Kate Spade & Co (KATE) 10-Q 1 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Apr. 01, 2017	Apr. 21, 2017
Document and Entity Information
Entity Registrant Name	Kate Spade & Co
Entity Central Index Key	352,363
Document Type	10-Q
Document Period End Date	Apr. 1, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		128,604,671
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Current Assets:
Cash and cash equivalents	$ 422,332	$ 478,536	$ 260,647
Accounts receivable - trade, net	64,336	77,487	68,626
Inventories, net	215,097	167,461	220,666
Deferred income taxes			1,985
Other current assets	36,871	34,024	31,808
Total current assets	738,636	757,508	583,732
Property and Equipment, Net	159,395	167,192	175,290
Goodwill	52,173	50,045	52,315
Intangibles, Net	85,881	86,703	87,285
Deferred Income Taxes	1,764	2,322	743
Other Assets	54,256	46,549	52,536
Total Assets	1,092,105	1,110,319	951,901
Current Liabilities:
Short-term borrowings	3,701	3,664	3,638
Accounts payable	93,390	93,144	99,817
Accrued expenses	103,113	125,434	117,832
Income taxes payable	1,701	2,207	917
Total current liabilities	201,905	224,449	222,204
Long-Term Debt	388,878	389,742	391,317
Other Non-Current Liabilities	46,957	48,685	51,995
Deferred Income Taxes	18,048	17,512	18,844
Commitments and Contingencies (Note 6)
Stockholders' Equity:
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	176,437
Capital in excess of par value	258,015	251,816	232,587
Retained earnings	1,295,318	1,306,096	1,165,559
Accumulated other comprehensive loss	(25,396)	(28,160)	(27,011)
Total stockholders' equity, excluding treasury stock	1,704,374	1,706,189	1,547,572
Common stock in treasury, at cost — 47,832,563, 48,261,217 and 48,457,848 shares	(1,268,057)	(1,276,258)	(1,280,031)
Total stockholders’ equity	436,317	429,931	267,541
Total Liabilities and Stockholders’ Equity	$ 1,092,105	$ 1,110,319	$ 951,901

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Preferred stock, authorized shares	50,000,000	50,000,000	50,000,000
Preferred stock, issued shares	0	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1	$ 1
Common stock, authorized shares	250,000,000	250,000,000	250,000,000
Common stock, issued shares	176,437,234	176,437,234	176,437,234
Common stock in treasury, shares	47,832,563	48,261,217	48,457,848

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net Sales	$ 271,225	$ 274,422
Cost of goods sold	99,763	104,941
Gross Profit	171,462	169,481
Selling, general & administrative expenses	164,580	151,768
Operating Income	6,882	17,713
Other income (expense), net	607	(247)
Interest expense, net	(4,545)	(4,996)
Income Before Provision for Income Taxes	2,944	12,470
Provision for income taxes	1,750	1,554
Income from Continuing Operations	1,194	10,916
Discontinued operations, net of income taxes	165	720
Net Income	$ 1,359	$ 11,636
Earnings per Share, Basic:
Income from Continuing Operations (in dollars per share)	$ 0.01	$ 0.09
Net Income (in dollars per share)	0.01	0.09
Earnings per Share, Diluted:
Income from Continuing Operations (in dollars per share)	0.01	0.08
Net Income (in dollars per share)	$ 0.01	$ 0.09
Weighted Average Shares, Basic (in shares)	128,387	127,931
Weighted Average Shares, Diluted (in shares)	128,954	128,636

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 1,359	$ 11,636
Other Comprehensive Income (Loss), Net of Income Taxes:
Cumulative translation adjustment, net of income taxes of $0	3,228	3,978
Write-off of translation adjustment in connection with liquidation of foreign subsidiaries	(198)
Change in fair value of cash flow hedging derivatives, net of income taxes of $(128) and $(520), respectively	(266)	(948)
Comprehensive Income	$ 4,123	$ 14,666

CONSOLIDATED STATEMENTS OF COM6

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Cumulative translation adjustment, income taxes	$ 0	$ 0
Change in fair value of cash flow hedging derivatives, income taxes	$ (128)	$ (520)

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Cash Flows from Operating Activities:
Net Income	$ 1,359	$ 11,636
Adjustments to arrive at income from continuing operations	(165)	(720)
Income from continuing operations	1,194	10,916
Adjustments to reconcile income from continuing operations to net cash used in operating activities:
Depreciation and amortization	12,459	11,539
Loss on asset disposals and impairments, including streamlining initiatives, net	6,767	206
Share-based compensation	6,199	7,910
Foreign currency transaction gains, net	(3,924)	(4,325)
Equity losses of equity investees	260	1,241
Other, net	5	31
Changes in assets and liabilities:
Decrease in accounts receivable – trade, net	13,752	29,279
Increase in inventories, net	(46,261)	(26,306)
Increase in other current and non-current assets	(9,727)	(448)
Increase (decrease) in accounts payable	800	(9,589)
Decrease in accrued expenses and other non-current liabilities	(21,517)	(33,368)
Net change in income tax assets and liabilities	(226)	462
Net cash used in operating activities of discontinued operations	(71)	(119)
Net cash used in operating activities	(40,290)	(12,571)
Cash Flows from Investing Activities:
Purchases of property and equipment	(9,903)	(11,822)
Proceeds from sales of joint venture interests, net		(2,350)
Investments in and advances to equity investees		(6,500)
Payments for in-store merchandise shops	(1,664)	(660)
Purchase of trademarks		(1,200)
Other, net	(11)	45
Net cash used in investing activities	(11,578)	(22,487)
Cash Flows from Financing Activities:
Repayment of Term Loan	(1,000)	(2,000)
Principal payments under capital lease obligations	(138)	(123)
Proceeds from exercise of stock options	810	65
Payment of deferred financing fees	(171)	(315)
Withholding taxes on share-based compensation	(5,344)	(761)
Net cash used in financing activities	(5,843)	(3,134)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	1,507	988
Net Change in Cash and Cash Equivalents	(56,204)	(37,204)
Cash and Cash Equivalents at Beginning of Period	478,536	297,851
Cash and Cash Equivalents at End of Period	$ 422,332	$ 260,647

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Apr. 01, 2017
BASIS OF PRESENTATION
BASIS OF PRESENTATION	1. The Condensed Consolidated Financial Statements of Kate Spade & Company and its wholly-owned and majority-owned subsidiaries (the “Company”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations; however, the Company believes that its disclosures are adequate to make the information presented not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2016 Annual Report on Form 10-K. Information presented as of December 31, 2016 is derived from audited financial statements. On February 16, 2017, the Company’s Board of Directors, together with management and in consultation with its financial advisor and legal counsel, announced that it is conducting a process to explore and evaluate strategic alternatives to further enhance shareholder value. There can be no assurance that this review process will result in a transaction or other strategic alternative of any kind. The Company operates its kate spade new york and JACK SPADE NEW YORK™ brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. The Company’s Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company’s activities for which separate financial information is available and which is utilized on a regular basis by the Company’s 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 and JACK SPADE NEW YORK brands in North America. · KATE SPADE International segment – consists of the Company’s kate spade new york and JACK SPADE NEW YORK brands in International markets (principally in Japan, Asia (excluding Japan), Europe and Latin America). · Adelington Design Group segment – primarily consists of exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the reported interim periods. Results of operations for interim periods are not necessarily indicative of results for the full year. Management has evaluated events or transactions that have occurred from the balance sheet date through the date the Company issued these financial statements. NATURE OF OPERATIONS Kate Spade & Company is engaged primarily in the design and marketing of a broad range of accessories and apparel. The Company’s fiscal year ends on the Saturday closest to December 31. The 2017 fiscal year, ending December 30, 2017, reflects a 52-week period, resulting in a 13-week, three-month period for the first quarter. The 2016 fiscal year, ending December 31, 2016, reflects a 52-week period, resulting in a 13-week, three-month period for the first quarter . PRINCIPLES OF CONSOLIDATION The Condensed 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 Company’s critical accounting policies are those that are most important to the portrayal of its financial condition and results of operations in conformity with US GAAP. These critical accounting policies are applied in a consistent manner throughout all periods presented. The Company’s critical accounting policies are summarized in Note 1 of Notes to Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The application of critical accounting policies requires that the Company make estimates and assumptions about future events and apply judgments that 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. The Company continues to monitor the critical accounting policies to ensure proper application of current rules and regulations. During the first quarter of 2017, there were no significant changes in the critical accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS On January 1, 2017, the first day of the Company’s 2017 fiscal year, the Company adopted new accounting guidance on share-based compensation, including modified retrospective adoption of the recognition of excess tax benefits and tax deficiencies in the statement of income. Upon adoption, all excess tax benefits and tax deficiencies from share-based compensation are recognized as income tax expense or benefit in the statement of income as discrete items in the reporting period in which they occur, regardless of whether the benefit reduces taxes payable in the current period. As a result of the adoption of this guidance, the Company recognized deferred tax assets of $44.3 million for the excess tax benefits that arose directly from tax deductions related to share-based compensation greater than the amounts recognized for financial reporting and also recognized an increase of an equal amount in the valuation allowance against such deferred tax assets. The Company also retrospectively adopted the accounting guidance on the presentation of shares withheld for certain employee taxes paid on the statement of cash flows. The cash paid by the Company when directly withholding shares for tax-withholding purposes is classified as a financing activity on the Condensed Consolidated Statement of Cash Flows for all periods presented. The Company elected to continue to estimate the number of share-based awards expected to vest, rather than electing to account for forfeitures as they occur to determine the amount of compensation expense to be recognized in each period.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	3 Months Ended
	Apr. 01, 2017
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY	2. STOCKHOLDERS’ EQUITY Activity for the three months ended April 1, 2017 in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost accounts was as follows: Common Stock Capital in Excess Retained in Treasury, In thousands of Par Value Earnings at Cost Balance as of December 31, 2016 $ 251,816 $ 1,306,096 $ (1,276,258) Net income — 1,359 — Exercise of stock options — (1,103) 1,913 Restricted shares issued, net of cancellations and shares withheld for taxes — (11,034) 6,288 Share-based compensation 6,199 — — Balance as of April 1, 2017 $ 258,015 $ 1,295,318 $ (1,268,057) Activity for the three months ended April 2, 2016 in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost accounts was as follows: Common Stock Capital in Excess Retained in Treasury, In thousands of Par Value Earnings at Cost Balance as of January 2, 2016 $ 224,677 $ 1,155,838 $ (1,281,690) Net income — 11,636 — Exercise of stock options — (223) 288 Restricted shares issued, net of cancellations and shares withheld for taxes — (1,692) 1,371 Share-based compensation 7,910 — — Balance as of April 2, 2016 $ 232,587 $ 1,165,559 $ (1,280,031) Accumulated other comprehensive (loss) income consisted of the following: In thousands April 1, 2017 December 31, 2016 April 2, 2016 Cumulative translation adjustment, net of income taxes of $0 $ (26,132) $ (29,162) $ (26,076) Unrealized gains (losses) on cash flow hedging derivatives, net of income taxes of $385, $513 and $(512), respectively 736 1,002 (935) Accumulated other comprehensive loss, net of income taxes $ (25,396) $ (28,160) $ (27,011) The following table presents the change in each component of Accumulated other comprehensive (loss) income, net of income taxes for the three months ended April 1, 2017: Unrealized Gains Cumulative (Losses) on Cash Translation Flow Hedging In thousands Adjustment Derivatives Balance as of December 31, 2016 $ (29,162) $ 1,002 Other comprehensive income (loss) before reclassification 3,228 (557) Amounts reclassified from accumulated other comprehensive (loss) income (198) 291 Net current-period other comprehensive income (loss) 3,030 (266) Balance as of April 1, 2017 $ (26,132) $ 736 The following table presents the change in each component of Accumulated other comprehensive (loss) income, net of income taxes for the three months ended April 2, 2016: Unrealized Gains Cumulative (Losses) on Cash Translation Flow Hedging In thousands Adjustment Derivatives Balance as of January 2, 2016 $ (30,054) $ 13 Other comprehensive income (loss) before reclassification 3,978 (725) Amounts reclassified from accumulated other comprehensive income — (223) Net current-period other comprehensive income (loss) 3,978 (948) Balance as of April 2, 2016 $ (26,076) $ (935)

INCOME TAXES

INCOME TAXES	3 Months Ended
	Apr. 01, 2017
INCOME TAXES
INCOME TAXES	3. INCOME TAXES During the first quarter of 2017 and 2016, the Company continued to record a full valuation allowance on deferred tax assets in most jurisdictions due to the combination of its history of pretax losses and its inability to carry back tax losses or credits. The Company continues to assess whether any significant changes in circumstances or assumptions have occurred that could materially affect the Company’s ability to realize deferred tax assets. The Company expects to release the valuation allowance when it has sufficient positive evidence, including but not limited to, the magnitude and duration of the Company’s historical losses as compared to recent profits within taxing jurisdictions to overcome such negative evidence. The Company’s provision for income taxes for the three months ended April 1, 2017 and April 2, 2016 primarily represented increases in deferred tax liabilities for indefinite-lived intangible assets, current tax on operations in certain jurisdictions and an increase in the accrual for interest related to uncertain tax positions. The number of years with open tax audits varies depending upon the tax jurisdiction. The major tax jurisdictions include the US, Japan, United Kingdom and Canada. The Company is no longer subject to US Federal examination by the Internal Revenue Service (“IRS”) for the years before 2013 and, with a few exceptions, this applies to tax examinations by state authorities as well. Although the years before 2013 are considered to be closed, the IRS and other taxing authorities can also subject the Company’s net operating loss carryforwards to further review when such net operating loss carryforwards are utilized. The Company expects a reduction in the liability for unrecognized tax benefits, inclusive of interest and penalties, by an amount between $2.5 million and $5.4 million within the next 12 months due to either settlement or the expiration of the statute of limitations. As of April 1, 2017, uncertain tax positions of $9.8 million existed, which would provide an effective rate impact in the future if subsequently recognized.

DEBT AND LINES OF CREDIT

DEBT AND LINES OF CREDIT	3 Months Ended
	Apr. 01, 2017
DEBT AND LINES OF CREDIT
DEBT AND LINES OF CREDIT	4. DEBT AND LINES OF CREDIT Long-term debt consisted of the following: In thousands April 1, 2017 December 31, 2016 April 2, 2016 Term Loan credit facility, due April 2021 (a) $ 385,105 $ 385,794 $ 386,952 Revolving credit facility — — — Capital lease obligations 7,474 7,612 8,003 Total debt 392,579 393,406 394,955 Less: Short-term borrowings (b) 3,701 3,664 3,638 Long-term debt $ 388,878 $ 389,742 $ 391,317 (a) The balance as of April 1, 2017, December 31, 2016 and April 2, 2016 included aggregate unamortized debt discount and deferred financing fees of $4.9 million, $5.2 million and $6.0 million, respectively. (b) At April 1, 2017, December 31, 2016 and April 2, 2016, the balance consisted of Term Loan (as defined below) amortization payments and obligations under capital leases. Term Loan On April 10, 2014, the Company entered into a term loan credit agreement (the “Term Loan Credit Agreement”), which provides for term loans (collectively, 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 and other obligations under the Term Loan Credit Agreement are guaranteed by all of the Company’s existing material domestic restricted subsidiaries. The Term Loan Credit Agreement provides for incremental future 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. 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 amended and restated revolving credit facility (as amended to date, the “ABL Facility”) on a first-priority basis. The Term Loan is subject to prepayment from the Company’s Excess Cash Flow (subject to reduction based on the Company’s net debt ratio). The Term Loan Credit Agreement limits the Company’s and its 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 The Company’s ABL Facility was entered into on May 16, 2014 and matures in May 2019. Availability under the ABL Facility is the lesser of $200.0 million and a borrowing base consisting of a percentage of 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 and certain of the Company’s foreign subsidiaries. The ABL Facility is secured by a first-priority lien on the ABL Priority Collateral and a second-priority lien on the Term Priority Collateral. 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. The agreement governing the ABL Facility requires 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. The agreement governing the ABL Facility also requires 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 April 1, 2017, availability under the Company’s ABL Facility was as follows: Total Borrowing Outstanding Letters of Available Excess In thousands Facility (a) Base (a) Borrowings Credit Issued Capacity Capacity (b) ABL Facility (a) $ 200,000 $ 279,023 $ — $ 8,447 $ 191,553 $ 171,553 (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

FAIR VALUE MEASUREMENTS	3 Months Ended
	Apr. 01, 2017
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	5. FAIR VALUE MEASUREMENTS The Company utilizes the following three level hierarchy that defines the assumptions used to measure certain assets and liabilities at fair value: 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 following table presents the financial assets and liabilities the Company measured at fair value on a recurring basis, based on the fair value hierarchy: Level 2 In thousands April 1, 2017 December 31, 2016 April 2, 2016 Financial Assets: Derivatives $ 1,308 $ 2,399 $ 137 Financial Liabilities: Derivatives $ (523) $ (413) $ (967) 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 presents the non‑financial assets the Company measured at fair value on a non‑recurring basis in 2017, based on such fair value hierarchy: Net Carrying Fair Value Measured and Recorded at Total Losses for the Value as of Reporting Date Using: Three Months Ended In thousands April 1, 2017 Level 1 Level 2 Level 3 April 1, 2017 Property and equipment $ 3,978 $ — $ — $ — $ 6,620 As a result of a decline in the respective future anticipated cash flows of certain kate spade new york retail locations, the Company determined that a portion of the carrying values of such assets exceeded their fair values, resulting in impairment charges, which were recorded in Selling, general & administrative expense (“SG&A”) on the accompanying Condensed Consolidated Statement of Income. The fair values of the Company’s Level 3 Property and equipment 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: April 1, 2017 December 31, 2016 April 2, 2016 Carrying Carrying Carrying In thousands Fair Value Value Fair Value Value Fair Value Value Term Loan credit facility, due April 2021 (a) $ 390,644 $ 385,105 $ 393,405 $ 385,794 $ 388,883 $ 386,952 ABL Facility (b) — — — — — — (a) Carrying values include aggregate unamortized debt discount and deferred financing fees. (b) Borrowings under the ABL 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.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Apr. 01, 2017
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	6. COMMITMENTS AND CONTINGENCIES Buying/Sourcing Pursuant to a buying/sourcing agency agreement, Li & Fung Limited (“Li & Fung”) acts as a global buying/sourcing agent. On March 24, 2015, the Company modified its existing arrangement in order to, among other things, transition the buying/sourcing activities for the Company’s accessories products to an in-house model, beginning with the Spring 2016 collection. The modifications included a reduction of the annual minimum value of inventory purchases and a change in the commission rates for certain products. The Company pays Li & Fung an agency commission based on the cost of product purchases through Li & Fung. The Company is obligated to use Li & Fung as the primary buying/sourcing agent for ready-to-wear apparel products and the Company may use Li & Fung as a buying/sourcing agent with respect to accessories products, with all such product purchases applying toward a minimum volume commitment of inventory purchases each year through the expiration of the term of the agreement on March 31, 2018. The Company’s agreement with Li & Fung is not exclusive. Leases 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 or assumed by third parties, for which the Company or certain subsidiaries of the Company may remain secondarily liable for the remaining obligations on 82 such leases. As of April 1, 2017, the future aggregate payments under these leases amounted to $60.7 million and extended to various dates through 2025. 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. As of April 1, 2017, the estimated future minimum lease payments under the noncancelable capital lease were as follows: In thousands 2017 $ 1,614 2018 2,194 2019 2,247 2020 2,300 2021 2,352 Thereafter 8,429 Total 19,136 Less: Amounts representing interest and executory costs (11,662) Net present values 7,474 Less: Capital lease obligations included in short-term debt (591) Long-term capital lease obligations $ 6,883 Other 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.

STREAMLINING INITIATIVES

STREAMLINING INITIATIVES	3 Months Ended
	Apr. 01, 2017
STREAMLINING INITIATIVES
STREAMLINING INITIATIVES	7. STREAMLINING INITIATIVES For the three months ended April 1, 2017 and April 2, 2016, there were no charges incurred associated with the Company’s streamlining initiatives. The liability for streamlining initiatives of $2.7 million at April 1, 2017 primarily consisted of contract termination costs. The Company expects to pay approximately $0.2 million of accrued streamlining costs in the next 12 months.

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	3 Months Ended
	Apr. 01, 2017
EARNINGS PER COMMON SHARE:
EARNINGS PER COMMON SHARE	8. EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings per common share. Three Months Ended April 1, 2017 April 2, 2016 In thousands (13 Weeks) (13 Weeks) Income from continuing operations $ 1,194 $ 10,916 Income from discontinued operations, net of income taxes 165 720 Net income $ 1,359 $ 11,636 Basic weighted average shares outstanding 128,387 127,931 Stock options and nonvested shares 567 705 Diluted weighted average shares outstanding 128,954 128,636 Earnings per share: Basic Income from continuing operations $ 0.01 $ 0.09 Income from discontinued operations — — Net income $ 0.01 $ Diluted Income from continuing operations $ 0.01 $ 0.08 Income from discontinued operations — 0.01 Net income $ 0.01 $ 0.09

ADDITIONAL FINANCIAL INFORMATIO

ADDITIONAL FINANCIAL INFORMATION	3 Months Ended
	Apr. 01, 2017
ADDITIONAL FINANCIAL INFORMATION
ADDITIONAL FINANCIAL INFORMATION	9. ADDITIONAL FINANCIAL INFORMATION Condensed Consolidated Statements of Cash Flows Supplementary Disclosures During the three months ended April 1, 2017 and April 2, 2016, net income tax payments were $2.0 million and $1.1 million, respectively. During the three months ended April 1, 2017 and April 2, 2016, the Company made interest payments of $4.2 million and $8.3 million, respectively. As of April 1, 2017, December 31, 2016 and April 2, 2016, the Company accrued capital expenditures totaling $4.0 million, $6.8 million and $6.2 million, respectively. Related Party Transactions In the first quarter of 2015, the Company and Walton Brown, a subsidiary of The Lane Crawford Joyce Group (“LCJG”), formed two joint ventures focused on growing the Company’s business in Greater China. Following the formation of the joint ventures, both Kate Spade Hong Kong, Limited, a wholly-owned subsidiary of the Company, and Walton Brown each own 50.0% of the shares of KS China Co., Limited (“KSC”) and KS HMT Co., Limited (“KS HMT”), the holding company for the KATE SPADE businesses in Hong Kong, Macau and Taiwan. With an equal partnership structure, the Company and Walton Brown actively manage the businesses together. The joint ventures each have an initial term of 10 years. The Company accounts for its investments in the joint ventures under the equity method of accounting. The Company’s equity in losses of its equity investees was $0.3 million and $1.2 million during the first quarter of 2017 and 2016, respectively. During the third quarter of 2015, the Company and Walton Brown each loaned $5.0 million to KSC. During the first quarter of 2016, the Company and Walton Brown each made additional loans of $0.7 million to KSC and $5.8 million to KS HMT. As of April 1, 2017, December 31, 2016 and April 2, 2016, the Company recorded $30.4 million, $30.5 million and $35.7 million, respectively, related to its Investments in and advances to unconsolidated subsidiaries, which was included in Other assets on the accompanying Condensed Consolidated Balance Sheets.

SEGMENT REPORTING

SEGMENT REPORTING	3 Months Ended
	Apr. 01, 2017
SEGMENT REPORTING
SEGMENT REPORTING	10. SEGMENT REPORTING The Company operates its kate spade new york and JACK SPADE NEW YORK brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. The Company’s Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company’s activities for which separate financial information is available and which is utilized on a regular basis by the Company’s CODM to evaluate performance and allocate resources. In identifying the Company’s reportable segments, the Company considers its management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of its operating segments. As such, the Company configured its operations into the following three reportable segments: · KATE SPADE North America segment – consists of the Company’s kate spade new york and JACK SPADE NEW YORK brands in North America. · KATE SPADE International segment – consists of the Company’s kate spade new york and JACK SPADE NEW YORK brands in International markets (principally in Japan, Asia (excluding Japan) , Europe and Latin America). · Adelington Design Group segment – primarily consists of exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands. The Company’s Chief Executive Officer has been identified as the CODM. The Company’s measure of segment profitability is Adjusted EBITDA of each reportable segment. Accordingly, the CODM evaluates performance and allocates resources based primarily on Segment Adjusted EBITDA. Segment Adjusted EBITDA excludes: (i) depreciation and amortization; (ii) charges due to streamlining initiatives, brand-exiting activities and acquisition related costs; and (iii) losses on asset disposals and impairments. The costs of all corporate departments that serve the respective segment are fully allocated, other than non-cash share-based compensation expense. The Company does not allocate amounts reported below Operating income to its reportable segments, other than equity 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. Sales are reported based on a destination basis. The Company, as licensor, also licenses to third parties the right to produce and market products bearing certain Company-owned trademarks; the resulting royalty income is included within the results of the associated segment. Adjusted Dollars in thousands Net Sales % to Total EBITDA % of Sales Three Months Ended April 1, 2017 (13 Weeks) KATE SPADE North America $ 217,398 $ 22,788 10.5 % KATE SPADE International 48,976 7,778 15.9 % Adelington Design Group 4,851 507 10.5 % Totals $ 271,225 Three Months Ended April 2, 2016 (13 Weeks) KATE SPADE North America $ 218,677 $ 11.2 % KATE SPADE International 48,883 17.5 % Adelington Design Group 6,862 31.8 % Totals $ 274,422 The following table provides a reconciliation to Net Income: Three Months Ended April 1, 2017 April 2, 2016 In thousands (13 Weeks) (13 Weeks) Reportable Segments Adjusted EBITDA: KATE SPADE North America $ 22,788 $ 24,587 KATE SPADE International (a) 7,778 8,537 Adelington Design Group 507 2,185 Total Reportable Segments Adjusted EBITDA 31,073 35,309 Depreciation and amortization, net (b) (11,485) (10,721) Loss on asset disposals and impairments, net (6,767) (206) Share-based compensation (6,199) (7,910) Equity loss included in Reportable Segments Adjusted EBITDA 260 1,241 Operating Income 6,882 17,713 Other income (expense), net (a) 607 (247) Interest expense, net (4,545) (4,996) Provision for income taxes 1,750 1,554 Discontinued operations, net of income taxes 165 720 Net Income $ 1,359 $ 11,636 (a) Amounts include equity in the losses of the Company’s equity method investees of $0.3 million and $1.2 million for the three months ended April 1, 2017 and April 2, 2016, respectively. (b) Excludes amortization included in Interest expense, net. GEOGRAPHIC DATA: Dollars in thousands Net Sales % to Total Three Months Ended April 1, 2017 (13 Weeks) Domestic $ 213,313 % International 57,912 % Total $ 271,225 % Three Months Ended April 2, 2016 (13 Weeks) Domestic $ 218,190 % International 56,232 % Total $ 274,422 % There were no significant changes in segment assets during the three months ended April 1, 2017.

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS	3 Months Ended
	Apr. 01, 2017
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS	11. DERIVATIVE INSTRUMENTS In order to reduce exposures related to changes in foreign currency exchange rates, the Company uses forward contracts and options and may utilize foreign currency collars and swap contracts for the purpose of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases mainly by its businesses in Japan and Canada. As of April 1, 2017, the Company had forward contracts to sell 2.8 billion yen for $25.9 million maturing through June 2018 and 17.6 million Canadian dollars for $13.3 million maturing through April 2018. The Company uses foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with intercompany loans. As of April 1, 2017, the Company had forward contracts to sell 5.1 billion yen for $45.8 million maturing through June 2017, 14.0 million Euro for $15.1 million maturing through June 2017, 8.0 million British pounds for $10.0 million maturing through June 2017, 5.0 million British pounds for 5.8 million Euro through June 2017, and 5.3 million Canadian dollars for $4.0 million maturing through June 2017. Transaction losses of $2.6 million and $3.1 million related to these derivative instruments were reflected within Other income (expense), net for the three months ended April 1, 2017 and April 2, 2016, respectively. The following table summarizes the fair value and presentation in the Condensed Consolidated Financial Statements for derivatives designated as hedging instruments and derivatives not designated as hedging instruments: Foreign Currency Contracts Designated as Hedging Instruments In thousands Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value April 1, 2017 Other current assets $ 23,300 $ 1,176 Accrued expenses $ 15,900 $ 187 December 31, 2016 Other current assets 40,300 2,388 Accrued expenses 1,600 5 April 2, 2016 Other current assets 17,432 137 Accrued expenses 16,918 680 Foreign Currency Contracts Not Designated as Hedging Instruments In thousands Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value April 1, 2017 Other current assets $ 15,145 $ 132 Accrued expenses $ 65,938 $ 336 December 31, 2016 Other current assets 11,500 11 Accrued expenses 43,439 408 April 2, 2016 Other current assets — — Accrued expenses 45,459 287 The following table summarizes the effect of foreign currency exchange contracts designated as hedging instruments on Location of Gain or Amount of Gain or (Loss) Reclassified Amount of Gain or Amount of Gain or (Loss) Recognized from Accumulated (Loss) Reclassified (Loss) Recognized in in Accumulated OCI into Operations from Accumulated Operations on OCI on Derivative (Effective and OCI into Operations Derivative In thousands (Effective Portion) Ineffective Portion) (Effective Portion) (Ineffective Portion) Three Months Ended April 1, 2017 (13 Weeks) $ (841) Cost of goods sold $ (447) $ — Three Months Ended April 2, 2016 (13 Weeks) (1,124) Cost of goods sold 344 —

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION	3 Months Ended
	Apr. 01, 2017
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION	12. SHARE-BASED COMPENSATION The Company recognizes the cost of all employee share-based awards on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. The Company issues stock options, restricted shares, restricted share units and shares with performance features to employees under share-based compensation plans. Stock options are issued at the current market price, have a three-year vesting period and a contractual term of 7 years. Compensation expense for restricted shares, including shares with performance features, is measured at fair value on the date of grant based on the number of shares granted and the quoted market price of the Company’s common stock. Such value is recognized as expense over the vesting period of the award, net of estimated forfeitures. Compensation expense for restricted share units with performance features and a market condition is measured at fair value, subject to the market condition on the date of grant and based on the number of shares expected to vest subject to the performance condition. Such value is recognized as expense over the vesting period of the award, net of estimated forfeitures. Compensation expense related to the Company’s share-based payment awards totaled $6.2 million and $7.9 million for the three months ended April 1, 2017 and April 2, 2016, respectively. 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 years. The Company utilizes the Trinomial 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. 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 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 stock option plans as of April 1, 2017 and changes therein during the three month period then ended are as follows: Weighted Weighted Average Aggregate Average Exercise Remaining Intrinsic Value Shares Price Contractual Term (In thousands) Outstanding December 31, 2016 720,160 $ 2.5 $ 5,281 Exercised (100,000) 8.10 1,274 Outstanding at April 1, 2017 620,160 $ 16.42 2.5 $ 6,099 Vested or expected to vest at April 1, 2017 609,345 $ 16.11 2.5 $ 6,097 Exercisable at April 1, 2017 533,234 $ 13.58 2.1 $ 6,083 As of April 1, 2017, there were approximately 0.1 million nonvested stock options. The weighted average grant date fair value per award for nonvested stock options was $15.69. As of April 1, 2017, there was $0.9 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 1.0 year. The total fair value of shares vested during the three month periods ended April 1, 2017 and April 2, 2016 was $0.6 million and $0.7 million, respectively. Restricted Stock In 2017, the Company granted 343,886 performance shares that vest 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”) ranking relative to the TSR’s of the Bloomberg Intelligence Global Luxury Goods Index constituents. The performance shares have a grant date fair value of $13.4 million that was calculated using a Monte Carlo simulation model. In 2016, the Company granted 452,922 performance shares that vest 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 TSR ranking relative to the TSR’s of the S&P Mid-Cap 400 constituents as well as an earnings-based performance condition. The performance shares have a grant date fair value of $11.8 million that was calculated using a Monte Carlo simulation model. Three Months Ended Valuation Assumptions: April 1, 2017 April 2, 2016 Weighted-average fair value $ 39.10 $ 25.99 Expected volatility 48.6% 42.5% Dividend yield — — Risk-free rate 1.5% 1.0% Weighted-average expected annual forfeiture 3.6% 3.6% A summary of award activity under restricted stock plans as of April 1, 2017 and changes therein during the three month period then ended are as follows: Weighted Average Grant Shares Date Fair Value Nonvested stock at December 31, 2016 2,880,155 $ 36.33 Granted 1,081,910 28.63 Vested (a) (527,997) 46.01 Cancelled (a) (356,307) 46.24 Nonvested stock at April 1, 2017 3,077,761 $ 30.81 Expected to vest as of April 1, 2017 (b) 2,192,491 $ 31.75 (a) Includes market share units granted to a group of key executives with the vesting of such units measured by the performance of the Company’s stock price over the vesting period. (b) Excludes the potential impact of the performance share multiplier, which will vary from 30% to 200% of the number of market share units 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. As of April 1, 2017, there was $43.1 million of total unrecognized compensation cost related to nonvested stock awards granted under restricted stock plans. That expense is expected to be recognized over a weighted average period of 2.2 years. The total fair value of shares vested during the three month periods ended April 1, 2017 and April 2, 2016 was $24.3 million and $3.7 million, respectively.

DISCONTINUED OPERATIONS AND DIS

DISCONTINUED OPERATIONS AND DISPOSALS	3 Months Ended
	Apr. 01, 2017
DISCONTINUED OPERATIONS AND DISPOSALS
DISCONTINUED OPERATIONS AND DISPOSALS	13. DISCONTINUED OPERATIONS AND DISPOSALS The Company completed the sale of Lucky Brand in February of 2014 and substantially completed the wind-down operations of the Juicy Couture business in the second quarter of 2014. The Company recorded pretax income of $1.2 million during the three months ended April 2, 2016, 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: Three Months Ended April 1, 2017 April 2, 2016 In thousands (13 Weeks) (13 Weeks) Income (loss) before benefit for income taxes $ 85 $ (498) Benefit for income taxes (47) — Income (loss) from discontinued operations, net of income taxes $ 132 $ (498) Gain on disposal of discontinued operations, net of income taxes $ 33 $ 1,218

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Apr. 01, 2017
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS	14. RECENT ACCOUNTING PRONOUNCEMENTS In January 2017, new accounting guidance was issued on intangibles, which simplifies the measurement of goodwill impairment testing. Under the new guidance, annual or interim goodwill impairment testing will be performed by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value and any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective for interim and annual goodwill impairment tests beginning on or after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new accounting guidance on its financial statements. In August 2016, new accounting guidance was issued which clarifies the classification of certain cash receipts and payments on the statement of cash flows. This guidance is effective for interim and annual periods beginning on or after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new accounting guidance on its financial statements. In February 2016, new accounting guidance was issued on lease transactions. The guidance was issued to increase transparency and comparability among organizations by requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and disclosing key information about leasing arrangements. This guidance is effective for interim and annual periods beginning on or after December 15, 2018. The Company is currently evaluating the impact of the adoption of the new accounting guidance on its financial statements. 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. In August 2015, this guidance was updated, which defers the effective date by one year and permits early adoption for interim and annual periods beginning on or after December 15, 2016. This guidance is effective for interim and annual periods beginning on or after December 15, 2017. The Company is continuing to evaluate the impact of the adoption of the new accounting guidance on its financial statements

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	3 Months Ended
	Apr. 01, 2017
BASIS OF PRESENTATION
BASIS OF PRESENTATION	The Condensed Consolidated Financial Statements of Kate Spade & Company and its wholly-owned and majority-owned subsidiaries (the “Company”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations; however, the Company believes that its disclosures are adequate to make the information presented not misleading. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2016 Annual Report on Form 10-K. Information presented as of December 31, 2016 is derived from audited financial statements. On February 16, 2017, the Company’s Board of Directors, together with management and in consultation with its financial advisor and legal counsel, announced that it is conducting a process to explore and evaluate strategic alternatives to further enhance shareholder value. There can be no assurance that this review process will result in a transaction or other strategic alternative of any kind. The Company operates its kate spade new york and JACK SPADE NEW YORK™ brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. The Company’s Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company’s activities for which separate financial information is available and which is utilized on a regular basis by the Company’s 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 and JACK SPADE NEW YORK brands in North America. · KATE SPADE International segment – consists of the Company’s kate spade new york and JACK SPADE NEW YORK brands in International markets (principally in Japan, Asia (excluding Japan), Europe and Latin America). · Adelington Design Group segment – primarily consists of exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the reported interim periods. Results of operations for interim periods are not necessarily indicative of results for the full year. Management has evaluated events or transactions that have occurred from the balance sheet date through the date the Company issued these financial statements.
NATURE OF OPERATIONS	NATURE OF OPERATIONS Kate Spade & Company is engaged primarily in the design and marketing of a broad range of accessories and apparel. The Company’s fiscal year ends on the Saturday closest to December 31. The 2017 fiscal year, ending December 30, 2017, reflects a 52-week period, resulting in a 13-week, three-month period for the first quarter. The 2016 fiscal year, ending December 31, 2016, reflects a 52-week period, resulting in a 13-week, three-month period for the first quarter .
PRINCIPLES OF CONSOLIDATION	PRINCIPLES OF CONSOLIDATION The Condensed 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 Company’s critical accounting policies are those that are most important to the portrayal of its financial condition and results of operations in conformity with US GAAP. These critical accounting policies are applied in a consistent manner throughout all periods presented. The Company’s critical accounting policies are summarized in Note 1 of Notes to Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The application of critical accounting policies requires that the Company make estimates and assumptions about future events and apply judgments that 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. The Company continues to monitor the critical accounting policies to ensure proper application of current rules and regulations. During the first quarter of 2017, there were no significant changes in the critical accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS	RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS On January 1, 2017, the first day of the Company’s 2017 fiscal year, the Company adopted new accounting guidance on share-based compensation, including modified retrospective adoption of the recognition of excess tax benefits and tax deficiencies in the statement of income. Upon adoption, all excess tax benefits and tax deficiencies from share-based compensation are recognized as income tax expense or benefit in the statement of income as discrete items in the reporting period in which they occur, regardless of whether the benefit reduces taxes payable in the current period. As a result of the adoption of this guidance, the Company recognized deferred tax assets of $44.3 million for the excess tax benefits that arose directly from tax deductions related to share-based compensation greater than the amounts recognized for financial reporting and also recognized an increase of an equal amount in the valuation allowance against such deferred tax assets. The Company also retrospectively adopted the accounting guidance on the presentation of shares withheld for certain employee taxes paid on the statement of cash flows. The cash paid by the Company when directly withholding shares for tax-withholding purposes is classified as a financing activity on the Condensed Consolidated Statement of Cash Flows for all periods presented. The Company elected to continue to estimate the number of share-based awards expected to vest, rather than electing to account for forfeitures as they occur to determine the amount of compensation expense to be recognized in each period.

STOCKHOLDERS' EQUITY (Tables)

STOCKHOLDERS' EQUITY (Tables)	3 Months Ended
	Apr. 01, 2017
STOCKHOLDERS' EQUITY
Schedule of activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost accounts	Activity for the three months ended April 1, 2017 in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost accounts was as follows: Common Stock Capital in Excess Retained in Treasury, In thousands of Par Value Earnings at Cost Balance as of December 31, 2016 $ 251,816 $ 1,306,096 $ (1,276,258) Net income — 1,359 — Exercise of stock options — (1,103) 1,913 Restricted shares issued, net of cancellations and shares withheld for taxes — (11,034) 6,288 Share-based compensation 6,199 — — Balance as of April 1, 2017 $ 258,015 $ 1,295,318 $ (1,268,057) Activity for the three months ended April 2, 2016 in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost accounts was as follows: Common Stock Capital in Excess Retained in Treasury, In thousands of Par Value Earnings at Cost Balance as of January 2, 2016 $ 224,677 $ 1,155,838 $ (1,281,690) Net income — 11,636 — Exercise of stock options — (223) 288 Restricted shares issued, net of cancellations and shares withheld for taxes — (1,692) 1,371 Share-based compensation 7,910 — — Balance as of April 2, 2016 $ 232,587 $ 1,165,559 $ (1,280,031)
Schedule of accumulated other comprehensive (loss) income	In thousands April 1, 2017 December 31, 2016 April 2, 2016 Cumulative translation adjustment, net of income taxes of $0 $ (26,132) $ (29,162) $ (26,076) Unrealized gains (losses) on cash flow hedging derivatives, net of income taxes of $385, $513 and $(512), respectively 736 1,002 (935) Accumulated other comprehensive loss, net of income taxes $ (25,396) $ (28,160) $ (27,011)
Schedule of the change in each component of Accumulated other comprehensive (loss) income, net of income taxes	The following table presents the change in each component of Accumulated other comprehensive (loss) income, net of income taxes for the three months ended April 1, 2017: Unrealized Gains Cumulative (Losses) on Cash Translation Flow Hedging In thousands Adjustment Derivatives Balance as of December 31, 2016 $ (29,162) $ 1,002 Other comprehensive income (loss) before reclassification 3,228 (557) Amounts reclassified from accumulated other comprehensive (loss) income (198) 291 Net current-period other comprehensive income (loss) 3,030 (266) Balance as of April 1, 2017 $ (26,132) $ 736 The following table presents the change in each component of Accumulated other comprehensive (loss) income, net of income taxes for the three months ended April 2, 2016: Unrealized Gains Cumulative (Losses) on Cash Translation Flow Hedging In thousands Adjustment Derivatives Balance as of January 2, 2016 $ (30,054) $ 13 Other comprehensive income (loss) before reclassification 3,978 (725) Amounts reclassified from accumulated other comprehensive income — (223) Net current-period other comprehensive income (loss) 3,978 (948) Balance as of April 2, 2016 $ (26,076) $ (935)

DEBT AND LINES OF CREDIT (Table

DEBT AND LINES OF CREDIT (Tables)	3 Months Ended
	Apr. 01, 2017
DEBT AND LINES OF CREDIT
Schedule of long-term debt	In thousands April 1, 2017 December 31, 2016 April 2, 2016 Term Loan credit facility, due April 2021 (a) $ 385,105 $ 385,794 $ 386,952 Revolving credit facility — — — Capital lease obligations 7,474 7,612 8,003 Total debt 392,579 393,406 394,955 Less: Short-term borrowings (b) 3,701 3,664 3,638 Long-term debt $ 388,878 $ 389,742 $ 391,317 (a) The balance as of April 1, 2017, December 31, 2016 and April 2, 2016 included aggregate unamortized debt discount and deferred financing fees of $4.9 million, $5.2 million and $6.0 million, respectively. (b) At April 1, 2017, December 31, 2016 and April 2, 2016, the balance consisted of Term Loan (as defined below) amortization payments and obligations under capital leases.
Schedule of availability under the Company's ABL Facility	Total Borrowing Outstanding Letters of Available Excess In thousands Facility (a) Base (a) Borrowings Credit Issued Capacity Capacity (b) ABL Facility (a) $ 200,000 $ 279,023 $ — $ 8,447 $ 191,553 $ 171,553 (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)	3 Months Ended
	Apr. 01, 2017
FAIR VALUE MEASUREMENTS
Schedule of financial assets and liabilities of the Company measured at fair value on recurring basis	Level 2 In thousands April 1, 2017 December 31, 2016 April 2, 2016 Financial Assets: Derivatives $ 1,308 $ 2,399 $ 137 Financial Liabilities: Derivatives $ (523) $ (413) $ (967)
Schedule of non-financial assets of the Company measured at fair value on non-recurring basis	Net Carrying Fair Value Measured and Recorded at Total Losses for the Value as of Reporting Date Using: Three Months Ended In thousands April 1, 2017 Level 1 Level 2 Level 3 April 1, 2017 Property and equipment $ 3,978 $ — $ — $ — $ 6,620
Schedule of fair values and carrying values of the Company's debt instruments	April 1, 2017 December 31, 2016 April 2, 2016 Carrying Carrying Carrying In thousands Fair Value Value Fair Value Value Fair Value Value Term Loan credit facility, due April 2021 (a) $ 390,644 $ 385,105 $ 393,405 $ 385,794 $ 388,883 $ 386,952 ABL Facility (b) — — — — — — (a) Carrying values include aggregate unamortized debt discount and deferred financing fees. (b) Borrowings under the ABL Facility bear interest based on market rate; accordingly its fair value approximates its carrying value.

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	3 Months Ended
	Apr. 01, 2017
COMMITMENTS AND CONTINGENCIES
Schedule of estimated future minimum lease payments under the noncancelable capital lease	As of April 1, 2017, the estimated future minimum lease payments under the noncancelable capital lease were as follows: In thousands 2017 $ 1,614 2018 2,194 2019 2,247 2020 2,300 2021 2,352 Thereafter 8,429 Total 19,136 Less: Amounts representing interest and executory costs (11,662) Net present values 7,474 Less: Capital lease obligations included in short-term debt (591) Long-term capital lease obligations $ 6,883

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	3 Months Ended
	Apr. 01, 2017
EARNINGS PER COMMON SHARE:
Schedule of computation of basic and diluted earnings per common share	Three Months Ended April 1, 2017 April 2, 2016 In thousands (13 Weeks) (13 Weeks) Income from continuing operations $ 1,194 $ 10,916 Income from discontinued operations, net of income taxes 165 720 Net income $ 1,359 $ 11,636 Basic weighted average shares outstanding 128,387 127,931 Stock options and nonvested shares 567 705 Diluted weighted average shares outstanding 128,954 128,636 Earnings per share: Basic Income from continuing operations $ 0.01 $ 0.09 Income from discontinued operations — — Net income $ 0.01 $ Diluted Income from continuing operations $ 0.01 $ 0.08 Income from discontinued operations — 0.01 Net income $ 0.01 $ 0.09

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	3 Months Ended
	Apr. 01, 2017
SEGMENT REPORTING
Schedule of segment reporting information, by segment	Adjusted Dollars in thousands Net Sales % to Total EBITDA % of Sales Three Months Ended April 1, 2017 (13 Weeks) KATE SPADE North America $ 217,398 $ 22,788 10.5 % KATE SPADE International 48,976 7,778 15.9 % Adelington Design Group 4,851 507 10.5 % Totals $ 271,225 Three Months Ended April 2, 2016 (13 Weeks) KATE SPADE North America $ 218,677 $ 11.2 % KATE SPADE International 48,883 17.5 % Adelington Design Group 6,862 31.8 % Totals $ 274,422
Schedule of reconciliation to Income (Loss) from Continuing Operations	The following table provides a reconciliation to Net Income: Three Months Ended April 1, 2017 April 2, 2016 In thousands (13 Weeks) (13 Weeks) Reportable Segments Adjusted EBITDA: KATE SPADE North America $ 22,788 $ 24,587 KATE SPADE International (a) 7,778 8,537 Adelington Design Group 507 2,185 Total Reportable Segments Adjusted EBITDA 31,073 35,309 Depreciation and amortization, net (b) (11,485) (10,721) Loss on asset disposals and impairments, net (6,767) (206) Share-based compensation (6,199) (7,910) Equity loss included in Reportable Segments Adjusted EBITDA 260 1,241 Operating Income 6,882 17,713 Other income (expense), net (a) 607 (247) Interest expense, net (4,545) (4,996) Provision for income taxes 1,750 1,554 Discontinued operations, net of income taxes 165 720 Net Income $ 1,359 $ 11,636 (a) Amounts include equity in the losses of the Company’s equity method investees of $0.3 million and $1.2 million for the three months ended April 1, 2017 and April 2, 2016, respectively. (b) Excludes amortization included in Interest expense, net.
Schedule of geographic data	Dollars in thousands Net Sales % to Total Three Months Ended April 1, 2017 (13 Weeks) Domestic $ 213,313 % International 57,912 % Total $ 271,225 % Three Months Ended April 2, 2016 (13 Weeks) Domestic $ 218,190 % International 56,232 % Total $ 274,422 %

DERIVATIVE INSTRUMENTS (Tables)

DERIVATIVE INSTRUMENTS (Tables)	3 Months Ended
	Apr. 01, 2017
DERIVATIVE INSTRUMENTS
Summary of effect of foreign currency exchange contracts on Condensed Consolidated Financial Statements	Location of Gain or Amount of Gain or (Loss) Reclassified Amount of Gain or Amount of Gain or (Loss) Recognized from Accumulated (Loss) Reclassified (Loss) Recognized in in Accumulated OCI into Operations from Accumulated Operations on OCI on Derivative (Effective and OCI into Operations Derivative In thousands (Effective Portion) Ineffective Portion) (Effective Portion) (Ineffective Portion) Three Months Ended April 1, 2017 (13 Weeks) $ (841) Cost of goods sold $ (447) $ — Three Months Ended April 2, 2016 (13 Weeks) (1,124) Cost of goods sold 344 —
Designated as Hedging Instrument
DERIVATIVE INSTRUMENTS
Summary of fair value and presentation in Condensed Consolidated Financial Statements for derivatives	Foreign Currency Contracts Designated as Hedging Instruments In thousands Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value April 1, 2017 Other current assets $ 23,300 $ 1,176 Accrued expenses $ 15,900 $ 187 December 31, 2016 Other current assets 40,300 2,388 Accrued expenses 1,600 5 April 2, 2016 Other current assets 17,432 137 Accrued expenses 16,918 680
Not Designated as Hedging Instrument
DERIVATIVE INSTRUMENTS
Summary of fair value and presentation in Condensed Consolidated Financial Statements for derivatives	Foreign Currency Contracts Not Designated as Hedging Instruments In thousands Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value April 1, 2017 Other current assets $ 15,145 $ 132 Accrued expenses $ 65,938 $ 336 December 31, 2016 Other current assets 11,500 11 Accrued expenses 43,439 408 April 2, 2016 Other current assets — — Accrued expenses 45,459 287

SHARE-BASED COMPENSATION (Table

SHARE-BASED COMPENSATION (Tables)	3 Months Ended
	Apr. 01, 2017
SHARE-BASED COMPENSATION
Summary of award activity under stock option plans	Weighted Weighted Average Aggregate Average Exercise Remaining Intrinsic Value Shares Price Contractual Term (In thousands) Outstanding December 31, 2016 720,160 $ 2.5 $ 5,281 Exercised (100,000) 8.10 1,274 Outstanding at April 1, 2017 620,160 $ 16.42 2.5 $ 6,099 Vested or expected to vest at April 1, 2017 609,345 $ 16.11 2.5 $ 6,097 Exercisable at April 1, 2017 533,234 $ 13.58 2.1 $ 6,083
Summary of award activity under restricted stock plans	Weighted Average Grant Shares Date Fair Value Nonvested stock at December 31, 2016 2,880,155 $ 36.33 Granted 1,081,910 28.63 Vested (a) (527,997) 46.01 Cancelled (a) (356,307) 46.24 Nonvested stock at April 1, 2017 3,077,761 $ 30.81 Expected to vest as of April 1, 2017 (b) 2,192,491 $ 31.75 (a) Includes market share units granted to a group of key executives with the vesting of such units measured by the performance of the Company’s stock price over the vesting period. (b) Excludes the potential impact of the performance share multiplier, which will vary from 30% to 200% of the number of market share units 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.
Performance Shares
SHARE-BASED COMPENSATION
Schedule of valuation assumptions used to estimate fair value of awards granted	Three Months Ended Valuation Assumptions: April 1, 2017 April 2, 2016 Weighted-average fair value $ 39.10 $ 25.99 Expected volatility 48.6% 42.5% Dividend yield — — Risk-free rate 1.5% 1.0% Weighted-average expected annual forfeiture 3.6% 3.6%

DISCONTINUED OPERATIONS AND D31

DISCONTINUED OPERATIONS AND DISPOSALS (Tables)	3 Months Ended
	Apr. 01, 2017
DISCONTINUED OPERATIONS AND DISPOSALS
Summary of results of discontinued operations	Three Months Ended April 1, 2017 April 2, 2016 In thousands (13 Weeks) (13 Weeks) Income (loss) before benefit for income taxes $ 85 $ (498) Benefit for income taxes (47) — Income (loss) from discontinued operations, net of income taxes $ 132 $ (498) Gain on disposal of discontinued operations, net of income taxes $ 33 $ 1,218

BASIS OF PRESENTATION - Segment

BASIS OF PRESENTATION - Segments (Details) - segment	3 Months Ended		12 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Dec. 30, 2017	Dec. 31, 2016
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Number of reportable segments	3
Period in fiscal year	91 days	91 days	364 days	364 days
KATE SPADE North America
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Number of operating segments	1
KATE SPADE International
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Number of operating segments	3

BASIS OF PRESENTATION - Recent

BASIS OF PRESENTATION - Recent Accounting Pronouncements (Details) - Accounting Standards Update 2016-09 - Adjustment $ in Millions	Jan. 01, 2017USD ($)
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
Deferred tax assets	$ 44.3
Deferred tax assets, valuation allowance	$ 44.3

STOCKHOLDERS' EQUITY - Activity

STOCKHOLDERS' EQUITY - Activity during the period (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost
Balance at beginning of period	$ 429,931
Net income	1,359	$ 11,636
Balance at end of period	436,317	267,541
Capital in Excess of Par Value
Activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost
Balance at beginning of period	251,816	224,677
Share-based compensation	6,199	7,910
Balance at end of period	258,015	232,587
Retained Earnings
Activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost
Balance at beginning of period	1,306,096	1,155,838
Net income	1,359	11,636
Exercise of stock options	(1,103)	(223)
Restricted shares issued, net of cancellations and shares withheld for taxes	(11,034)	(1,692)
Balance at end of period	1,295,318	1,165,559
Treasury Shares
Activity in the Capital in excess of par value, Retained earnings and Common stock in treasury, at cost
Balance at beginning of period	(1,276,258)	(1,281,690)
Exercise of stock options	1,913	288
Restricted shares issued, net of cancellations and shares withheld for taxes	6,288	1,371
Balance at end of period	$ (1,268,057)	$ (1,280,031)

STOCKHOLDERS' EQUITY - AOCI (De

STOCKHOLDERS' EQUITY - AOCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Accumulated other comprehensive (loss) Income
Cumulative translation adjustment, net of income taxes of $0			$ (26,132)	$ (29,162)	$ (26,076)
Unrealized gains (losses) on cash flow hedging derivatives, net of income taxes of $385, $513 and $(512), respectively			736	1,002	(935)
Accumulated other comprehensive loss, net of income taxes	$ (28,160)	$ (27,011)	(25,396)	(28,160)	(27,011)
Income tax effect on cumulative translation adjustment			0	0	0
Income tax effect on unrealized gains (losses) on cash flow hedging derivatives			385	513	(512)
Change in each component of Accumulated other comprehensive (loss) income, net of income taxes
Balance at beginning of period	(28,160)
Balance at end of period	(25,396)	(27,011)
Cumulative Translation Adjustment
Accumulated other comprehensive (loss) Income
Accumulated other comprehensive loss, net of income taxes	(29,162)	(30,054)	(26,132)	(29,162)	(26,076)
Change in each component of Accumulated other comprehensive (loss) income, net of income taxes
Balance at beginning of period	(29,162)	(30,054)
Other comprehensive income (loss) before reclassification	3,228	3,978
Amounts reclassified from accumulated other comprehensive (loss) income	(198)
Net current-period other comprehensive income (loss)	3,030	3,978
Balance at end of period	(26,132)	(26,076)
Unrealized Gains (Losses) on Cash Flow Hedging Derivatives
Accumulated other comprehensive (loss) Income
Accumulated other comprehensive loss, net of income taxes	1,002	13	$ 736	$ 1,002	$ (935)
Change in each component of Accumulated other comprehensive (loss) income, net of income taxes
Balance at beginning of period	1,002	13
Other comprehensive income (loss) before reclassification	(557)	(725)
Amounts reclassified from accumulated other comprehensive (loss) income	291	(223)
Net current-period other comprehensive income (loss)	(266)	(948)
Balance at end of period	$ 736	$ (935)

INCOME TAXES (Details)

INCOME TAXES (Details) $ in Millions	Apr. 01, 2017USD ($)
Uncertain tax positions	$ 9.8
Minimum
Expected reduction in the liability for unrecognized tax benefits	2.5
Maximum
Expected reduction in the liability for unrecognized tax benefits	$ 5.4

DEBT AND LINES OF CREDIT - Summ

DEBT AND LINES OF CREDIT - Summary (Details) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
DEBT AND LINES OF CREDIT
Total debt	$ 392,579	$ 393,406	$ 394,955
Less: Short-term borrowings	3,701	3,664	3,638
Long-term debt	388,878	389,742	391,317
Term Loan credit facility, due April 2021
DEBT AND LINES OF CREDIT
Total debt	385,105	385,794	386,952
Unamortized debt discount and deferred financing fees	4,900	5,200	6,000
Capital lease obligations
DEBT AND LINES OF CREDIT
Total debt	$ 7,474	$ 7,612	$ 8,003

DEBT AND LINES OF CREDIT - Term

DEBT AND LINES OF CREDIT - Term Loan (Details) - Term Loan credit facility, due April 2021 $ in Millions	Apr. 10, 2014USD ($)	Apr. 01, 2017USD ($)
DEBT AND LINES OF CREDIT
Aggregate principal amount	$ 400
Quarterly amortization payments	$ 1
Additional borrowing capacity		$ 100
LIBOR
DEBT AND LINES OF CREDIT
Floor rate (as a percent)		1.00%
Spread on variable rate basis		3.00%
Maximum
DEBT AND LINES OF CREDIT
Consolidated net total secured debt ratio used for determining additional amount		3.75

DEBT AND LINES OF CREDIT - ABL

DEBT AND LINES OF CREDIT - ABL Facility (Details) $ in Thousands	May 16, 2014USD ($)item	Apr. 01, 2017USD ($)
ABL Facility
DEBT AND LINES OF CREDIT
Maximum borrowing capacity	$ 200,000	$ 200,000
Number of borrowing options under amended facility | item	2
Fixed charge coverage ratio	1
Trailing number of quarters over which fixed charge coverage ratio is required to be maintained | item	4
Availability for number of consecutive business days to apply cash collections to reduce outstanding borrowings, maximum availability under credit facility	3 days
Availability below which specified fixed charge coverage ratio has to be maintained	$ 15,000
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 for number of consecutive business days for which specified fixed charge coverage ratio has to be maintained	3 days
ABL Facility | Maximum
DEBT AND LINES OF CREDIT
Covenant to apply cash collections to reduce outstanding borrowings, maximum availability under credit facility	$ 20,000
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%
Swingline revolving credit line
DEBT AND LINES OF CREDIT
Maximum borrowing capacity	$ 30,000
Multi-currency revolving credit line
DEBT AND LINES OF CREDIT
Maximum borrowing capacity	35,000
Increased maximum borrowing capacity	100,000
Letters of credit
DEBT AND LINES OF CREDIT
Maximum borrowing capacity	125,000
Standby letters of credit
DEBT AND LINES OF CREDIT
Maximum borrowing capacity	$ 40,000

DEBT AND LINES OF CREDIT - AB40

DEBT AND LINES OF CREDIT - ABL Facility Availability (Details) - ABL Facility - USD ($) $ in Thousands	May 16, 2014	Apr. 01, 2017
Availability under amended facility
Maximum borrowing capacity	$ 200,000	$ 200,000
Borrowing Base		279,023
Letters of Credit Issued		8,447
Available Capacity		191,553
Excess Capacity		$ 171,553
Maximum
Availability under amended facility
Covenant to apply cash collections to reduce outstanding borrowings, maximum availability under credit facility	$ 20,000

FAIR VALUE MEASUREMENTS - Finan

FAIR VALUE MEASUREMENTS - Financial assets and liabilities (Details) - Fair value on recurring basis - Fair Value Measured and Recorded at Reporting Date Using: Level 2 - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Assets and liabilities measured at fair value
Financial Assets: Derivatives	$ 1,308	$ 2,399	$ 137
Financial Liabilities: Derivatives	$ (523)	$ (413)	$ (967)

FAIR VALUE MEASUREMENTS - Non-f

FAIR VALUE MEASUREMENTS - Non-financial Assets (Details) - Fair value on non-recurring basis $ in Thousands	3 Months Ended
	Apr. 01, 2017USD ($)
Assets and liabilities measured at fair value
Property and equipment - Total losses	$ 6,620
Net Carrying Value
Assets and liabilities measured at fair value
Property and equipment	$ 3,978

FAIR VALUE MEASUREMENTS - FV of

FAIR VALUE MEASUREMENTS - FV of debt (Details) - Term Loan credit facility, due April 2021 - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Fair Value
Fair values and carrying values of debt instruments
Debt instruments	$ 390,644	$ 393,405	$ 388,883
Net Carrying Value
Fair values and carrying values of debt instruments
Debt instruments	$ 385,105	$ 385,794	$ 386,952

COMMITMENTS AND CONTINGENCIES44

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	3 Months Ended
	Jun. 29, 2013item	Apr. 01, 2017USD ($)item
Estimated future minimum lease payments under the noncancelable capital lease
2,017		$ 1,614
2,018		2,194
2,019		2,247
2,020		2,300
2,021		2,352
Thereafter		8,429
Total		19,136
Less: Amounts representing interest and executory costs		(11,662)
Net present values		7,474
Less: Capital lease obligations included in short-term debt		(591)
Long-term capital lease obligations		$ 6,883
Various dispositions
Capital lease obligations
Number of store leases assigned to third parties | item		277
Number of leases for which the entity is secondarily liable | item		82
Future aggregate payments under disposition leases		$ 60,700
Sale Leaseback Agreement for North Bergen, New Jersey Office
Capital lease obligations
Lease term	12 years
Number of renewal options under the sale-leaseback transaction | item	2
Term of options under the sale-leaseback transaction	5 years

STREAMLINING INITIATIVES - By T

STREAMLINING INITIATIVES - By Type (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
STREAMLINING INITIATIVES
Expenses related to streamlining initiatives	$ 0	$ 0
Streamlining initiatives liability	2.7
Expected payments in next twelve months	$ 0.2

EARNINGS PER COMMON SHARE - Bas

EARNINGS PER COMMON SHARE - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Basic and diluted earnings per common share
Income from continuing operations	$ 1,194	$ 10,916
Income from discontinued operations, net of income taxes	165	720
Basic net income	1,359	11,636
Diluted net income	$ 1,359	$ 11,636
Basic weighted average shares outstanding	128,387	127,931
Stock options and nonvested shares	567	705
Diluted weighted average shares outstanding	128,954	128,636
Basic earnings per share:
Income from continuing operations (in dollars per share)	$ 0.01	$ 0.09
Net income (in dollars per share)	0.01	0.09
Earnings per Share, Diluted:
Income from continuing operations (in dollars per share)	0.01	0.08
Income from discontinued operations (in dollars per share)		0.01
Net income (in dollars per share)	$ 0.01	$ 0.09

ADDITIONAL FINANCIAL INFORMAT47

ADDITIONAL FINANCIAL INFORMATION - Cash flows disclosures (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Dec. 31, 2016
ADDITIONAL FINANCIAL INFORMATION
Income tax payments	$ 2	$ 1.1
Interest payments	4.2	8.3
Accrued capital expenditures	$ 4	$ 6.2	$ 6.8

ADDITIONAL FINANCIAL INFORMAT48

ADDITIONAL FINANCIAL INFORMATION - Related party disclosures (Details) $ in Thousands	3 Months Ended
	Apr. 01, 2017USD ($)	Apr. 02, 2016USD ($)	Oct. 03, 2015USD ($)	Apr. 04, 2015item	Dec. 31, 2016USD ($)
Related Party Transactions
Payments to acquire additional interest in investee		$ 6,500
Net Sales	$ 271,225	274,422
Equity losses of equity investees	(260)	(1,241)
Other assets
Related Party Transactions
Investments in and advances to Joint venture	$ 30,400	35,700			$ 30,500
Co-venturer, Walton Brown
Related Party Transactions
Number of Joint Ventures | item				2
KSC | Joint venture
Related Party Transactions
Ownership interest (as a percent)				50.00%
Initial term of joint venture				10 years
Loans to related parties during the period		700	$ 5,000
KSC | Walton Brown | Joint venture
Related Party Transactions
Ownership interest (as a percent)				50.00%
Loans to related parties during the period		700	$ 5,000
KS HMT | Joint venture
Related Party Transactions
Ownership interest (as a percent)				50.00%
Initial term of joint venture				10 years
Loans to related parties during the period		5,800
KS HMT | Walton Brown | Joint venture
Related Party Transactions
Ownership interest (as a percent)				50.00%
Loans to related parties during the period		$ 5,800

SEGMENT REPORTING - Sales and E

SEGMENT REPORTING - Sales and EBITDA (Details) $ in Thousands	3 Months Ended
	Apr. 01, 2017USD ($)segment	Apr. 02, 2016USD ($)
SEGMENT REPORTING
Number of reportable segments | segment	3
Net Sales	$ 271,225	$ 274,422
% to Total	100.00%	100.00%
Adjusted EBITDA	$ 31,073	$ 35,309
KATE SPADE North America
SEGMENT REPORTING
Number of operating segments | segment	1
Net Sales	$ 217,398	$ 218,677
% to Total	80.10%	79.70%
Adjusted EBITDA	$ 22,788	$ 24,587
% of Sales	10.50%	11.20%
KATE SPADE International
SEGMENT REPORTING
Number of operating segments | segment	3
Net Sales	$ 48,976	$ 48,883
% to Total	18.10%	17.80%
Adjusted EBITDA	$ 7,778	$ 8,537
% of Sales	15.90%	17.50%
Adelington Design Group
SEGMENT REPORTING
Net Sales	$ 4,851	$ 6,862
% to Total	1.80%	2.50%
Adjusted EBITDA	$ 507	$ 2,185
% of Sales	10.50%	31.80%

SEGMENT REPORTING - Reconciliat

SEGMENT REPORTING - Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Reconciliation to Net Income
Adjusted EBITDA	$ 31,073	$ 35,309
Depreciation and amortization, net	(11,485)	(10,721)
Loss on asset disposals and impairments, net	(6,767)	(206)
Share-based compensation	(6,199)	(7,910)
Equity loss included in Reportable Segments Adjusted EBITDA	260	1,241
Operating Income	6,882	17,713
Other income (expense), net	607	(247)
Interest expense, net	(4,545)	(4,996)
Provision for income taxes	1,750	1,554
Discontinued operations, net of income taxes	165	720
Net Income	1,359	11,636
KATE SPADE North America
Reconciliation to Net Income
Adjusted EBITDA	22,788	24,587
KATE SPADE International
Reconciliation to Net Income
Adjusted EBITDA	7,778	8,537
Adelington Design Group
Reconciliation to Net Income
Adjusted EBITDA	507	2,185
Equity method investee
Reconciliation to Net Income
Equity loss included in Reportable Segments Adjusted EBITDA	$ 300	$ 1,200

SEGMENT REPORTING - Geographic

SEGMENT REPORTING - Geographic Category (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
GEOGRAPHIC DATA
Net Sales	$ 271,225	$ 274,422
% to Total	100.00%	100.00%
Domestic
GEOGRAPHIC DATA
Net Sales	$ 213,313	$ 218,190
% to Total	78.60%	79.50%
International
GEOGRAPHIC DATA
Net Sales	$ 57,912	$ 56,232
% to Total	21.40%	20.50%

DERIVATIVE INSTRUMENTS - Design

DERIVATIVE INSTRUMENTS - Designated as hedging (Details) - Apr. 01, 2017 - Foreign Exchange Forward Contract - Designated as Hedging Instrument CAD in Millions, $ in Millions, ¥ in Billions	JPY (¥)	USD ($)	CAD
Japan, Yen
DERIVATIVE INSTRUMENTS
Forward contracts to sell foreign currency in exchange of U.S. dollars	¥ 2.8	$ 25.9
Canada, Dollars
DERIVATIVE INSTRUMENTS
Forward contracts to sell foreign currency in exchange of U.S. dollars		$ 13.3	CAD 17.6

DERIVATIVE INSTRUMENTS - Not de

DERIVATIVE INSTRUMENTS - Not designated as hedging (Details) - Not Designated as Hedging Instrument € in Millions, £ in Millions, CAD in Millions, $ in Millions, ¥ in Billions	3 Months Ended
	Apr. 01, 2017USD ($)	Apr. 02, 2016USD ($)	Apr. 01, 2017JPY (¥)	Apr. 01, 2017GBP (£)	Apr. 01, 2017EUR (€)	Apr. 01, 2017USD ($)	Apr. 01, 2017CAD
Foreign Exchange Forward Contract | Other expense, net
DERIVATIVE INSTRUMENTS
Transaction losses related to derivative instruments reflected within Other expense, net	$ 2.6	$ 3.1
Foreign Exchange Forward Contract | Japan, Yen
DERIVATIVE INSTRUMENTS
Forward contracts to sell foreign currency in exchange of U.S. dollars			¥ 5.1			$ 45.8
Foreign Exchange Forward Contract | Euro
DERIVATIVE INSTRUMENTS
Forward contracts to sell foreign currency in exchange of U.S. dollars					€ 14	15.1
Foreign Exchange Forward Contract | Canada, Dollars
DERIVATIVE INSTRUMENTS
Forward contracts to sell foreign currency in exchange of U.S. dollars						4	CAD 5.3
Foreign Exchange Forward Contract 1, British pounds | United Kingdom, Pounds
DERIVATIVE INSTRUMENTS
Forward contracts to sell foreign currency in exchange of U.S. dollars				£ 8		$ 10
Foreign Exchange Forward Contract 2, British pounds | United Kingdom, Pounds
DERIVATIVE INSTRUMENTS
Forward contracts to sell foreign currency in exchange of U.S. dollars				£ 5	€ 5.8

DERIVATIVE INSTRUMENTS - Notion

DERIVATIVE INSTRUMENTS - Notional amount and FV (Details) - Foreign Currency Contract - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2016	Apr. 02, 2016
Designated as Hedging Instrument | Other current assets
Asset Derivatives
Asset Derivatives, Notional amount	$ 23,300	$ 40,300	$ 17,432
Asset Derivatives, Fair value	1,176	2,388	137
Designated as Hedging Instrument | Accrued expenses
Liability Derivatives
Liability Derivatives, Notional Amount	15,900	1,600	16,918
Liability Derivatives, Fair Value	187	5	680
Not Designated as Hedging Instrument | Other current assets
Asset Derivatives
Asset Derivatives, Notional amount	15,145	11,500
Asset Derivatives, Fair value	132	11
Not Designated as Hedging Instrument | Accrued expenses
Liability Derivatives
Liability Derivatives, Notional Amount	65,938	43,439	45,459
Liability Derivatives, Fair Value	$ 336	$ 408	$ 287

DERIVATIVE INSTRUMENTS - Gain L

DERIVATIVE INSTRUMENTS - Gain Loss (Details) - Designated as Hedging Instrument - Foreign Currency Contract - Cost of goods sold - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
Derivative instruments, Gain (Loss)
Amount of Gain or (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion)	$ (841)	$ (1,124)
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Operations (Effective Portion)	$ (447)	$ 344

SHARE-BASED COMPENSATION - Expe

SHARE-BASED COMPENSATION - Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
SHARE-BASED COMPENSATION
Share-based compensation expense	$ 6,199	$ 7,910
Stock options
SHARE-BASED COMPENSATION
Vesting period	3 years
Contractual term	7 years

SHARE-BASED COMPENSATION - Opti

SHARE-BASED COMPENSATION - Options (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Dec. 31, 2016
SHARE-BASED COMPENSATION
Vesting period	3 years
Contractual term	7 years
Shares
Outstanding at the beginning of the period (in shares)	720,160
Exercised (in shares)	(100,000)
Outstanding at end of the period (in shares)	620,160		720,160
Vested or expected to vest at the end of the period (in shares)	609,345
Exercisable at the end of the period (in shares)	533,234
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 15.26
Exercised (in dollars per share)	8.10
Outstanding at the end of the period (in dollars per share)	16.42		$ 15.26
Vested or expected to vest at the end of the period (in dollars per share)	16.11
Exercisable at the end of the period (in dollars per share)	$ 13.58
Weighted Average Remaining Contractual Term
Outstanding at the end of the period	2 years 6 months		2 years 6 months
Vested or expected to vest at the end of the period	2 years 6 months
Exercisable at the end of the period	2 years 1 month 6 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period (in dollars)	$ 5,281
Exercised (in dollars)	1,274
Outstanding at the end of the period (in dollars)	6,099		$ 5,281
Vested or expected to vest at the end of the period (in dollars)	6,097
Exercisable at the end of the period (in dollars)	$ 6,083
Additional disclosure
Nonvested stock options outstanding (in shares)	100,000
Weighted average grant date fair value per award for nonvested stock options (in dollars per share)	$ 15.69
Total unrecognized compensation cost related to nonvested stock options granted	$ 900
Weighted average recognition period of unrecognized stock-based compensation expense	1 year
Fair value of shares vested under stock option plans	$ 600	$ 700

SHARE-BASED COMPENSATION - Perf

SHARE-BASED COMPENSATION - Performance Units (Details) - Performance Shares - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		12 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Dec. 31, 2016
SHARE-BASED COMPENSATION
Granted (in shares)	343,886		452,922
Vesting period	3 years		3 years
Grant date fair value (in dollars)	$ 13.4		$ 11.8
Valuation Assumptions:
Weighted-average fair value (in dollars per share)	$ 39.10	$ 25.99
Expected volatility (as a percent)	48.60%	42.50%
Risk-free rate (as a percent)	1.50%	1.00%
Weighted-average expected annual forfeiture (as a percent)	3.60%	3.60%
Minimum
SHARE-BASED COMPENSATION
Number of awards to be granted depending on the Company's TSR relative to the TSR of the S&P Mid-Cap 400 Index (as a percent)	0.00%		0.00%
Maximum
SHARE-BASED COMPENSATION
Number of awards to be granted depending on the Company's TSR relative to the TSR of the S&P Mid-Cap 400 Index (as a percent)	200.00%		200.00%

SHARE-BASED COMPENSATION - Rest

SHARE-BASED COMPENSATION - Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		12 Months Ended
	Apr. 01, 2017	Apr. 02, 2016	Dec. 31, 2016
Restricted Stock Awards
Shares
Nonvested stock at the beginning of the period (in shares)	2,880,155
Granted (in shares)	1,081,910
Vested (in shares)	(527,997)
Cancelled (in shares)	(356,307)
Nonvested stock at the end of the period (in shares)	3,077,761		2,880,155
Expected to vest at the end of the period (in shares)	2,192,491
Weighted Average Grant Date Fair Value
Nonvested stock at the beginning of the period (in dollars per share)	$ 36.33
Granted (in dollars per share)	28.63
Vested (in dollars per share)	46.01
Cancelled (in dollars per share)	46.24
Nonvested stock at the end of the period (in dollars per share)	30.81		$ 36.33
Expected to vest at the end of the period (in dollars per share)	$ 31.75
Additional disclosures
Total unrecognized compensation cost related to nonvested stock awards granted under restricted stock plans	$ 43.1
Weighted average recognition period of unrecognized stock-based compensation expense	2 years 2 months 12 days
Fair value of shares vested under restricted stock plans	$ 24.3	$ 3.7
Market Share Units | Minimum
Additional disclosures
Number of shares to be earned as a percentage of target amount	30.00%
Market Share Units | Maximum
Additional disclosures
Number of shares to be earned as a percentage of target amount	200.00%
Performance Shares
SHARE-BASED COMPENSATION
Vesting period	3 years		3 years
Shares
Granted (in shares)	343,886		452,922
Weighted Average Grant Date Fair Value
Nonvested stock at the end of the period (in dollars per share)	$ 39.10	$ 25.99
Performance Shares | Minimum
Additional disclosures
Number of awards to be granted depending on the Company's TSR relative to the TSR of the S&P Mid-Cap 400 Index (as a percent)	0.00%		0.00%
Performance Shares | Maximum
Additional disclosures
Number of awards to be granted depending on the Company's TSR relative to the TSR of the S&P Mid-Cap 400 Index (as a percent)	200.00%		200.00%

DISCONTINUED OPERATIONS AND D60

DISCONTINUED OPERATIONS AND DISPOSALS - Summarized results (Details) - Juicy Couture and Lucky Brand - Discontinued Operations, Disposed of by Sale - USD ($) $ in Thousands	3 Months Ended
	Apr. 01, 2017	Apr. 02, 2016
DISCONTINUED OPERATIONS AND DISPOSALS
Pretax income related to disposal of discontinued operations		$ 1,200
Results of discontinued operations
Income (loss) before benefit for income taxes	$ 85	(498)
Benefit for income taxes	(47)
Income (loss) from discontinued operations, net of income taxes	132	(498)
Gain on disposal of discontinued operations, net of income taxes	$ 33	$ 1,218