 100.00% | |||||||||||||||||||||
Sale proceeds of intangible assets under disposal or sale transactions | 225,000,000 | |||||||||||||||||||||
Cash consideration | 8,600,000 | 140,000,000 | ||||||||||||||||||||
Term of note | 3 years | |||||||||||||||||||||
Note | 85,000,000 | |||||||||||||||||||||
Increase in principal amount of Lucky Note annual increments | 5,000,000 | |||||||||||||||||||||
Cash interest on note | 8,000,000 | |||||||||||||||||||||
Purchase price | 195,000,000 | 32,300,000 | 41,400,000 | 3,308,000,000 | ||||||||||||||||||
Working capital and other previously agreed adjustments | 2,300,000 | |||||||||||||||||||||
Business Combination Recognized Identifiable Working Capital and Other Previously Agreed Adjustments | 2,300,000 | |||||||||||||||||||||
Additional contingent payment | 10,000,000 | |||||||||||||||||||||
Guaranteed minimum royalties payment | 10,000,000 | |||||||||||||||||||||
Consideration on termination under disposition leases | 51,000,000 | |||||||||||||||||||||
Net proceeds received from termination under disposition leases | 45,800,000 | |||||||||||||||||||||
Proceeds previously received from termination under disposition leases | 5,000,000 | |||||||||||||||||||||
Acquired percentage of the equity | 51.00% | |||||||||||||||||||||
Purchase price aggregate cash payments | $32,268,000 | $41,027,000 |
BASIS_OF_PRESENTATION_AND_SIGN3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | 12 Months Ended | 3 Months Ended | ||||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Jan. 03, 2015 | Apr. 05, 2014 | Sep. 28, 2013 | |
Intangibles, Net | ||||||
Impairment of intangible assets | $1,533,000 | $3,300,000 | ||||
Impairment charges on goodwill | 0 | 0 | 0 | |||
Merchandising rights | Minimum | ||||||
Intangibles, Net | ||||||
Amortization period | 3 years | |||||
Merchandising rights | Maximum | ||||||
Intangibles, Net | ||||||
Amortization period | 4 years | |||||
Customer relationships | Minimum | ||||||
Intangibles, Net | ||||||
Amortization period | 12 years | |||||
Customer relationships | Maximum | ||||||
Intangibles, Net | ||||||
Amortization period | 14 years | |||||
Owned trademarks | ||||||
Intangibles, Net | ||||||
Impairment of intangible assets | 0 | |||||
Non-cash impairment charge | $1,500,000 | $1,500,000 | $1,500,000 | $3,300,000 |
BASIS_OF_PRESENTATION_AND_SIGN4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
Property and Equipment, Net | |||
Pretax charges | $10.40 | $1.50 | $26.40 |
Advertising, Promotion and Marketing | |||
Advertising, marketing & promotion expenses | 56.9 | 42.8 | 22.7 |
Shipping and Handling Costs | |||
Shipping and handling costs | $32.80 | $26.40 | $15.40 |
Fiscal Year | |||
Period in fiscal year | 371 days | 364 days | 364 days |
Minimum | |||
Operating Leases | |||
Retail stores leases term | 5 years | ||
Maximum | |||
Operating Leases | |||
Retail stores leases term | 10 years | ||
Buildings and building improvements | Minimum | |||
Shipping and Handling Costs | |||
Estimated useful lives | 20 years | ||
Buildings and building improvements | Maximum | |||
Shipping and Handling Costs | |||
Estimated useful lives | 39 years | ||
Machinery and equipment | Minimum | |||
Shipping and Handling Costs | |||
Estimated useful lives | 3 years | ||
Machinery and equipment | Maximum | |||
Shipping and Handling Costs | |||
Estimated useful lives | 7 years | ||
Costs for software developed or obtained | |||
Shipping and Handling Costs | |||
Estimated useful lives | 5 years |
ACQUISITION_Details
ACQUISITION (Details) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||||||||||||||||||||||||
Jan. 03, 2015 | Oct. 04, 2014 | Jul. 05, 2014 | Apr. 05, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Feb. 05, 2014 | Feb. 05, 2014 | Feb. 05, 2014 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Oct. 31, 2012 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | Feb. 05, 2014 | Oct. 31, 2012 | Oct. 31, 2012 | Dec. 28, 2013 | Dec. 29, 2012 | Jan. 03, 2015 | Feb. 05, 2014 | Oct. 31, 2012 | Oct. 31, 2012 | Oct. 31, 2012 | Oct. 31, 2012 | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Distribution Rights | Customer Lists | KATE SPADE North America | KATE SPADE North America | KATE SPADE North America | Sanei | Globalluxe Kate Spade H K Limited | Globalluxe Kate Spade H K Limited | Globalluxe Kate Spade H K Limited | Globalluxe Kate Spade H K Limited | Globalluxe Kate Spade H K Limited | Globalluxe Kate Spade H K Limited | Globalluxe Kate Spade H K Limited | Globalluxe Kate Spade H K Limited | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | KATE SPADE International | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | HONG KONG | TAIWAN, PROVINCE OF CHINA | MACAU | SINGAPORE | MALAYSIA | INDONESIA | THAILAND | USD ($) | USD ($) | JPY (¥) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Distribution Rights | Customer Lists | KATE SPADE North America | |||||||||||||
item | item | item | item | item | item | item | USD ($) | USD ($) | USD ($) | ||||||||||||||||||||||||||||
ACQUISITION | |||||||||||||||||||||||||||||||||||||
Purchase price | $32,300,000 | $41,400,000 | ¥ 3,308,000,000 | ||||||||||||||||||||||||||||||||||
Working capital and other previously agreed adjustments | 2,300,000 | ||||||||||||||||||||||||||||||||||||
Amount funded by Company's new partner, Valiram Group to acquire operating assets | 1,500,000 | ||||||||||||||||||||||||||||||||||||
Number of stores operated | 6 | 1 | 2 | 2 | 3 | 2 | |||||||||||||||||||||||||||||||
Number of concessions operated | 1 | 1 | 1 | 1 | 6 | ||||||||||||||||||||||||||||||||
Remaining ownership interest acquired (as a percent) | 51.00% | ||||||||||||||||||||||||||||||||||||
Cash acquired | 400,000 | ||||||||||||||||||||||||||||||||||||
Fair value of the equity interest at the acquisition date | 47,200,000 | ||||||||||||||||||||||||||||||||||||
Carrying value of investment | 7,100,000 | ||||||||||||||||||||||||||||||||||||
Sales generated | 398,574,000 | 250,417,000 | 265,998,000 | 223,614,000 | 275,429,000 | 192,612,000 | 178,881,000 | 156,449,000 | 1,138,603,000 | 803,371,000 | 544,765,000 | 891,766,000 | 597,748,000 | 411,507,000 | 98,300,000 | 16,000,000 | |||||||||||||||||||||
Gain (loss) recognized on remeasurement of investments | 40,100,000 | -1,800,000 | 700,000 | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA generated | 146,971,000 | 77,109,000 | 41,740,000 | 143,009,000 | 70,250,000 | 24,924,000 | 5,700,000 | 500,000 | |||||||||||||||||||||||||||||
Goodwill recorded | 64,798,000 | 49,111,000 | 64,798,000 | 49,111,000 | 60,223,000 | 47,664,000 | 58,669,000 | 63,483,000 | 21,800,000 | 63,400,000 | |||||||||||||||||||||||||||
Goodwill recorded, deductible for income tax purposes | 0 | ||||||||||||||||||||||||||||||||||||
Assets acquired: | |||||||||||||||||||||||||||||||||||||
Current assets | 3,549,000 | 23,721,000 | |||||||||||||||||||||||||||||||||||
Property and equipment, net | 1,267,000 | 5,608,000 | |||||||||||||||||||||||||||||||||||
Goodwill and intangibles, net | 26,592,000 | 79,374,000 | |||||||||||||||||||||||||||||||||||
Other assets | 860,000 | 6,776,000 | |||||||||||||||||||||||||||||||||||
Total Assets Acquired | 32,268,000 | 115,479,000 | |||||||||||||||||||||||||||||||||||
Liabilities assumed: | |||||||||||||||||||||||||||||||||||||
Current liabilities | 8,834,000 | ||||||||||||||||||||||||||||||||||||
Non-current liabilities | 17,629,000 | ||||||||||||||||||||||||||||||||||||
Total liabilities assumed | 26,463,000 | ||||||||||||||||||||||||||||||||||||
Useful Life | 1 year 8 months 12 days | 3 years | 3 years | 3 years | |||||||||||||||||||||||||||||||||
Estimated Fair Value | 4,500,000 | 256,000 | 14,900,000 | 1,100,000 | |||||||||||||||||||||||||||||||||
Pro forma financial information | |||||||||||||||||||||||||||||||||||||
Net sales | 617,134,000 | ||||||||||||||||||||||||||||||||||||
Gross profit | 388,190,000 | ||||||||||||||||||||||||||||||||||||
Operating loss | -32,187,000 | ||||||||||||||||||||||||||||||||||||
Loss before benefit for income taxes | -54,251,000 | ||||||||||||||||||||||||||||||||||||
Loss from continuing operations | ($50,836,000) | ||||||||||||||||||||||||||||||||||||
Diluted loss per share from continuing operations | ($0.47) |
DISCONTINUED_OPERATIONS_Detail
DISCONTINUED OPERATIONS (Details) (USD $) | 12 Months Ended | ||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
Assets held for sale: | |||
Cash and cash equivalents | $163,000 | ||
Accounts receivable - trade, net | 41,709,000 | ||
Inventories, net | 80,503,000 | ||
Property and Equipment, net | 68,533,000 | ||
Other assets | 11,146,000 | ||
Assets held for sale | 202,054,000 | ||
Liabilities held for sale: | |||
Accounts payable | 52,977,000 | ||
Accrued expenses | 27,773,000 | ||
Other liabilities | 15,620,000 | ||
Liabilities held for sale | 96,370,000 | ||
Pretax charges related to disposal of discontinued operations | 130,000,000 | 143,400,000 | -12,200,000 |
Aftertax charges related to disposal of discontinued operations | 130,017,000 | 143,363,000 | -12,190,000 |
Results of discontinued operations | |||
Net sales | 209,519,000 | 980,488,000 | 961,950,000 |
Loss before provision for income taxes | -46,923,000 | -36,382,000 | -3,056,000 |
Provision for income taxes | 660,000 | 1,821,000 | 6,572,000 |
Loss from discontinued operations, net of income taxes | -47,583,000 | -38,203,000 | -9,628,000 |
Income (loss) on disposal of discontinued operations, net of income taxes | 130,017,000 | 143,363,000 | -12,190,000 |
Charges related to streamlining initiatives of the entity | $26,600,000 | $48,400,000 | $9,800,000 |
INVENTORIES_NET_Details
INVENTORIES, NET (Details) (USD $) | Jan. 03, 2015 | Dec. 28, 2013 |
In Thousands, unless otherwise specified | ||
INVENTORIES, NET | ||
Raw materials and work in process | $538 | $1,028 |
Finished goods | 157,703 | 183,606 |
Total inventories, net | $158,241 | $184,634 |
PROPERTY_AND_EQUIPMENT_NET_Det
PROPERTY AND EQUIPMENT, NET (Details) (USD $) | 12 Months Ended | 3 Months Ended | |||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Sep. 28, 2013 | Jun. 29, 2013 | |
item | |||||
PROPERTY AND EQUIPMENT, NET | |||||
Total property and equipment, gross | $333,212,000 | $438,071,000 | |||
Less: Accumulated depreciation and amortization | 159,140,000 | 289,000,000 | |||
Total property and equipment, net | 174,072,000 | 149,071,000 | |||
Additional disclosures | |||||
Depreciation and amortization expense on property and equipment | 38,300,000 | 28,000,000 | 22,300,000 | ||
Depreciation for property and equipment under capital leases | 800,000 | 1,900,000 | 2,900,000 | ||
Property and equipment under capital leases | 9,300,000 | 9,300,000 | |||
Sale Lease back Agreement for Ohio Facility | |||||
Additional disclosures | |||||
Proceeds from capital lease | 20,300,000 | ||||
Lease term | 10 years | ||||
Deferred gain associated with sale-leaseback | 9,500,000 | ||||
Sale Leaseback Agreement for North Bergen, New Jersey Office | |||||
Additional disclosures | |||||
Proceeds from capital lease | 8,700,000 | ||||
Lease term | 12 years | ||||
Number of renewal options under the sale-leaseback transaction | 2 | ||||
Term of options under the sale-leaseback transaction | 5 years | ||||
Land and buildings | |||||
PROPERTY AND EQUIPMENT, NET | |||||
Total property and equipment, gross | 9,300,000 | 9,300,000 | |||
Machinery and equipment | |||||
PROPERTY AND EQUIPMENT, NET | |||||
Total property and equipment, gross | 140,189,000 | 171,811,000 | |||
Furniture and fixtures | |||||
PROPERTY AND EQUIPMENT, NET | |||||
Total property and equipment, gross | 61,694,000 | 83,753,000 | |||
Leasehold improvements | |||||
PROPERTY AND EQUIPMENT, NET | |||||
Total property and equipment, gross | $122,029,000 | $173,207,000 |
GOODWILL_AND_INTANGIBLES_NET_D
GOODWILL AND INTANGIBLES, NET (Details) (USD $) | 12 Months Ended | 3 Months Ended | |||||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Jan. 03, 2015 | Apr. 05, 2014 | Sep. 28, 2013 | Feb. 05, 2014 | |
Amortized intangible assets: | |||||||
Gross carrying amount | $36,594,000 | $28,981,000 | $36,594,000 | ||||
Accumulated amortization | -21,167,000 | -13,203,000 | -21,167,000 | ||||
Net | 15,427,000 | 15,778,000 | 15,427,000 | ||||
Unamortized intangible assets: | |||||||
Owned trademarks | 74,900,000 | 74,900,000 | 74,900,000 | ||||
Total intangible assets, net | 90,327,000 | 90,678,000 | 90,327,000 | ||||
Goodwill | 64,798,000 | 49,111,000 | 60,223,000 | 64,798,000 | |||
Amortization expense of intangible assets | 8,200,000 | 5,700,000 | 2,100,000 | ||||
Estimated amortization expense for intangible assets | |||||||
Fiscal Year 2015 | 7,700,000 | 7,700,000 | |||||
Fiscal Year 2016 | 2,500,000 | 2,500,000 | |||||
Fiscal Year 2017 | 2,000,000 | 2,000,000 | |||||
Fiscal Year 2018 | 1,300,000 | 1,300,000 | |||||
Fiscal Year 2019 | 400,000 | 400,000 | |||||
Changes in carrying amount of goodwill | |||||||
Balance at beginning of the period | 49,111,000 | 60,223,000 | 49,111,000 | ||||
Acquired | 21,836,000 | ||||||
Translation adjustment | -6,149,000 | -11,112,000 | |||||
Balance at end of the period | 64,798,000 | 49,111,000 | 60,223,000 | 64,798,000 | |||
KATE SPADE International | |||||||
Unamortized intangible assets: | |||||||
Goodwill | 63,483,000 | 47,664,000 | 63,483,000 | 21,800,000 | |||
Changes in carrying amount of goodwill | |||||||
Balance at beginning of the period | 47,664,000 | 58,669,000 | 47,664,000 | 21,800,000 | |||
Acquired | 21,836,000 | ||||||
Translation adjustment | -6,017,000 | -11,005,000 | |||||
Balance at end of the period | 63,483,000 | 47,664,000 | 63,483,000 | 21,800,000 | |||
Adelington Design Group | |||||||
Unamortized intangible assets: | |||||||
Goodwill | 1,315,000 | 1,447,000 | 1,315,000 | ||||
Changes in carrying amount of goodwill | |||||||
Balance at beginning of the period | 1,447,000 | 1,554,000 | 1,447,000 | ||||
Translation adjustment | -132,000 | -107,000 | |||||
Balance at end of the period | 1,315,000 | 1,447,000 | 1,315,000 | ||||
Owned trademarks | |||||||
Amortized intangible assets: | |||||||
Gross carrying amount | 467,000 | 2,000,000 | 467,000 | ||||
Accumulated amortization | -467,000 | -100,000 | -467,000 | ||||
Net | 1,900,000 | ||||||
Unamortized intangible assets: | |||||||
Non-cash impairment charge | 1,500,000 | 1,500,000 | 1,500,000 | 3,300,000 | |||
Customer relationships | |||||||
Amortized intangible assets: | |||||||
Gross carrying amount | 7,422,000 | 7,273,000 | 7,422,000 | ||||
Accumulated amortization | -4,769,000 | -4,022,000 | -4,769,000 | ||||
Net | 2,653,000 | 3,251,000 | 2,653,000 | ||||
Customer relationships | Weighted Average | |||||||
Amortized intangible assets: | |||||||
Amortization Period | 11 years | ||||||
Merchandising rights | |||||||
Amortized intangible assets: | |||||||
Gross carrying amount | 12,012,000 | 6,087,000 | 12,012,000 | ||||
Accumulated amortization | -4,108,000 | -2,595,000 | -4,108,000 | ||||
Net | 7,904,000 | 3,492,000 | 7,904,000 | ||||
Merchandising rights | Weighted Average | |||||||
Amortized intangible assets: | |||||||
Amortization Period | 4 years | ||||||
Reacquired rights | |||||||
Amortized intangible assets: | |||||||
Gross carrying amount | 14,371,000 | 11,299,000 | 14,371,000 | ||||
Accumulated amortization | -9,604,000 | -4,394,000 | -9,604,000 | ||||
Net | 4,767,000 | 6,905,000 | 4,767,000 | ||||
Reacquired rights | Weighted Average | |||||||
Amortized intangible assets: | |||||||
Amortization Period | 2 years | ||||||
Other | |||||||
Amortized intangible assets: | |||||||
Gross carrying amount | 2,322,000 | 2,322,000 | 2,322,000 | ||||
Accumulated amortization | -2,219,000 | -2,092,000 | -2,219,000 | ||||
Net | $103,000 | $230,000 | $103,000 | ||||
Other | Weighted Average | |||||||
Amortized intangible assets: | |||||||
Amortization Period | 4 years |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES (Details) (USD $) | Jan. 03, 2015 | Dec. 28, 2013 |
In Thousands, unless otherwise specified | ||
ACCRUED EXPENSES | ||
Lease obligations | $28,152 | $34,142 |
Payroll, bonuses and other employment related obligations | 27,446 | 45,971 |
Streamlining initiatives | 13,633 | 17,829 |
Advertising | 11,026 | 9,883 |
Taxes, other than taxes on income | 9,275 | 13,762 |
Deferred income | 7,742 | 6,322 |
Insurance related | 6,109 | 7,739 |
Employee benefits | 5,354 | 8,134 |
Accrued Disposition Costs | 2,325 | 10,179 |
Interest | 355 | 8,375 |
Other | 39,509 | 37,842 |
Total | $150,926 | $200,178 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
Income (Loss) before benefit for income taxes | |||
United States | ($6,165,000) | ($34,370,000) | ($47,259,000) |
International | -1,488,000 | -2,358,000 | -10,389,000 |
Loss Before Benefit for Income Taxes | -7,653,000 | -36,728,000 | -57,648,000 |
Current: | |||
Federal | -77,366,000 | 686,000 | 3,344,000 |
Foreign | 809,000 | -2,326,000 | 1,254,000 |
State and local | -7,472,000 | 742,000 | -3,175,000 |
Total Current | -84,029,000 | -898,000 | 1,423,000 |
Deferred: | |||
Federal | 1,883,000 | -626,000 | -4,692,000 |
Foreign | -2,722,000 | -437,000 | -691,000 |
State and local | 489,000 | -2,602,000 | -1,001,000 |
Total Deferred | -350,000 | -3,665,000 | -6,384,000 |
Income Tax Expense (Benefit), Total | -84,379,000 | -4,563,000 | -4,961,000 |
Reduction in uncertain tax positions | 87,400,000 | ||
Effective income tax rate differed from the statutory federal income tax rate | |||
Federal tax at statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
State and local income taxes, net of federal benefit (as a percent) | 97.60% | 7.20% | 8.40% |
Officer and share-based compensation (as a percent) | 226.40% | ||
Change in valuation allowance (as a percent) | -185.70% | -13.20% | -41.30% |
Unrecognized tax benefits (as a percent) | 1010.90% | -1.90% | -6.40% |
Rate differential on foreign income (as a percent) | -46.80% | -15.00% | -5.90% |
Gain on acquisition of subsidiary (as a percent) | 29.70% | ||
Conversion of debt to equity (as a percent) | -1.50% | -3.40% | |
Indefinite-lived intangibles (as a percent) | -31.00% | 4.80% | -4.60% |
Other, net (as a percent) | -3.90% | -3.00% | -3.00% |
Effective income tax rate (as a percent) | 1102.50% | 12.40% | 8.50% |
Deferred tax assets: | |||
Inventory valuation | 9,212,000 | 6,088,000 | |
Streamlining initiatives | 10,003,000 | ||
Deferred compensation | 2,053,000 | 3,009,000 | |
Nondeductible accruals | 10,363,000 | 83,661,000 | |
Share-based compensation | 11,827,000 | 7,322,000 | |
Net operating loss carryforward | 300,825,000 | 249,399,000 | |
Tax credit carryforward | 34,000 | 53,495,000 | |
Goodwill | 5,603,000 | 6,885,000 | |
Capital loss carryforward | 68,839,000 | 72,788,000 | |
Other | 15,906,000 | 19,339,000 | |
Total deferred tax assets | 424,662,000 | 511,989,000 | |
Deferred tax liabilities: | |||
Trademarks and other intangibles | -17,622,000 | -16,636,000 | |
Property and equipment | -5,632,000 | -12,633,000 | |
Other | -2,746,000 | -1,584,000 | |
Total deferred tax liabilities | -26,000,000 | -30,853,000 | |
Less: Valuation allowance | -415,173,000 | -497,485,000 | |
Net deferred tax liability | -16,511,000 | -16,349,000 | |
Adjustment in deferred tax assets | $44,700,000 |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 12 Months Ended | |
Jan. 03, 2015 | Dec. 28, 2013 | |
Carryforwards | ||
Net operating loss carryforwards | $787,600,000 | |
Adjustments effected due to tax deductions | 115,000,000 | |
Net operating loss carryforwards | ||
Deferred tax assets related to net operating loss carryforwards for domestic state and local income tax purpose | 53,700,000 | |
Deferred tax assets related to net operating loss carryforwards for foreign income tax purpose | 11,700,000 | |
Total deferred tax assets related to net operating loss carryforwards | 300,825,000 | 249,399,000 |
Deferred tax assets related to net operating loss carryforwards for federal income tax purpose | 235,400,000 | |
Valuation allowance | 415,173,000 | 497,485,000 |
Total decrease in the valuation allowance | 82,300,000 | |
Federal | ||
Carryforwards | ||
Net operating loss carryforwards | 275,600,000 | |
Adjustments effected due to tax deductions | 40,200,000 | |
Net operating loss carryforwards | ||
Operating loss carryforwards | $47,000,000 |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | 12 Months Ended | ||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
INCOME TAXES | |||
Amount of unremitted earnings | $0 | ||
Changes in the amounts of unrecognized tax benefits | |||
Unrecognized Tax Benefits, Beginning Balance | 84,108,000 | 85,999,000 | 103,982,000 |
Increases from prior period positions | 32,000 | 1,436,000 | 535,000 |
Decreases from prior period positions | -4,348,000 | -630,000 | |
Increases from current period positions | 2,000,000 | 37,000 | |
Decreases relating to settlements with taxing authorities | -153,000 | -17,765,000 | |
Reduction due to the lapse of the applicable statute of limitations | -74,916,000 | -826,000 | -160,000 |
Unrecognized Tax Benefits, Ending Balance | 9,224,000 | 84,108,000 | 85,999,000 |
Unrecognized tax benefits | |||
Increase (decrease) in accrual for interest | 10,600,000 | 2,500,000 | 3,300,000 |
Increase (decrease) in accrual for penalties | 1,600,000 | 100,000 | -200,000 |
Accrual for interest on income taxes | 1,800,000 | 12,400,000 | |
Accrual for penalties on income taxes | 1,100,000 | 2,700,000 | |
Uncertain tax positions that would affect effective tax rate, if recognized | 9,200,000 | ||
Expected reduction in the liability for unrecognized tax benefits, inclusive of interest & penalties, within the next 12 months, low end of the range | 1,400,000 | ||
Expected reduction in the liability for unrecognized tax benefits, inclusive of interest & penalties, within the next 12 months, high end of the range | $3,600,000 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | 3 Months Ended | ||
In Millions, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Jun. 29, 2013 |
item | ||||
Leases | ||||
Rental expense | $87 | $54.30 | $33 | |
Operating leases | ||||
2015 | 65.4 | |||
2016 | 60.9 | |||
2017 | 59 | |||
2018 | 55.4 | |||
2019 | 50.7 | |||
Thereafter | 194.9 | |||
Total | 486.3 | |||
Capital leases | ||||
2015 | 1.9 | |||
2016 | 2.1 | |||
2017 | 2.1 | |||
2018 | 2.2 | |||
2019 | 2.2 | |||
Thereafter | 13.1 | |||
Total | 23.6 | |||
Minimum non-cancelable sublease rentals | 33.3 | |||
Liz Claiborne Canada Retail Stores | ||||
Capital leases | ||||
Number of store leases assigned to third parties | 277 | |||
Number of leases for which the entity is secondarily liable | 185 | |||
Future aggregate payments under disposition leases | $152 | |||
Sale Leaseback Agreement for North Bergen, New Jersey Office | ||||
Capital leases | ||||
Lease term | 12 years | |||
Number of renewal options under the sale-leaseback transaction | 2 | |||
Term of options under the sale-leaseback transaction | 5 years |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details 2) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Jan. 03, 2015 |
Other | |
Short-term commitments for purchase of raw materials and production of finished goods | 156.4 |
Account receivable | Credit concentration | Nordstrom Inc. and Lane Crawford International Ltd. | |
Other | |
Concentration Risk (as a percent) | 39.60% |
DEBT_AND_LINES_OF_CREDIT_Detai
DEBT AND LINES OF CREDIT (Details) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 0 Months Ended | |||||||||||||||||||||||||||||||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Jun. 29, 2013 | Sep. 28, 2013 | Mar. 30, 2013 | Dec. 28, 2013 | Dec. 29, 2012 | Apr. 14, 2014 | Jul. 12, 2012 | Apr. 07, 2011 | Jul. 05, 2014 | Dec. 29, 2012 | Jan. 03, 2015 | 12-May-14 | Apr. 14, 2014 | Jul. 12, 2012 | Jun. 30, 2012 | Jun. 08, 2012 | Apr. 07, 2011 | 31-May-14 | Jan. 03, 2015 | Dec. 28, 2013 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | Apr. 08, 2011 | Jan. 03, 2015 | Dec. 28, 2013 | Jun. 29, 2013 | 12-May-14 | Apr. 10, 2014 | Jan. 03, 2015 | Apr. 10, 2014 | Apr. 10, 2014 | Apr. 10, 2014 | Apr. 10, 2014 | Apr. 10, 2014 | Apr. 10, 2014 | Apr. 10, 2014 | |
USD ($) | USD ($) | USD ($) | Sale Leaseback Agreement for North Bergen, New Jersey Office | Convertible Notes Payable | Convertible Notes Payable | Convertible Notes Payable | Convertible Notes Payable | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | 10.5% Senior Secured Notes, due April 2019 | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Letter of Credit [Member] | Standby letters of credit | Multi-currency revolving credit line | Swingline revolving credit line | Euro Currency Credit Line [Member] | Euro Currency Credit Line [Member] | Euro Currency Credit Line [Member] | 5.0% Euro Notes, due July 2013 | Capital lease obligations | Capital lease obligations | Capital lease obligations | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | Consolidated Net Total Debt Ratio Less than 2.75 To1.0 [Member] | Consolidated Net Total Debt Ratio Less than 2.75 To1.0 [Member] | Consolidated Net Total Debt Ratio Less than 2.25 To1.0 [Member] | Consolidated Net Total Debt Ratio Less than 2.25 To1.0 [Member] | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Maximum | USD ($) | USD ($) | USD ($) | USD ($) | Minimum | Maximum | EUR (€) | USD ($) | USD ($) | Sale Leaseback Agreement for North Bergen, New Jersey Office | USD ($) | USD ($) | USD ($) | USD ($) | Minimum | Maximum | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | Term Loan credit facility, due April 2021 | ||||||||
item | USD ($) | USD ($) | |||||||||||||||||||||||||||||||||||||||||||
DEBT AND LINES OF CREDIT | |||||||||||||||||||||||||||||||||||||||||||||
Interest rate (as a percent) | 10.50% | 10.50% | 10.50% | 5.00% | |||||||||||||||||||||||||||||||||||||||||
Total debt | $410,743,000 | $394,201,000 | $382,209,000 | $6,000,000 | $2,997,000 | $8,585,000 | $8,995,000 | $396,158,000 | |||||||||||||||||||||||||||||||||||||
Less: Short-term borrowings | 10,459,000 | 3,407,000 | |||||||||||||||||||||||||||||||||||||||||||
Long-term debt | 400,284,000 | 390,794,000 | |||||||||||||||||||||||||||||||||||||||||||
Principal amount of debt | 52,900,000 | 220,000,000 | 400,000,000 | ||||||||||||||||||||||||||||||||||||||||||
Aggregate principal amount | 152,000,000 | 400,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Unamortized debt discount | 1,800,000 | ||||||||||||||||||||||||||||||||||||||||||||
Amortization payments | 4,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Debt conversion, aggregate principal amount | 8,800,000 | 11,200,000 | 19,900,000 | 49,400,000 | |||||||||||||||||||||||||||||||||||||||||
Number of shares of common stock converted from convertible notes | 2,462,509 | 3,171,670 | 5,634,179 | 14,197,106 | |||||||||||||||||||||||||||||||||||||||||
Pretax loss on the extinguishment of debt | -16,914,000 | -1,707,000 | -9,754,000 | 1,700,000 | 4,600,000 | 16,900,000 | 5,100,000 | ||||||||||||||||||||||||||||||||||||||
Net proceeds used to redeem the Company's remaining outstanding debt | 354,800,000 | ||||||||||||||||||||||||||||||||||||||||||||
Net proceeds from issuance of debt | 160,600,000 | 212,900,000 | |||||||||||||||||||||||||||||||||||||||||||
Repurchase of aggregate principal amount of debt | 334,800,000 | 37,200,000 | 128,500,000 | 392,000,000 | |||||||||||||||||||||||||||||||||||||||||
Repurchase price as percentage of principal amount, plus accrued and unpaid interest | 103.00% | 105.25% | |||||||||||||||||||||||||||||||||||||||||||
Offering of additional notes as a percentage of par value | 108.25% | ||||||||||||||||||||||||||||||||||||||||||||
Quarterly amortization payments | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Variable rate basis | LIBOR | LIBOR | |||||||||||||||||||||||||||||||||||||||||||
Floor rate (as a percent) | 1.00% | ||||||||||||||||||||||||||||||||||||||||||||
Spread on variable rate basis | 1.50% | 2.00% | 3.00% | ||||||||||||||||||||||||||||||||||||||||||
Additional incremental overall limit | 100,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Consolidated net total secured debt ratio used for determining additional amount | 1 | 3.75 | |||||||||||||||||||||||||||||||||||||||||||
Refinancing term | 6 months | ||||||||||||||||||||||||||||||||||||||||||||
Penalty (as a percentage) | 1.00% | ||||||||||||||||||||||||||||||||||||||||||||
Amount required to be prepaid as a percentage of Company's excess cash flow | 50.00% | 25.00% | 0.00% | ||||||||||||||||||||||||||||||||||||||||||
Consolidated net total secured debt ratio | 2.75 | 2.25 | |||||||||||||||||||||||||||||||||||||||||||
Available capacity under amended facility | 200,000,000 | 200,000,000 | 125,000,000 | 40,000,000 | 35,000,000 | 30,000,000 | |||||||||||||||||||||||||||||||||||||||
Option to increase borrowing under certain specified conditions | 100,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Number of borrowing options under amended facility | 2 | ||||||||||||||||||||||||||||||||||||||||||||
Availability for number of consecutive business days to apply cash collections to reduce outstanding borrowings, maximum availability under credit facility | 3 days | ||||||||||||||||||||||||||||||||||||||||||||
Fixed charge coverage ratio | 1 | ||||||||||||||||||||||||||||||||||||||||||||
Trailing number of quarters over which fixed charge coverage ratio is required to be maintained | 4 | ||||||||||||||||||||||||||||||||||||||||||||
Availability for number of consecutive business days for which specified fixed charge coverage ratio has to be maintained | 3 days | ||||||||||||||||||||||||||||||||||||||||||||
Availability below which specified fixed charge coverage ratio has to be maintained | 15,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Covenant to apply cash collections to reduce outstanding borrowings, maximum availability under credit facility | 20,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Covenant to apply cash collections to reduce outstanding borrowings, maximum availability under credit facility as a percentage of the lesser of the borrowing base and aggregate commitments | 12.50% | ||||||||||||||||||||||||||||||||||||||||||||
Minimum aggregate borrowing availability as a percentage of commitments then in effect below which a specified fixed charge coverage ratio has to be maintained | 10.00% | ||||||||||||||||||||||||||||||||||||||||||||
Availability under amended facility | |||||||||||||||||||||||||||||||||||||||||||||
Total Facility | 200,000,000 | 200,000,000 | 125,000,000 | 40,000,000 | 35,000,000 | 30,000,000 | |||||||||||||||||||||||||||||||||||||||
Borrowing Base | 249,832,000 | ||||||||||||||||||||||||||||||||||||||||||||
Letters of Credit Issued | 13,140,000 | ||||||||||||||||||||||||||||||||||||||||||||
Available Capacity | 180,860,000 | ||||||||||||||||||||||||||||||||||||||||||||
Excess Capacity | 160,860,000 | ||||||||||||||||||||||||||||||||||||||||||||
Outstanding Borrowings | 6,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Sale price of office building under sale-leaseback agreement | 8,700,000 | 8,700,000 | |||||||||||||||||||||||||||||||||||||||||||
Lease term | 12 years | 12 years | |||||||||||||||||||||||||||||||||||||||||||
Total lease payments under sale-leaseback agreement | 8,600,000 | 9,000,000 | 26,900,000 | ||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings included in capital lease obligations | $500,000 | $400,000 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||
Sep. 28, 2013 | Jan. 03, 2015 | Apr. 05, 2014 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
Assumptions | ||||||
Discount rate (as a percent) | 3.50% | |||||
Market royalty rate (as a percent) | 14.00% | |||||
Long term growth rate (as a percent) | 2.00% | |||||
Owned trademarks | ||||||
Assumptions | ||||||
Non-cash impairment charge | 3,300,000 | $1,500,000 | $1,500,000 | $1,500,000 | ||
Fair value on non-recurring basis | ||||||
Assets and liabilities measured at fair value | ||||||
Property and equipment | 10,358,000 | 10,358,000 | 1,480,000 | 26,413,000 | ||
Intangibles, net | 1,533,000 | 1,533,000 | 3,300,000 | |||
Other assets | 6,109,000 | |||||
Fair value on non-recurring basis | Fair Value Measured and Recorded at Reporting Date Using: Level 3 | ||||||
Assets and liabilities measured at fair value | ||||||
Property and equipment | 4,127,000 | 4,127,000 | 15,706,000 | 22,710,000 | ||
Intangibles, net | 1,900,000 | |||||
Fair value on non-recurring basis | Net Carrying Value | ||||||
Assets and liabilities measured at fair value | ||||||
Property and equipment | 4,127,000 | 4,127,000 | 15,706,000 | 22,710,000 | ||
Intangibles, net | 1,900,000 | |||||
Fair value on recurring basis | Fair Value Measured and Recorded at Reporting Date Using: Level 2 | ||||||
Assets and liabilities measured at fair value | ||||||
Financial Assets: Derivatives | $3,193,000 | $3,193,000 | $1,701,000 |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (USD $) | 12 Months Ended | |||
Jan. 03, 2015 | Dec. 28, 2013 | Jun. 30, 2012 | Apr. 07, 2011 | |
Lucky Brand Note | ||||
Fair values and carrying values of debt instruments | ||||
Carrying value | $89,000,000 | |||
Initial principal payment | 85,000,000 | |||
Accrued payment in kind | 4,000,000 | |||
Lucky Brand Note | Minimum | ||||
Fair values and carrying values of debt instruments | ||||
Fair value | 79,000,000 | |||
Lucky Brand Note | Maximum | ||||
Fair values and carrying values of debt instruments | ||||
Fair value | 89,000,000 | |||
Convertible Notes Payable | ||||
Fair values and carrying values of debt instruments | ||||
Long-term Debt, Fair Value | 384,786,000 | |||
Carrying value | 396,158,000 | |||
Stated Percentage | 10.50% | |||
10.5% Senior Secured Notes, due April 2019 | ||||
Fair values and carrying values of debt instruments | ||||
Long-term Debt, Fair Value | 400,830,000 | |||
Carrying value | 382,209,000 | |||
Stated Percentage | 10.50% | 10.50% | ||
Carrying value | 152,000,000 | |||
Revolving Credit Facility [Member] | ||||
Fair values and carrying values of debt instruments | ||||
Long-term Debt, Fair Value | 6,000,000 | 2,997,000 | ||
Carrying value | $6,000,000 | 2,997,000 |
DERIVATIVE_INSTRUMENTS_Details
DERIVATIVE INSTRUMENTS (Details) | 12 Months Ended | ||||||||||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Jan. 03, 2015 | Dec. 28, 2013 | Jan. 03, 2015 | Dec. 28, 2013 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | Jan. 03, 2015 | |
Forward Contracts | Forward Contracts | Forward Contracts | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | Foreign Exchange Contract | |
USD ($) | USD ($) | USD ($) | Designated as Hedging Instrument | Designated as Hedging Instrument | Not Designated as Hedging Instrument | Not Designated as Hedging Instrument | Forward Contracts | Forward Contracts | Forward Contracts | Forward Contracts | |
USD ($) | USD ($) | USD ($) | USD ($) | Designated as Hedging Instrument | Designated as Hedging Instrument | Not Designated as Hedging Instrument | Not Designated as Hedging Instrument | ||||
Short | Short | Short | Short | ||||||||
USD ($) | JPY (¥) | USD ($) | JPY (¥) | ||||||||
DERIVATIVE INSTRUMENTS | |||||||||||
Forward contracts to sell foreign currency in exchange of U.S. dollars | $39,100,000 | ¥ 4,300,000,000 | $33,400,000 | ¥ 4,000,000,000 | |||||||
Transaction (losses) gains related to derivative instruments reflected within Other expense, net | 4,500,000 | 8,500,000 | 1,000,000 | ||||||||
Asset Derivatives | |||||||||||
Asset Derivatives, Notional amount | 39,100,000 | 21,050,000 | 33,350,000 | 38,403,000 | |||||||
Asset Derivatives, Fair value | $3,066,000 | $1,317,000 | $127,000 | $384,000 |
DERIVATIVE_INSTRUMENTS_Details1
DERIVATIVE INSTRUMENTS (Details 2) (Foreign Exchange Contract, USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 |
Foreign Exchange Contract | ||
Derivative instruments, Gain (Loss) | ||
Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion) | $2,854 | $2,911 |
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Operations (Effective Portion) | $1,161 | $1,326 |
STREAMLINING_INITIATIVES_Detai
STREAMLINING INITIATIVES (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 03, 2015 | Oct. 04, 2014 | Jul. 05, 2014 | Apr. 05, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
STREAMLINING INITIATIVES | |||||||||||
Expected payment of accrued streamlining costs in the next 12 months | $7,800,000 | $7,800,000 | |||||||||
Expected payment of accrued streamlining costs classified as discontinued operations in the next 12 months | 5,900,000 | ||||||||||
Roll forward of liability for streamlining initiatives | |||||||||||
Balance at the beginning of the period | 16,894,000 | 24,566,000 | 16,894,000 | 24,566,000 | 56,331,000 | ||||||
provision | 7,100,000 | 1,100,000 | 4,900,000 | 28,900,000 | 7,300,000 | -1,000,000 | 1,400,000 | 2,900,000 | 41,952,000 | 10,601,000 | 43,193,000 |
asset write-downs | -6,367,000 | -1,744,000 | -27,783,000 | ||||||||
Translation difference | -3,000 | 23,000 | 83,000 | ||||||||
Spending | -42,579,000 | -16,552,000 | -47,258,000 | ||||||||
Balance at the end of the period | 9,897,000 | 16,894,000 | 9,897,000 | 16,894,000 | 24,566,000 | ||||||
Share-based compensation | 37,270,000 | 7,269,000 | 6,911,000 | ||||||||
Payroll and Related Costs | |||||||||||
Roll forward of liability for streamlining initiatives | |||||||||||
Balance at the beginning of the period | 3,036,000 | 4,559,000 | 3,036,000 | 4,559,000 | 7,352,000 | ||||||
provision | 33,729,000 | 5,657,000 | 9,158,000 | ||||||||
Translation difference | -7,000 | 25,000 | |||||||||
Spending | -34,685,000 | -7,173,000 | -11,976,000 | ||||||||
Balance at the end of the period | 2,080,000 | 3,036,000 | 2,080,000 | 3,036,000 | 4,559,000 | ||||||
Contract Termination | |||||||||||
Roll forward of liability for streamlining initiatives | |||||||||||
Balance at the beginning of the period | 2,151,000 | 4,243,000 | 2,151,000 | 4,243,000 | 18,012,000 | ||||||
provision | 1,540,000 | 6,000 | 2,681,000 | ||||||||
Translation difference | 12,000 | 49,000 | |||||||||
Spending | -2,704,000 | -2,110,000 | -16,499,000 | ||||||||
Balance at the end of the period | 987,000 | 2,151,000 | 987,000 | 2,151,000 | 4,243,000 | ||||||
Asset Write Downs and Disposals | |||||||||||
Roll forward of liability for streamlining initiatives | |||||||||||
provision | 6,367,000 | 1,744,000 | 27,783,000 | ||||||||
asset write-downs | -6,367,000 | -1,744,000 | -27,783,000 | ||||||||
Other Restructuring | |||||||||||
Roll forward of liability for streamlining initiatives | |||||||||||
Balance at the beginning of the period | 11,707,000 | 15,764,000 | 11,707,000 | 15,764,000 | 30,967,000 | ||||||
provision | 316,000 | 3,194,000 | 3,571,000 | ||||||||
Translation difference | -3,000 | 18,000 | 9,000 | ||||||||
Spending | -5,190,000 | -7,269,000 | -18,783,000 | ||||||||
Balance at the end of the period | 6,830,000 | 11,707,000 | 6,830,000 | 11,707,000 | 15,764,000 | ||||||
Accrued withdrawal liability | 6,800,000 | 6,800,000 | |||||||||
Payroll and Related Costs and Spending | |||||||||||
Roll forward of liability for streamlining initiatives | |||||||||||
Share-based compensation | $17,300,000 | $2,800,000 |
STREAMLINING_INITIATIVES_Detai1
STREAMLINING INITIATIVES (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Jan. 03, 2015 | Oct. 04, 2014 | Jul. 05, 2014 | Apr. 05, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
STREAMLINING INITIATIVES | |||||||||||
Expenses associated with streamlining actions | $7,100 | $1,100 | $4,900 | $28,900 | $7,300 | ($1,000) | $1,400 | $2,900 | $41,952 | $10,601 | $43,193 |
KATE SPADE North America | |||||||||||
STREAMLINING INITIATIVES | |||||||||||
Expenses associated with streamlining actions | 7,319 | 791 | 2,519 | ||||||||
KATE SPADE International | |||||||||||
STREAMLINING INITIATIVES | |||||||||||
Expenses associated with streamlining actions | 1,567 | ||||||||||
Adelington Design Group | |||||||||||
STREAMLINING INITIATIVES | |||||||||||
Expenses associated with streamlining actions | 982 | 272 | 3,112 | ||||||||
Other | |||||||||||
STREAMLINING INITIATIVES | |||||||||||
Expenses associated with streamlining actions | $32,084 | $9,538 | $37,562 |
SHAREBASED_COMPENSATION_Detail
SHARE-BASED COMPENSATION (Details) (USD $) | 12 Months Ended | ||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
SHARE-BASED COMPENSATION | |||
Share-based compensation expense | $37,300,000 | $7,300,000 | $6,900,000 |
Payroll and Related Costs and Spending | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expense | 17,300,000 | 2,800,000 | |
2005 Plan | |||
SHARE-BASED COMPENSATION | |||
Authorized for issuance of common stock | 5,000,000 | ||
Shares available for future grant | 6,800,000 | ||
2011 Plan | |||
SHARE-BASED COMPENSATION | |||
Authorized for issuance of common stock | 3,000,000 | ||
Shares available for future grant | 6,800,000 | ||
2011 Plan | Maximum | |||
SHARE-BASED COMPENSATION | |||
Number of shares authorized to grants of restricted stock, restricted stock units, unrestricted stock and performance shares | 1,500,000 | ||
2013 Plan | |||
SHARE-BASED COMPENSATION | |||
Authorized for issuance of common stock | 9,500,000 | ||
Shares available for future grant | 6,800,000 | ||
Employee Stock Option | |||
SHARE-BASED COMPENSATION | |||
Holding period of shares, if previously acquired shares are tendered as payment | 6 months | ||
Vesting period | 3 years | ||
Valuation Assumptions: | |||
Weighted-average fair value of options granted (in dollars per share) | $10.32 | $6.04 | |
Expected volatility (as a percent) | 59.50% | 63.30% | |
Weighted-average volatility (as a percent) | 59.50% | 63.30% | |
Expected term (in years) | 4 years 10 months 24 days | 5 years 1 month 6 days | |
Risk-free rate, minimum (as a percent) | 0.10% | 0.20% | |
Risk-free rate, maximum (as a percent) | 3.90% | 3.80% | |
Expected annual forfeiture (as a percent) | 12.40% | 13.50% | |
Shares | |||
Outstanding at the beginning of the period (in shares) | 5,166,375 | ||
Exercised (in shares) | -4,010,331 | ||
Cancelled/expired (in shares) | -125,075 | ||
Outstanding at end of the period (in shares) | 1,030,969 | 5,166,375 | |
Vested or expected to vest at the end of the period (in shares) | 1,020,053 | ||
Exercisable at the end of the period (in shares) | 537,404 | ||
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $11.26 | ||
Exercised (in dollars per share) | $10.46 | ||
Cancelled/expired (in dollars per share) | $37.21 | ||
Outstanding at the end of the period (in dollars per share) | $11.25 | $11.26 | |
Vested or expected to vest at the end of the period (in dollars per share) | $11.16 | ||
Exercisable at the end of the period (in dollars per share) | $6.85 | ||
Weighted Average Remaining Contractual Term | |||
Outstanding at the end of the period | 3 years 10 months 24 days | 3 years 4 months 24 days | |
Vested or expected to vest at the end of the period | 3 years 10 months 24 days | ||
Exercisable at the end of the period | 3 years 1 month 6 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the beginning of the period (in dollars) | 108,498,000 | ||
Exercised (in dollars) | 98,734,000 | ||
Outstanding at the end of the period (in dollars) | 21,613,000 | 108,498,000 | |
Vested or expected to vest at the end of the period (in dollars) | 21,477,000 | ||
Exercisable at the end of the period (in dollars) | 13,628,000 | ||
Intrinsic value of options exercised (in dollars per share) | $24.62 | $16.46 | |
Additional disclosure | |||
Nonvested stock options outstanding (in shares) | 500,000 | ||
Weighted average grant date fair value per award for nonvested stock options (in dollars per share) | $16.03 | ||
Total unrecognized compensation cost related to nonvested stock options granted | 600,000 | ||
Weighted average recognition period of unrecognized stock-based compensation expense | 9 months 18 days | ||
Fair value of shares vested under stock option plans | $3,200,000 | $4,900,000 | $4,100,000 |
Employee Stock Option | Minimum | |||
SHARE-BASED COMPENSATION | |||
Contractual term | 7 years | ||
Employee Stock Option | Maximum | |||
SHARE-BASED COMPENSATION | |||
Contractual term | 10 years |
SHAREBASED_COMPENSATION_Detail1
SHARE-BASED COMPENSATION (Details 2) (USD $) | 12 Months Ended | ||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
Valuation Assumptions: | |||
Weighted-average fair value (in dollars per share) | $50.24 | ||
Historic volatility (as a percent) | 52.30% | ||
Risk-free rate (as a percent) | 1.68% | ||
Weighted-average expected annual forfeiture (as a percent) | 4.80% | ||
Weighted Average Grant Date Fair Value | |||
Nonvested stock at the end of the period (in dollars per share) | $50.24 | ||
Domestic and international employees | |||
SHARE-BASED COMPENSATION | |||
Percentage of shares vesting on the second anniversary from the date of grant | 50.00% | ||
Percentage of shares vesting on the third anniversary from the date of grant | 50.00% | ||
Restricted Stock | |||
Valuation Assumptions: | |||
Weighted-average fair value (in dollars per share) | $45.39 | $14.93 | |
Percentage of shares transferrable on first anniversary from date of grant | 25.00% | ||
Percentage of shares transferrable on the third anniversary from the date of grant | 50.00% | ||
Shares | |||
Nonvested stock at the beginning of the period (in shares) | 1,035,250 | ||
Granted (in shares) | 1,637,778 | ||
Vested (in shares) | -406,500 | ||
Cancelled (in shares) | -546,954 | ||
Nonvested stock at the end of the period (in shares) | 1,719,574 | 1,035,250 | |
Expected to vest at the end of the period (in shares) | 1,492,428 | ||
Weighted Average Grant Date Fair Value | |||
Nonvested stock at the beginning of the period (in dollars per share) | $14.93 | ||
Granted (in dollars per share) | $48.05 | $21.79 | $11.91 |
Vested (in dollars per share) | $17.01 | ||
Cancelled (in dollars per share) | $16.80 | ||
Nonvested stock at the end of the period (in dollars per share) | $45.39 | $14.93 | |
Expected to vest at the end of the period (in dollars per share) | $45.42 | ||
Additional disclosures | |||
Total unrecognized compensation cost related to nonvested stock awards granted under restricted stock plans | $48,600,000 | ||
Weighted average recognition period of unrecognized stock-based compensation expense | 2 years 8 months 12 days | ||
Fair value of shares vested under restricted stock plans | 6,900,000 | 1,600,000 | 2,300,000 |
Restricted Stock | Non-employee directors | |||
Valuation Assumptions: | |||
Value of shares granted annually | 100,000 | ||
Restricted Stock | Chairman of the Board | |||
Valuation Assumptions: | |||
Value of shares granted annually | 150,000 | ||
Staking Grants | |||
SHARE-BASED COMPENSATION | |||
Aggregate grant date value | 54,800,000 | ||
Percentage of shares vesting on the third anniversary from the date of grant | 50.00% | ||
Share Based Compensation Arrangement by Share Based Payment Award Percentage Vesting on Fifth Anniversary from Date of Grant | 50.00% | ||
Staking Grants | Key Executives | |||
SHARE-BASED COMPENSATION | |||
Aggregate grant date value | 64,900,000 | ||
Shares | |||
Granted (in shares) | 1,291,487 | ||
Annual Long Term Incentive Awards | |||
SHARE-BASED COMPENSATION | |||
Aggregate grant date value | 10,100,000 | ||
Percentage of shares vesting on the second anniversary from the date of grant | 50.00% | ||
Annual Long Term Incentive Awards | Minimum | |||
SHARE-BASED COMPENSATION | |||
Number of shares to be earned as a percentage of target amount | 30.00% | ||
Annual Long Term Incentive Awards | Maximum | |||
SHARE-BASED COMPENSATION | |||
Number of shares to be earned as a percentage of target amount | 200.00% | ||
Performance Shares | |||
SHARE-BASED COMPENSATION | |||
Aggregate grant date value | $8,900,000 | ||
Valuation Assumptions: | |||
Weighted-average fair value (in dollars per share) | $43.93 | ||
Historic volatility (as a percent) | 44.20% | ||
Risk-free rate (as a percent) | 0.66% | ||
Weighted-average expected annual forfeiture (as a percent) | 4.00% | ||
Shares | |||
Expected to vest at the end of the period (in shares) | 202,541 | ||
Weighted Average Grant Date Fair Value | |||
Nonvested stock at the end of the period (in dollars per share) | $43.93 | ||
Performance Shares | Minimum | |||
Weighted Average Grant Date Fair Value | |||
Number of awards granted depending on the Company's Total Shareholder Return ("TSR") relative to the TSR of the S&P Mid-Cap 400 Index (as a percent) | 0.00% | ||
Percentage impact of stock price over vesting periods on number of MSU awarded | 30.00% | ||
Performance Shares | Maximum | |||
Weighted Average Grant Date Fair Value | |||
Number of awards granted depending on the Company's Total Shareholder Return ("TSR") relative to the TSR of the S&P Mid-Cap 400 Index (as a percent) | 200.00% | ||
Percentage impact of stock price over vesting periods on number of MSU awarded | 200.00% | ||
Performance Shares | Key Executives | |||
SHARE-BASED COMPENSATION | |||
Performance period | 2 years | ||
Service period | 3 years | ||
Shares | |||
Granted (in shares) | 535,000 |
PROFITSHARING_RETIREMENT_SAVIN1
PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS | |||
401(k)/Profit Sharing Plan contribution expense | $1.40 | $1.30 | $1.10 |
Maximum percentage of base salary which can be deferred by employees | 50.00% | ||
Maximum percentage of annual bonus which can be deferred by employees | 100.00% |
EARNINGS_PER_COMMON_SHARE_Deta
EARNINGS PER COMMON SHARE (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Jan. 03, 2015 | Oct. 04, 2014 | Jul. 05, 2014 | Apr. 05, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
Anti-dilutive shares | |||||||||||
Income (loss) from continuing operations | $126,494 | $2,623 | ($13,983) | ($38,408) | $29,333 | ($14,165) | ($23,588) | ($23,745) | $76,726 | ($32,165) | ($52,687) |
Convertible Notes interest expense | 82,434 | 105,160 | -21,818 | ||||||||
Income (loss) from continuing operations, diluted | $159,160 | $72,995 | ($74,505) | ||||||||
Basic weighted average shares outstanding | 127,160,000 | 126,971,000 | 126,664,000 | 124,403,000 | 122,785,000 | 122,396,000 | 120,013,000 | 119,032,000 | 126,264,000 | 121,057,000 | 109,292,000 |
Stock options and nonvested shares | 755,000 | ||||||||||
Diluted weighted average shares outstanding | 127,741,000 | 127,610,000 | 126,664,000 | 124,403,000 | 125,219,000 | 122,396,000 | 120,013,000 | 119,032,000 | 127,019,000 | 121,057,000 | 109,292,000 |
Basic | |||||||||||
Income (loss) from continuing operations (in dollars per share) | $0.99 | $0.02 | ($0.11) | ($0.31) | $0.24 | ($0.12) | ($0.20) | ($0.20) | $0.61 | ($0.27) | ($0.48) |
Loss from discontinued operations (in dollars per share) | ($0.09) | $0.08 | $0.68 | $1.27 | ($0.02) | ($0.16) | ($0.24) | $0.65 | $0.87 | ($0.20) | |
Net income (loss) (in dollars per share) | $0.99 | ($0.07) | ($0.03) | $0.37 | $1.51 | ($0.14) | ($0.36) | ($0.44) | $1.26 | $0.60 | ($0.68) |
Diluted | |||||||||||
Income (loss) from continuing operations (in dollars per share) | $0.99 | $0.02 | ($0.11) | ($0.31) | $0.23 | ($0.12) | ($0.20) | ($0.20) | $0.60 | ($0.27) | ($0.48) |
Loss from discontinued operations (in dollars per share) | ($0.09) | $0.08 | $0.68 | $1.25 | ($0.02) | ($0.16) | ($0.24) | $0.65 | $0.87 | ($0.20) | |
Net income (loss) (in dollars per share) | $0.99 | ($0.07) | ($0.03) | $0.37 | $1.48 | ($0.14) | ($0.36) | ($0.44) | $1.25 | $0.60 | ($0.68) |
Nonvested Shares | |||||||||||
Anti-dilutive shares | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 500,000 | 500,000 | |||||||||
Diluted | |||||||||||
Shares excluded from computation of diluted earnings per share | 500,000 | 500,000 | |||||||||
Shares not achieving performance criteria excluded from computation of diluted earnings per share | 500,000 | 1,200,000 | |||||||||
Convertible Notes Payable | |||||||||||
Anti-dilutive shares | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 5,200,000 | 5,800,000 | |||||||||
Diluted | |||||||||||
Shares excluded from computation of diluted earnings per share | 5,200,000 | 5,800,000 | |||||||||
Shares not achieving performance criteria excluded from computation of diluted earnings per share | 1,500,000 | 12,300,000 |
ADDITIONAL_FINANCIAL_INFORMATI1
ADDITIONAL FINANCIAL INFORMATION (Details) (USD $) | 12 Months Ended | 0 Months Ended | |||
In Millions, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Feb. 08, 2013 | Nov. 02, 2011 |
Other Expense, Net | |||||
Foreign currency transaction (losses) gains | ($1.60) | ($1.10) | $1.30 | ||
Trademark rights for LIZ CLAIBORNE family brands and MONET brand | |||||
Licensing-Related Transactions | |||||
Advance received for agreement to develop exclusive brands for JCPenney | 20 | ||||
Advance refunded on termination of agreement to develop exclusive brands for JCPenney | $20 |
ADDITIONAL_FINANCIAL_INFORMATI2
ADDITIONAL FINANCIAL INFORMATION (Details 2) (USD $) | 12 Months Ended | 3 Months Ended | ||||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Dec. 27, 2014 | Sep. 28, 2013 | Mar. 30, 2013 | |
Condensed Consolidated Statements of Cash Flows Supplementary Disclosures | ||||||
Net income tax payments | $1,000,000 | $2,400,000 | ($1,100,000) | |||
Interest payments | 34,100,000 | 43,600,000 | 38,700,000 | |||
Accrued capital expenditures | 9,800,000 | 13,300,000 | 7,700,000 | |||
Payment made to acquire business | 32,268,000 | 41,027,000 | ||||
KATE SPADE International | ||||||
Condensed Consolidated Statements of Cash Flows Supplementary Disclosures | ||||||
Payment made to acquire business | 41,000,000 | |||||
Juicy Couture | ||||||
Condensed Consolidated Statements of Cash Flows Supplementary Disclosures | ||||||
Payment made to acquire business | 32,300,000 | |||||
Convertible Notes Payable | ||||||
Condensed Consolidated Statements of Cash Flows Supplementary Disclosures | ||||||
Debt conversion, aggregate principal amount | 19,900,000 | 49,400,000 | 8,800,000 | 11,200,000 | ||
Number of shares of common stock converted from convertible notes | 5,634,179 | 14,197,106 | 2,462,509 | 3,171,670 | ||
Noncontrolling interest sold | $4,000,000 |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 03, 2015 | Oct. 04, 2014 | Jul. 05, 2014 | Apr. 05, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
item | item | ||||||||||
SEGMENT REPORTING | |||||||||||
Number of reportable segments | 3 | ||||||||||
Number of reportable segments resulting from disaggregation of former KATE SPADE segment | 2 | ||||||||||
Net Sales | $398,574,000 | $250,417,000 | $265,998,000 | $223,614,000 | $275,429,000 | $192,612,000 | $178,881,000 | $156,449,000 | $1,138,603,000 | $803,371,000 | $544,765,000 |
% to Total | 100.00% | 100.00% | 100.00% | ||||||||
Depreciation and Amortization Expense | 54,438,000 | 38,780,000 | 35,837,000 | ||||||||
Adjusted EBITDA | 146,971,000 | 77,109,000 | 41,740,000 | ||||||||
Long-Lived Assets | 926,338,000 | 977,511,000 | 926,338,000 | 977,511,000 | |||||||
Expenditures for Long-Lived Assets | 132,221,000 | 67,591,000 | 89,392,000 | ||||||||
Reconciliation to Loss from Continuing Operations | |||||||||||
Adjusted EBITDA | 146,971,000 | 77,109,000 | 41,740,000 | ||||||||
Unallocated Corporate Costs | -48,441,000 | -35,088,000 | -25,641,000 | ||||||||
Charges due to streamlining initiatives, brand-exiting activities, acquisition related costs and loss on asset disposals and impairments, net | -30,371,000 | -15,716,000 | -46,455,000 | ||||||||
Share-based compensation | -37,270,000 | -7,269,000 | -6,911,000 | ||||||||
Equity loss included in Reportable Segments Adjusted EBITDA | 2,583,000 | 1,179,000 | 1,245,000 | ||||||||
Operating Income (Loss) | 33,472,000 | 20,215,000 | -36,022,000 | ||||||||
Other expense, net | -4,033,000 | -2,062,000 | -325,000 | ||||||||
Impairment of cost investment | -6,109,000 | ||||||||||
Gain on acquisition of subsidiary | 40,065,000 | ||||||||||
Loss on extinguishment of debt | 16,914,000 | 1,707,000 | 9,754,000 | ||||||||
Interest expense, net | -20,178,000 | -47,065,000 | -51,612,000 | ||||||||
Benefit for income taxes | -84,379,000 | -4,563,000 | -4,961,000 | ||||||||
Income (Loss) from Continuing Operations | 126,494,000 | 2,623,000 | -13,983,000 | -38,408,000 | 29,333,000 | -14,165,000 | -23,588,000 | -23,745,000 | 76,726,000 | -32,165,000 | -52,687,000 |
Payroll and Related Costs and Spending | |||||||||||
Reconciliation to Loss from Continuing Operations | |||||||||||
Share-based compensation | -17,300,000 | -2,800,000 | |||||||||
Domestic | |||||||||||
SEGMENT REPORTING | |||||||||||
Number of reportable segments | 1 | ||||||||||
Net Sales | 899,475,000 | 648,406,000 | 493,556,000 | ||||||||
% to Total | 79.00% | 80.70% | 90.60% | ||||||||
Long-Lived Assets | 254,597,000 | 211,602,000 | 254,597,000 | 211,602,000 | |||||||
International | |||||||||||
SEGMENT REPORTING | |||||||||||
Number of reportable segments | 4 | ||||||||||
Net Sales | 239,128,000 | 154,965,000 | 51,209,000 | ||||||||
% to Total | 21.00% | 19.30% | 9.40% | ||||||||
Long-Lived Assets | 74,600,000 | 77,258,000 | 74,600,000 | 77,258,000 | |||||||
Other | |||||||||||
SEGMENT REPORTING | |||||||||||
Adjusted EBITDA | -940,000 | -4,334,000 | -4,332,000 | ||||||||
Reconciliation to Loss from Continuing Operations | |||||||||||
Adjusted EBITDA | -940,000 | -4,334,000 | -4,332,000 | ||||||||
KATE SPADE North America | |||||||||||
SEGMENT REPORTING | |||||||||||
Net Sales | 891,766,000 | 597,748,000 | 411,507,000 | ||||||||
% to Total | 78.30% | 74.40% | 75.50% | ||||||||
Depreciation and Amortization Expense | 31,905,000 | 23,961,000 | 21,364,000 | ||||||||
Adjusted EBITDA | 143,009,000 | 70,250,000 | 24,924,000 | ||||||||
% of Sales | 16.00% | 11.80% | 6.10% | ||||||||
Long-Lived Assets | 467,383,000 | 377,102,000 | 467,383,000 | 377,102,000 | |||||||
Expenditures for Long-Lived Assets | 76,707,000 | 58,089,000 | 41,885,000 | ||||||||
Reconciliation to Loss from Continuing Operations | |||||||||||
Adjusted EBITDA | 143,009,000 | 70,250,000 | 24,924,000 | ||||||||
Equity loss included in Reportable Segments Adjusted EBITDA | 2,600,000 | 1,200,000 | 1,200,000 | ||||||||
Kate Spade International | |||||||||||
SEGMENT REPORTING | |||||||||||
Net Sales | 213,582,000 | 145,404,000 | 50,418,000 | ||||||||
% to Total | 18.80% | 18.10% | 9.30% | ||||||||
Depreciation and Amortization Expense | 13,904,000 | 8,476,000 | 2,260,000 | ||||||||
Adjusted EBITDA | 810,000 | -815,000 | 3,454,000 | ||||||||
% of Sales | 0.40% | -0.60% | 6.90% | ||||||||
Long-Lived Assets | 198,677,000 | 149,395,000 | 198,677,000 | 149,395,000 | |||||||
Expenditures for Long-Lived Assets | 55,038,000 | 9,139,000 | 47,115,000 | ||||||||
Reconciliation to Loss from Continuing Operations | |||||||||||
Adjusted EBITDA | 810,000 | -815,000 | 3,454,000 | ||||||||
Adelington Design Group | |||||||||||
SEGMENT REPORTING | |||||||||||
Net Sales | 33,255,000 | 60,219,000 | 82,840,000 | ||||||||
% to Total | 2.90% | 7.50% | 15.20% | ||||||||
Depreciation and Amortization Expense | 887,000 | 625,000 | 958,000 | ||||||||
Adjusted EBITDA | 4,092,000 | 12,008,000 | 17,694,000 | ||||||||
% of Sales | 12.30% | 19.90% | 21.40% | ||||||||
Long-Lived Assets | 18,671,000 | 22,130,000 | 18,671,000 | 22,130,000 | |||||||
Expenditures for Long-Lived Assets | 476,000 | 363,000 | 392,000 | ||||||||
Reconciliation to Loss from Continuing Operations | |||||||||||
Adjusted EBITDA | 4,092,000 | 12,008,000 | 17,694,000 | ||||||||
Corporate and Other | |||||||||||
SEGMENT REPORTING | |||||||||||
Depreciation and Amortization Expense | 7,742,000 | 5,718,000 | 11,255,000 | ||||||||
Adjusted EBITDA | -940,000 | -4,334,000 | -4,332,000 | ||||||||
Long-Lived Assets | 241,607,000 | 428,884,000 | 241,607,000 | 428,884,000 | |||||||
Reconciliation to Loss from Continuing Operations | |||||||||||
Adjusted EBITDA | -940,000 | -4,334,000 | -4,332,000 | ||||||||
Corporate, Non-Segment [Member] | |||||||||||
SEGMENT REPORTING | |||||||||||
Depreciation and amortization expense recorded in interest expense | $5,200,000 | $3,600,000 | $9,700,000 |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $) | 12 Months Ended | ||
Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | |
Accumulated other comprehensive (loss) income | |||
Cumulative translation adjustment, net of income taxes of $0 | ($32,096,000) | ($21,862,000) | |
Gains on cash flow hedging derivatives, net of income taxes of $602 | 2,110,000 | 983,000 | |
Accumulated other comprehensive loss, net of income taxes | -29,986,000 | -20,879,000 | |
Income tax effect on cumulative translation adjustment | 0 | ||
Income tax effect on gains on cash flow hedging derivatives | 1,168,000 | 602,000 | |
Change in each component of Accumulated other comprehensive (loss) income, net of income taxes | |||
Balance at the beginning of the period | -20,879,000 | ||
Net current-period other comprehensive (loss) income | -9,107,000 | -10,805,000 | -4,150,000 |
Balance at the end of the period | -29,986,000 | -20,879,000 | |
Cumulative Translation Adjustment | |||
Accumulated other comprehensive (loss) income | |||
Accumulated other comprehensive loss, net of income taxes | -32,096,000 | -21,862,000 | |
Change in each component of Accumulated other comprehensive (loss) income, net of income taxes | |||
Balance at the beginning of the period | -21,862,000 | -10,074,000 | |
Other comprehensive (loss) income before reclassification | -10,234,000 | -11,788,000 | |
Balance at the end of the period | -32,096,000 | -21,862,000 | |
Unrealized Gains (Losses) on Cash Flow Hedging Derivatives | |||
Accumulated other comprehensive (loss) income | |||
Accumulated other comprehensive loss, net of income taxes | 2,110,000 | 983,000 | |
Change in each component of Accumulated other comprehensive (loss) income, net of income taxes | |||
Balance at the beginning of the period | 983,000 | ||
Other comprehensive (loss) income before reclassification | 1,847,000 | 1,805,000 | |
Amounts reclassified from accumulated other comprehensive loss | -720,000 | -822,000 | |
Balance at the end of the period | $2,110,000 | $983,000 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 | Jun. 30, 2011 | Nov. 20, 2009 |
Related Party Transactions | |||||
Capital contributions to joint venture | $2,400 | $5,500 | $5,000 | ||
KS China Co Limited | |||||
Related Party Transactions | |||||
Ownership interest in joint venture (as a percent) | 40.00% | ||||
Capital contributions to joint venture | $2,400 | $5,500 | $5,000 | ||
KATE SPADE International | |||||
Related Party Transactions | |||||
Ownership interest in joint venture acquired (as a percent) | 51.00% |
UNAUDITED_QUARTERLY_RESULTS_De
UNAUDITED QUARTERLY RESULTS (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Jan. 03, 2015 | Oct. 04, 2014 | Jul. 05, 2014 | Apr. 05, 2014 | Dec. 28, 2013 | Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
UNAUDITED QUARTERLY RESULTS | |||||||||||
Net Sales | $398,574 | $250,417 | $265,998 | $223,614 | $275,429 | $192,612 | $178,881 | $156,449 | $1,138,603 | $803,371 | $544,765 |
Gross Profit | 230,224 | 157,314 | 155,910 | 136,823 | 169,794 | 118,222 | 110,478 | 98,096 | 680,271 | 496,590 | 339,932 |
(Loss) income from continuing operations | 126,494 | 2,623 | -13,983 | -38,408 | 29,333 | -14,165 | -23,588 | -23,745 | 76,726 | -32,165 | -52,687 |
(Loss) income from discontinued operations, net of income taxes | 30 | -11,753 | 9,579 | 84,578 | 155,839 | -2,701 | -19,549 | -28,429 | -82,434 | -105,160 | 21,818 |
Net income (loss) | 126,524 | -9,130 | -4,404 | 46,170 | 185,172 | -16,866 | -43,137 | -52,174 | 159,160 | 72,995 | -74,505 |
Basic earnings per share | |||||||||||
(Loss) income from continuing operations (in dollars per share) | $0.99 | $0.02 | ($0.11) | ($0.31) | $0.24 | ($0.12) | ($0.20) | ($0.20) | $0.61 | ($0.27) | ($0.48) |
Income (loss) from discontinued operations (in dollars per share) | ($0.09) | $0.08 | $0.68 | $1.27 | ($0.02) | ($0.16) | ($0.24) | $0.65 | $0.87 | ($0.20) | |
Net income (loss) (in dollars per share) | $0.99 | ($0.07) | ($0.03) | $0.37 | $1.51 | ($0.14) | ($0.36) | ($0.44) | $1.26 | $0.60 | ($0.68) |
Diluted earnings per share | |||||||||||
(Loss) income from continuing operations (in dollars per share) | $0.99 | $0.02 | ($0.11) | ($0.31) | $0.23 | ($0.12) | ($0.20) | ($0.20) | $0.60 | ($0.27) | ($0.48) |
(Loss) income from discontinued operations (in dollars per share) | ($0.09) | $0.08 | $0.68 | $1.25 | ($0.02) | ($0.16) | ($0.24) | $0.65 | $0.87 | ($0.20) | |
Net income (loss) (in dollars per share) | $0.99 | ($0.07) | ($0.03) | $0.37 | $1.48 | ($0.14) | ($0.36) | ($0.44) | $1.25 | $0.60 | ($0.68) |
Basic weighted average shares outstanding | 127,160 | 126,971 | 126,664 | 124,403 | 122,785 | 122,396 | 120,013 | 119,032 | 126,264 | 121,057 | 109,292 |
Diluted weighted average shares outstanding | 127,741 | 127,610 | 126,664 | 124,403 | 125,219 | 122,396 | 120,013 | 119,032 | 127,019 | 121,057 | 109,292 |
Pretax expenses (credit) related to streamlining initiatives | $7,100 | $1,100 | $4,900 | $28,900 | $7,300 | ($1,000) | $1,400 | $2,900 | $41,952 | $10,601 | $43,193 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (USD $) | 1 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Feb. 04, 2015 | Jan. 29, 2015 | Jun. 30, 2011 |
item | item | ||
KS China Co Limited | |||
Subsequent event | |||
Ownership interest in joint venture (as a percent) | 40.00% | ||
Kate Spade China and K S H M T Co Limited | |||
Subsequent event | |||
Investments in the joint ventures under the equity method of accounting | 34 | ||
Walton Brown | |||
Subsequent event | |||
Number of joint ventures | 2 | ||
Walton Brown | Kate Spade China and K S H M T Co Limited | |||
Subsequent event | |||
Ownership interest in joint venture (as a percent) | 50.00% | ||
Jack Spade | |||
Subsequent event | |||
Number of owned stores | 12 | ||
Kate Spade Saturdays | |||
Subsequent event | |||
Number of owned stores | 16 | ||
Number of partnered store locations | 3 | ||
Forecast | Minimum | |||
Subsequent event | |||
Non-cash asset impairment charges | 7 | ||
Forecast | Maximum | |||
Subsequent event | |||
Non-cash asset impairment charges | 9 | ||
Subsequent Event | Kate Spade China and K S H M T Co Limited | |||
Subsequent event | |||
Initial period of joint venture operations | 10 years | ||
Subsequent Event | E-Land Fashion | KS China Co Limited | |||
Subsequent event | |||
Ownership interest in joint venture (as a percent) | 60.00% | ||
Aggregate payment to acquire interest in joint venture | 36 | ||
Payments to acquire additional interest in joint venture | 10 | ||
Termination and other related costs | 26 | ||
Subsequent Event | Lane Crawford Joyce Group Member | Kate Spade China and K S H M T Co Limited | |||
Subsequent event | |||
Proceeds received in relation to joint ventures interests | 21 | ||
Subsequent Event | Forecast | Minimum | |||
Subsequent event | |||
Termination and other related costs | 21 | ||
Cash restructuring charges | 32 | ||
Employee related costs | 4 | ||
Subsequent Event | Forecast | Maximum | |||
Subsequent event | |||
Termination and other related costs | 25 | ||
Cash restructuring charges | 39 | ||
Employee related costs | 5 |
SCHEDULE_II_VALUATION_AND_QUAL1
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Jan. 03, 2015 | Dec. 28, 2013 | Dec. 29, 2012 |
Accounts receivable - allowance for doubtful accounts | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Period | $1,800 | $1,625 | $340 |
Additions - Charged to Costs and Expenses | 1,189 | 229 | 1,555 |
Deductions | 1,273 | 54 | 270 |
Balance at End of Period | 1,716 | 1,800 | 1,625 |
Allowance for returns | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Period | 7,230 | 8,501 | 8,053 |
Additions - Charged to Costs and Expenses | 80,453 | 85,083 | 109,493 |
Deductions | 80,004 | 86,354 | 109,045 |
Balance at End of Period | 7,679 | 7,230 | 8,501 |
Allowance for discounts | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Period | 32 | 533 | 569 |
Additions - Charged to Costs and Expenses | 208 | 371 | 3,626 |
Deductions | 166 | 872 | 3,662 |
Balance at End of Period | 74 | 32 | 533 |
Deferred tax valuation allowance | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Period | 497,485 | 545,565 | 494,745 |
Additions - Charged to Costs and Expenses | 50,820 | ||
Deductions | 82,312 | 48,080 | |
Balance at End of Period | $415,173 | $497,485 | $545,565 |