Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov ESTTA Tracking number: ESTTA817038 Filing date: 04/26/2017 IN THE UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD Proceeding 91216585 Party Plaintiff LLC Correspondence G ROXANNE ELINGS Address DAVIS WRIGHT TREMAINE LLP 1251 AVENUE OF THE AMERICAS 21ST FLOOR NEW YORK, NY 10020 UNITED STATES [email protected], [email protected], [email protected], li- [email protected], [email protected] Submission Other Motions/Papers Filer's Name G. Roxanne Elings Filer's e-mail [email protected], [email protected], [email protected], daniel- [email protected], [email protected] Signature /GRE/ Date 04/26/2017 Attachments Notice of Corrected Filing - 7th Notice of Reliance.pdf(77538 bytes ) Filed copy of Seventh Notice of Reliance- 1.pdf(97330 bytes ) 208.pdf(1003759 bytes ) 210.pdf(1700227 bytes ) 211.pdf(1382499 bytes ) 213.pdf(407014 bytes ) 214.pdf(3425594 bytes ) 215.pdf(677183 bytes ) 216.pdf(429857 bytes ) 217.pdf(838619 bytes ) 218.pdf(616232 bytes ) 219.pdf(328676 bytes ) 220.pdf(539626 bytes ) 221.pdf(222649 bytes ) 222.PDF(21490 bytes ) 223.PDF(13497 bytes ) 224.PDF(58545 bytes ) 225.pdf(1948649 bytes ) 226.pdf(161934 bytes ) 227.pdf(130320 bytes ) 228.pdf(287613 bytes ) IN THE UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD

In the matter of Serial No. 86/179,137 Mark: THE SPADES

Kate Spade LLC, Opposition No. 91217168 Opposer,

v.

The Spades Trademark Company, LLC

Applicant.

In the matter of Application Serial No. 85/932,097 Mark: PATIO BY THE SPADES

Kate Spade LLC, Opposition No.: 91216585 Opposer,

v.

Thatch, LLC Applicant.

UNITED STATES PATENT AND TRADEMARK OFFICE Trademark Trial and Appeal Board P.O. Box 1451 Alexandria, VA 22313-1451

NOTICE OF CORRECTED FILING

Kate Spade, LLC (“Opposer”) is refiling Opposer’s Seventh Notice of Reliance and its

corresponding exhibits Nos. 208, 210, 211, and 213-228 pursuant to C.F.R. §2.122(e) and TBMP

§704.08. On February 10, 2017, the Seventh Notice of Reliance was timely filed during

Opposer’s Trial Testimony Period but mistakenly filed in the child proceeding for this matter,

4823-4553-0438v.1 0096356-000005 Opposition No. 91217168. See receipt for original filing attached as Exhibit A. On July 14,

2015, the Board consolidated Opposition Nos. 91217168 and 91216585 and ordered the parties to file only a single copy of each paper in the parent proceeding, No. 91216585. Accordingly,

Opposer is now refiling the Seventh Notice of Reliance in the parent proceeding, Opposition No.

91216585.

Dated: April 26, 2017 New York, NY KATE SPADE LLC

___/G. Roxanne Elings/______By: G. Roxanne Elings L. Danielle Toaltoan Davis Wright Tremaine LLP 1251 Avenue of the Americas 21st Floor New York, New York 10020 (212) 489-8230

Attorneys for Kate Spade, LLC

2 4823-4553-0438v.1 0096356-000005 Exhibit A Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov ESTTA Tracking number: ESTTA800820 Filing date: 02/10/2017 IN THE UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD Proceeding 91217168 Party Plaintiff Kate Spade LLC Correspondence G ROXANNE ELINGS Address DAVIS WRIGHT TREMAINE LLP 1251 AVENUE OF THE AMERICAS 21ST FLOOR NEW YORK, NY 10020 UNITED STATES [email protected], [email protected], [email protected], daniel- [email protected] Submission Plaintiff's Notice of Reliance Filer's Name G. Roxanne Elings Filer's e-mail [email protected], [email protected], [email protected], li- [email protected], [email protected], [email protected] Signature /GRE/ Date 02/10/2017 Attachments Seventh Notice of Reliance.pdf(64333 bytes ) 208.pdf(1284729 bytes ) 210.pdf(3563984 bytes ) 211.pdf(2991853 bytes ) 213.pdf(1934742 bytes ) 214.pdf(3425594 bytes ) 215.pdf(2451042 bytes ) 216.pdf(3042480 bytes ) 217.pdf(2505555 bytes ) 218.pdf(616232 bytes ) 219.pdf(322102 bytes ) 220.pdf(3238972 bytes ) 221.pdf(216929 bytes ) 222.PDF(8104 bytes ) 223.PDF(4722 bytes ) 224.PDF(93361 bytes ) 225.pdf(1635908 bytes ) 226.pdf(177591 bytes ) 227.pdf(211578 bytes ) 228.pdf(281735 bytes ) CERTIFICATE OF SERVICE

I hereby certify that on this 26th day of April, 2017, a true and complete copy of the foregoing NOTICE OF CORRECTED FILING has been served upon Applicants’ counsel of record by via email to the following addresses:

Frank J. Gilbert, Esq. Douglas Schwartz, Esq. Schwartz & Cera LLP 201 California Street, Suite 450 San Francisco, CA 94111 [email protected] [email protected]

and

Deborah K. Squiers Cowan, Liebowitz & Latman, P.C. 114 W. 47th Street New York, NY 10036 [email protected]

/L. Danielle Toaltoan/ L. Danielle Toaltoan

3 4823-4553-0438v.1 0096356-000005

IN THE UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD In the matter of Serial No. 86/179,137 Mark: THE SPADES

Kate Spade LLC, Opposition No. 91217168 Opposer,

v.

The Spades Trademark Company, LLC

Applicant.

In the matter of Application Serial No. 85/932,097 Mark: PATIO BY THE SPADES

Kate Spade LLC, Opposition No.: 91216585 Opposer,

v.

Thatch, LLC Applicant.

UNITED STATES PATENT AND TRADEMARK OFFICE Trademark Trial and Appeal Board P.O. Box 1451 Alexandria, VA 22313-1451

4828-1622-7137v.10 0096356-000005

OPPOSER’S SEVENTH NOTICE OF RELIANCE PURSUANT TO C.F.R. §2.122(e) and TBMP §704.08

Kate Spade LLC (“Opposer”), pursuant to C.F.R. §2.122(e) and TBMP §704.08, submits the Internet materials identified below as evidence in the captioned proceedings by way of this Notice of Reliance. The materials submitted herewith are relevant to the fame and strength of Opposer’s trademarks.

Ex. Article Title/ URL Date Date No. Description Published Accessed

208 Kate Spade Annual Report 2012 http://thomson.mobular.net/thomson/7/3361/4 2/21/2013 2/3/2017 779/

209 Kate Spade Annual Report 2013 http://nasdaqomx.mobular.net/nasdaqomx/7/3 2/25/2014 2/3/2017 402/4873/

210 Kate Spade Annual Report 2014 http://nasdaqomx.mobular.net/nasdaqomx/7/3 3/3/2015 2/3/2017 469/4960/

211 Kate Spade Annual Report 2015 http://nasdaqomx.mobular.net/nasdaqomx/7/3 3/1/2016 2/3/2017 507/5006/

212 Kate Spade’s Shiny, Sparkly Success Story http://www.racked.com/2016/3/2/11140414/k 3/2/2016 2/3/2017 ate-spade-brand-bags

213 Kate Spade’s Digital IQ Index Ranking https://www.l2inc.com/brand- 2/3/2017 search?brand_id=262&show_all_research=tru e

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Ex. Article Title/ URL Date Date No. Description Published Accessed

214 The 10 Most Popular Brands of http://fashionista.com/2013/12/google-top- 12/17/2013 2/3/2017 2013, According to Google/Versace fashion-brands-2013 Versace Versace/by Dhani Mau

215 Kate Spade Is A Brand Ready To Boom http://www.forbes.com/sites/walterloeb/2013/ 3/22/2013 2/3/2017 Around The World/by Walter Loeb 03/22/kate-spade-a-brand-that-will-grow- globally/#7b5e5d76229d 7:51 AM

216 The Top 30 American Designers, http://www.racked.com/2013/2/20/7686557/h 2/20/2013 2/3/2017 According to the Internet/by Kerry Folan ere-are-the-top-30-american-designers- according-to-the-internet 9:30 am

217 , Chanel most-searched https://www.luxurydaily.com/louis-vuitton- 6/28/2012 2/3/2017 handbag brands: research/by Tricia Carr hermes-most-searched-for-handbag-brands- research/

218 The 10 Most Popular Fashion Brands of http://fashionista.com/2013/12/google-top- 12/17/2013 2/3/2017 2013, According to Google/Versace fashion-brands-2013 Versace Versace/by Dhani Mau

219 Goldman Sachs polled hundreds of college- http://www.businessinsider.com/goldman- 12/14/2015 4/27/2016 age women on their favorite clothing sachs-college-fashionista-survey-2015-12 brands – and 3 clear winners emerged

220 Three Brands doing social commerce right http://digiday.com/brands/three-brands- 12/10/2015 2/6/2017 social-commerce-right/

221 Google Releases 2014 Fashion ‘Year In http://www.fashiontimes.com/articles/16831/ 12/16/2014 4/27/2016 Search’ Results 20141216/google-releases-2014-fashion-year- search-results.htm

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Ex. Article Title/ URL Date Date No. Description Published Accessed

222 Victoria Beckham Is the Most-Searched http://mashable.com/2013/12/16/most- 12/16/2013 2/10/2017 Fashion Designer of 2013 searched-fashion-brandspeak/#vGJI.QSeauqk

223 Like What You See? Kate Spade Video Ad http://mashable.com/2013/11/08/kate-spade- N/A 2/10/2017 Designed for Instant Shopping video-ad-google/#2abzNFqwXEqm

224 The 50 best brands to follow on Twitter http://www.businessinsider.com/best-brands- 09/06/2013 2/10/2017 to-follow-on-twitter-2013-9?op=1/#ole- foods-market-offers-gift-cards-and-dinner- advice-18

225 Forever 21, Urban Outfitters Among Most http://www.forbes.com/sites/barbarathau/201 07/22/2014 2/7/2017 Popular Retailers on Pinterest, Relative 4/07/22/forever-21-urban-outfitters-among- Newbies Tops List most-popular-retailers-on-pinterest-newbie- tops-list/#7e8341e5e4ce

226 How Social Media Helped Kate Spade http://mashable.com/2011/11/29/kate-spade- N/A 2/10/2017 Become a Global Brand ceo-craig-leavitt-interview/#oOfVByPnaEqU

227 Sasha Obama Was the Vision of Inaugural http://thehighlow.com/2013/01/sasha-obama- 1/22/2013 2/10/2017 Poise in was-the-vision-of-inaugural-poise-in-kate- spade-new-york/

228 The Everyday Elegance of Kate Spade http://urbanette.com/kate-spade-handbag/ N/A 4/27/2016 Handbags

229 Jack Spade to Highlight Clothing http://wwd.com/fashion- 7/17/2014 2/3/2017 news/sportswear/jack-spade-to-highlight- clothing-7803368/

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Ex. Article Title/ URL Date Date No. Description Published Accessed

230 Jack Spade in expansion mode http://wwd.com/business-news/retail/jack- 2/4/2013 2/3/2017 spade-in-growth-mode-6686280/

231 Jack Spade Launches Men’s Wear http://wwd.com/fashion-news/textiles/jack- 2/24/2009 2/3/2017 spade-launches-mens-wear-2029206/

232 Mary Beech: Telling Kate Spade’s Story http://wwd.com/business-news/retail/mary- 10/7/2016 2/3/2017 beech-telling-kate-spades-story-10558443/

233 Wallet-style bags, Jeans Among Top http://wwd.com/business-news/retail/amazon- 12/27/2016 2/3/2017 -Bought Gifts holiday-shopping-levis-kate-spade-fossil- gifts-10734002/

234 Burberry Ranked First in L2’s Digital http://wwd.com/business- 11/30/2015 2/3/2017 Index news/retail/burberry-snapchat-first-in-l2- fashion-digital-index-10287458/

235 Gucci, Coach Tie for Top Spot in L2 http://wwd.com/business-news/media/gucci- 12/11/2014 2/3/2017 Digital Study coach-lead-in-l2-online-study-displacing- burberry-8071697/

236 Malia and Sasha Obama Wore the Perfect http://www.teenvogue.com/story/malia-sasha- 6/20/2015 2/6/2017 Summer Dresses (And They Could Be obama-dresses-london Yours)

237 Maisie Williams is adorable in the http://fashionista.com/2015/03/maisie- 3/25/2015 4/27/2016 matching suit and frog purse williams-kate-spade-jimmy-kimmel

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Ex. Article Title/ URL Date Date No. Description Published Accessed

238 Zooey Deschanel’s Black Tights & Party https://www.bustle.com/articles/124359- 11/17/2015 4/27/2016 Dress Combo Is A Winter “Must” zooey-deschanels-black-tights-party-dress- combo-is-a-winter-must-photos

239 A Pink, Kate Spade-Inspired California http://www.marthastewartweddings.com/412 2/2/2017 Wedding/by Shira Savada of Martha 929/california-darlington-house-modern-pink- Stewart Weddings, Real Weddings Editor wedding-acqua-photo#412570

240 Gifts for Freida Pinto, Lola Kirke, and http://www.wmagazine.com/story/freida- 11/3/2015 2/2/2017 Zosia Mamet/by Gillian Sagansky pinto-lola-kirke-zosia-mamet-gifts 6:19 pm

241 Kate Spade Spring 2014/by Claudia Mata http://www.wmagazine.com/story/kate-spade- 9/6/2013 2/2/2017 spring-2014 3:58 pm

242 W magazine print ad photography/In these http://www.commarts.com/exhibit/w- 2/2/2017 advertorial photographs by Jonathon magazine-print-ad-photography Kambouris, legs wearing Kate Spade shoes come out of striking shapes.

243 Kate Spade Spring 2015/by Claudia Mata http://www.wmagazine.com/story/kate-spade- 9/7/2014 2/2/2017 spring-2015 1:49 pm

244 One Look, One Line: Kate Spade/by Nora http://www.wmagazine.com/story/one-look- 2/8/2013 2/2/2017 Milch one-line-kate-spade 5:15 pm

245 The Creative Advertising: http://www.lebook.com/creative/kate-spade- Spring / 2/3/2017 new-york-spring-2016-advertising-2016 Summer 2016 (separate screenshots of all the years/seasons

6 4828-1622-7137v.10 0096356-000005

Ex. Article Title/ URL Date Date No. Description Published Accessed

 Kate Spade New York | Spring 2016 plus screenshots of every set of images)  Kate Spade New York | SS15/Spring / Summer 2015  Kate Spade New York | Travel Edition/Summer 2014  Kate Spade New York | Cuba/Summer 2014  Kate Spade New York | Wedding Edition/2014  Kate Spade New York/Spring 2013  Kate Spade New York/Summer 2013 246 What to Wear When Your Life Is a http://nymag.com/thecut/2016/09/what-to- 6/2016 2/3/2017 Comedy wear-when-your-life-is-a-comedy-s-c-l.html

247 Q. & A. With Katia Kuethe, New Director https://runway.blogs.nytimes.com/2012/07/19 7/19/2012 2/3/2017 of Creative at Kate Spade/by Corbin /q-a-with-katia-kuthe-new-director-of- Chamberlin creative-at-kate-spade/?_r=0 1:00 pm

248 Is the First Celebrity http://nymag.com/thecut/2011/01/bryce_dalla 1/3/2011 2/3/2017 Face of Kate Spade/by Charlotte Cowles s_howard_is_the_fir.html 10:25 a.m.

249 Brad Goreski Lands Kate Spade Stylist http://nymag.com/thecut/2011/12/brad- 12/29/2011 2/3/2017 Contract/by Charlotte Cowles goreski-lands-kate-spade-stylist-contract.html 9:30 a.m

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Ex. Article Title/ URL Date Date No. Description Published Accessed

250 Zoom Shot: Kate Spade’s Lucite and http://nymag.com/thecut/2012/09/zoom-shot- 9/8/2012 2/3/2017 Gemstone Necklace/by Diana Tsui of-the-day-kate-spades-necklace.html 12:35 p.m

251 Kate Spade Spring 2012 RTW http://wwd.com/runway/spring-ready-to- Spring 2012 2/10/2017 wear-2012/new-york/kate-spade/review/

252 Kate Spade Fall 2012 RTW http://wwd.com/runway/fall-ready-to-wear- Fall 2012 2/10/2017 2012/new-york/kate-spade/review/

253 Kate Spade Spring 2013 RTW http://nymag.com/thecut/fashion/shows/2013/ Spring 2013 2/3/2017 spring/new-york/rtw/kate-spade.html

254 Kate Spade Fall 2013 RTW http://nymag.com/thecut/fashion/shows/2013/ Fall 2013 2/3/2017 fall/new-york/rtw/kate-spade.html

255 Kate Spade Spring 2014 RTW http://nymag.com/thecut/fashion/shows/2014/ Spring 2014 2/3/2017 spring/new-york/rtw/kate-spade.html

256 Kate Spade Fall 2014 RTW http://nymag.com/thecut/fashion/shows/2014/ Fall 2014 2/3/2017 fall/new-york/rtw/kate-spade.html

257 Kate Spade Spring 2015 RTW http://nymag.com/thecut/fashion/shows/2015/ Spring 2015 2/10/2017 spring/new-york/rtw/kate-spade-new- york.html

258 Kate Spade Fall 2015 RTW http://nymag.com/thecut/fashion/shows/2015/ Fall 2015 2/3/2017 fall/new-york/rtw/kate-spade.html

259 Kate Spade Pre-Fall 2016 RTW http://nymag.com/thecut/fashion/shows/2016/ Fall 2016 2/3/2017 pre-fall/new-york/rtw/kate-spade.html

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Ex. Article Title/ URL Date Date No. Description Published Accessed

260 Kate Spade Spring 2016 RTW http://nymag.com/thecut/fashion/shows/2016/ Spring 2016 2/3/2017 spring/new-york/rtw/kate-spade.html

261 Kate Spade Fall 2016 RTW http://nymag.com/thecut/fashion/shows/2016/ Fall 2016 2/3/2017 fall/new-york/rtw/kate-spade.html

262 Lip Service: Spring Forward With Kate http://www.lamag.com/theclutch/lip-service- 1/21/2014 2/3/2017 Spade New York’s spring-forward-with-kate-spade-new-yorks- Supercalifragilipstick.by Navdeep Mundi supercalifragilipstick/

263 Exclusive Evening at Kate Spade http://www.lamag.com/lasocialpicsandreels/e 9/4/2013 2/3/2017 xclusive-evening-at-kate-spade/

264 Here Are the Top Ten Fashion Brands That http://fashionista.com/2011/10/here-are-the- 10/13/2011 2/3/2017 Are Conquering the Digital Realm (Plus the top-ten-fashion-brands-that-are-conquering- Brands That Aren't and Should Be)/by the-digital-realm-plus-the-brands-that-arent- Cheryl Wischhover and-should-be

265 Kate Spade Bridal Hit 3 Weeks http://www.shefinds.com/2011/kate-spade- 3/14/2011 2/3/2017 Early - Shop Now!/by Justine Ingersoll bridal-hit-nordstrom-3-weeks-early-shop- Schwartz now/

266 Kate Spade Launched a Girls' Collection, http://www.popsugar.com/moms/Kate-Spade- 2/24/2015 2/3/2017 and We're Drooling Over Every Piece!/ by New-York-Launches-Kids-Line- Rebecca Gruber 36948338#photo-36948338

267 Kate Spade New York Is Launching http://www.instyle.com/lifestyle/home- 10/19/2015 2/3/2017 Furniture—and We Want Every Single decorating/kate-spade-new-york-launching- Piece/by Sharon Clott Kanter furniture 3:15 PM

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Ex. Article Title/ URL Date Date No. Description Published Accessed

268 Giant Kate Spade Fall 2011 fashion http://www.dailybillboardblog.com/2011/10/g 10/8/2011 2/3/2017 billboard... iant-kate-spade-fall-2011-fashion.html

269 Gender Equality Campaign Erases Women http://www.adweek.com/news/technology/ge 3/9/2015 2/3/2017 From Billboards and Print Ads Clinton nder-equality-campaign-erases-women- Foundation teams with brands/by Lauren billboards-and-print-ads-163352 Johnson

270 Kate Spade Facebook https://www.facebook.com/katespadeny/ 2/3/2017

271 Kate Spade Instagram https://www.instagram.com/katespadeny/?hl= 2/3/2017 en

272 Kate Spade Pinterest https://www.pinterest.com/katespadeny/ 2/3/2017

273 I heart Kate Spade Pinterest page https://www.pinterest.com/mdemetriades/i- 2/3/2017 heart-kate-spade/

274 Kate Spade Disney Springs Store https://www.disneysprings.com/shops/kate- 2/3/2017 spade-new-york/

275 Town Center is now open at Disney https://disneyparks.disney.go.com/blog/2016/ 2/3/2017 Springs 05/town-center-is-now-open-at-disney- springs/

276 Kate Spade Live Colorfully fragrance http://www.dailybillboardblog.com/2013/04/k 4/13/2013 2/3/2017 billboards... ate-spade-live-colorfully-fragrance.html

277 Kate Spade New York Radio – Web https://www.pandora.com/station/play/34814 2/3/2017 73028220111497

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Ex. Article Title/ URL Date Date No. Description Published Accessed

278 Kate Spade New York - YouTube https://www.youtube.com/user/katespadenew 2/3/2017 york

279 #missadventure films | kate spade new york https://www.youtube.com/playlist?list=PL43r 12/13/2016 2/3/2017 pDJCjOhKLwMH1CoQeDqbx8636rjOh

280 Misbehaving With the Stars of Kate Spade http://www.vanityfair.com/style/2016/03/mis 3/31/2016 2/3/2017 New York’s Campaign, Season 2/A behaving-with-the-stars-of-kate-spade-new- Conversation with Kate Spade New York’s yorks-campaign-season-2 Kristen Naiman

281 Kate Spade Wins at Pre-Roll by Letting http://www.adweek.com/news/technology/an 12/10/2014 2/3/2017 Anna Kendrick Be Anna Kendrick/Holiday na-kendricks-cuff-video-pays-kate-spade- campaign thrives on bite-size versions of 161876 'Waiting Game'/by Lauren Johnson

282 #missbehavior: poppy jamie | kate spade https://www.youtube.com/playlist?list=PL43r 12/16/2016 2/3/2017 new york pDJCjOhJeZaVI081_cm1t8MagzH3x

283 Questions with... | kate spade new york https://www.youtube.com/playlist?list=PL43r 1/12/2017 2/3/2017 pDJCjOhL9H9OgqaQK215Y6KAmjxyV

284 Amazon – Style Book https://www.amazon.com/Style-Kate- 2/3/2017 Spade/dp/0743250672

285 Worn on TV https://wornontv.net/tag/kate-spade/ 2/3/2017

286 Princess Kate (in Kate Spade!) Gets a Rare http://people.com/royals/princess-kate-in- 10/10/2016 2/3/2017 Public Curtsy—Find Out Why/By Erin Hill kate-spade-gets-a-rare-public-curtsy-find-out- why/ 12:19 pm EST

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Ex. Article Title/ URL Date Date No. Description Published Accessed

287 How Kate Spade and Everpurse Got http://www.forbes.com/sites/jenniferelias/201 2/15/2016 2/6/2016 Wearable Tech Right 6/02/15/how-kate-spade-and-everpurse-got- wearable-tech-right/#367551a69dd2

288 What Does Luxury Mean Today? It http://fashionista.com/2015/10/nyu-stern- 10/19/2015 4/27/2016 Depends on Whom You’re Asking redefining-luxury

289 Kate Spade adds furniture to the mix https://www.washingtonpost.com/lifestyle/ho 10/22/2015 4/27/2016 me/kate-spade-adds-furniture-to-the- mix/2015/10/22/f2186294-76a0-11e5-a958- d889faf561dc_story.html?utm_term=.2c0078 91ccfd

290 Kate Spade Adds Slew of New Lines, From http://wwd.com/business-news/markets/kate- 06/20/2015 2/6/2017 Cupcakes to Cookware spade-beyond-yoga-new-lines-cupcakes- cookware-10189213/

291 Fashionbase https://www.fashionbase.com/brands/4f66684 2/3/2017 2300449afa1aa41fd/outfits

292 Brad Goreski Inks Deal with Kate http://www.bravotv.com/the-daily-dish/brad- 12/29/2011 2/3/2017 Spade/The Bravoleb dives into ready-to- goreski-inks-deal-with-kate-spade wear/by Colleen Werthmann 12:22 PM ET

293 Mazel Tov! Kate Spade New York Wins http://stylecaster.com/kate-spade-york-wins- 2011 2/3/2017 ‘Lifestyle Brand Of The Year’ Award/by lifestyle-brand-year-award/ Jamie Rose

294 From the 7th Annual Shorty Awards/Kate http://shortyawards.com/7th/katespadeny# 2/3/2017 Spade New York

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Ex. Article Title/ URL Date Date No. Description Published Accessed

295 Kate Spade and Company http://www.katespadeandcompany.com/web/ 2/3/2017 Website/Philanthropic Programs guest/overview

296 Jack Spade Website (all links) www.jackspade.com 2/3/2017

297 Kate Spade Website (all links) www.katespade.com 2/3/2017

298 Kate Spade and Company Website (all www.katespadeandcompany.com 2/3/2017 links)

299 Archive of Kate Spade Website – Jan. 13, https://web.archive.org/web/20130113204854 2/10/2017 2013 /http://www.katespade.com/on/demandware.s tore/Sites-Kate-Site/default/Home-ShopHome

300 Archive of Kate Spade Website – Mar. 25, https://web.archive.org/web/20130325074532 2/10/2017 2013 /http://www.katespade.com/

301 Kate Spade goods at Neiman Marcus http://www.neimanmarcus.com/search.jsp?fro 2/6/2017 m=brSearch&responsive=true&request_type= search&search_type=keyword&q=kate%20sp ade&l=kate%20spade&fl=

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Ex. Article Title/ URL Date Date No. Description Published Accessed

302 Kate Spade goods at Bergdorf Goodman http://www.bergdorfgoodman.com/search.jsp 2/6/2017 ?N=0&Ntt=kate+spade&_requestid=94415#e ndecaDrivenSiloRefinements=0&personalize dPriorityProdId=de&userConstrainedResults =true&refinements=&page=1&pageSize=120 &sort=MAX_PROMO_PRICE%7C1&definit ionPath=/nm/commerce/pagedef_rwd/etempl ate/Search&onlineOnly=&allStoresInput=fals e&rwd=true&catalogId=&selectedRecentSize =&activeFavoriteSizesCount=0&activeIntera ction=true

303 Kate Spade at Saks Fifth Avenue https://www.saksfifthavenue.com/search/End 2/6/2017 ecaSearch.jsp?bmForm=endeca_search_form _one&bmFormID=lEli_Ln&bmUID=lEli_Lo &bmIsForm=true&bmPrevTemplate=%2FEn try.jsp&bmText=SearchString&SearchString =kate+spade&submit- search=&bmSingle=N_Dim&N_Dim=0&bm Hidden=Ntk&Ntk=Entire+Site&bmHidden= Ntx&Ntx=mode%2Bmatchpartialmax&bmHi dden=prp8&prp8=t15&bmHidden=prp13&pr p13=&bmHidden=sid&sid=15A158E0B9C0 &bmHidden=FOLDER%3C%3Efolder_id&F OLDER%3C%3Efolder_id=

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304 Kate Spade at Bloomingdales http://www1.bloomingdales.com/shop/kate- 2/6/2017 spade-new-york/womens- clothing?id=1002761&cm_sp=LEFTNAV_G BS-_-kate%20spade%20new%20york-_- 1002761-Women%27s%20Clothing- n&cm_kws=kate%20spade

305 Kate Spade at Bloomingdales http://www1.bloomingdales.com/shop/kate- 2/6/2017 spade-new- york?id=1002760&cm_kws=kate%20spade

306 Kate Spade books on Amazon https://www.amazon.com/s/ref=dp_byline_sr 2/10/2017 _book_1?ie=UTF8&text=Kate+Spade+New+ York&search-alias=books&field- author=Kate+Spade+New+York&sort=releva ncerank

307 Kate Spade on Amazon https://www.amazon.com/kate-spade-new- 2/6/2017 york/b?ie=UTF8&node=2594654011

308 Northstar homepage http://www.northstarhub.com/ 2/7/2017

309 Kate Spade Has New Cute Fitness Trackers http://www.shape.com/fitness/gear/kate- 8/24/2016 2/7/2017 spade-launching-cutest-fitness-trackers-ever

310 15 of The Most Stylish Laptop Bags For http://www.askmen.com/entertainment/guy_g 2/6/2017 Men ear/15-of-the-most-stylish-laptop-bags-for- men.html

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311 15 Must Have Items for An Epic Memorial http://www.mensfitness.com/styleandgroomin 2/7/2017 Day Weekend g/grooming/15-must-have-items-epic- memorial-day-weekend

312 Kate Spade Premieres Season 2 of http://www.harpersbazaar.com/culture/news/a 3/28/2016 2/7/2017 #Missadventure With A Weekend Getaway 14821/kate-spade-premiere-season-2- missadventure/

313 Kate Spade New York’s Minnie Mouse http://www.instyle.com/news/kate-spade- 3/16/2016 2/7/2017 Collection Will Satisfy Every Disney Fan launches-minnie-mouse-collection

314 Beyonce’s Pink Platforms, Taylor Swift’s http://www.usmagazine.com/celebrity- 2/23/2016 2/7/2017 Bow-Topped Pumps, More Celeb Shoes to style/news/beyonces-pink-platforms-plus- Drool Over more-celeb-shoes-w165120

315 The Fashionable Life: Country Elegance http://www.harpersbazaar.com/culture/interio 3/2/2016 2/7/2017 rs-entertaining/a14021/deborah-lloyd-0316/

316 Jourdan Dunn and Iris Apfel’s Playful Kate http://www.instyle.com/news/kate-spade- 1/29/2016 2/7/2017 Spade Campaign Will Get You Excited for spring-2016-campaign-jourdan-dunn-iris- Spring apfel

317 Trendsetters at Work: House Beautiful http://www.eonline.com/news/730031/trendse 1/11/2016 2/7/2017 tters%ADat%ADwork%ADhouse%ADbeauti ful1/8

318 Kate Spade New York Launches Their First http://www.instyle.com/news/kate-spade- 1/5/2016 2/7/2017 Athleisure Line athleisure-beyond-yoga?iid=sr-link1

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319 Reasons to Be Excited About 2016 https://www.nytimes.com/interactive/2015/12 12/30/2015 2/6/2017 /30/fashion/Reasons-to-Be-Excited-About- 2016-clothing.html?_r=1

320 Pope Francis Arrives In America: First http://www.fashiontimes.com/articles/23405/ 9/22/2015 2/7/2017 Lady Michelle Obama Wears Carolina 20150922/pope-francis-arrives-america-first- Herrera, Sasha Obama Sports Kate Spade lady-michelle-obama-wears-carolina.htm

321 Kate Spade Wants to Take Over Your http://www.foodandwine.com/fwx/style/kate- 7/23/2015 2/7/2017 Kitchen spade-wants-take-over-your-kitchen

322 5 Retailers Who Nailed It This Holiday http://www.ekaterinawalter.com/5-retailers- 12/19/2014 2/7/2017 Season who-nailed-it-this-holiday-season/

323 Pinterest Boards Dedicated to Kate Spade https://www.pinterest.com/search/boards/?q= 2/10/2017 kate%20spade

324 Pinterest (boricketts) – Magazine/ Billboard https://www.pinterest.com/boricketts/magazin 2/8/2017 Ads e-billboard-ads/

325 Northstar Fearless Intellect http://www.northstarhub.com/ 2/8/2017

326 Excerpts from Kate Spade Blog https://www.katespade.com/blog/ 2/8/2017

327 Design Doing Good http://www.architecturaldigest.com/gallery/ch 1/31/2012 2/9/2017 arity-shopping-slideshow/all

328 Emily Blunt: Charlotte Riley Joins ‘All http://www.justjared.com/2012/08/24/emily- 8/24/2012 2/9/2017 You Need is Kill’ blunt-charlotte-riley-kill/

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329 Kerry Washington & Garrett Hedlund: http://www.justjared.com/2012/11/29/kerry- 11/29/2012 2/9/2017 Variety Awards Studio! washington-garrett-hedlund-variety-awards- studio/

330 Carley Rae Jepsen – Teen Choice Awards http://www.justjared.com/2012/07/22/carly- 7/22/2012 2/9/2017 2012 rae-jepsen-teen-choice-awards-2012/

331 Bella Thorne: Radio Disney Music Awards http://www.justjaredjr.com/2013/04/27/bella- 4/27/2013 2/9/2017 2013 thorne-radio-disney-music-awards-2013/

332 Emmy Rossum: ‘Chelsea Lately’ with http://www.justjared.com/2013/01/31/emmy- 1/31/2013 2/9/2017 Chuy Bravo! rossum-chelsea-lately-with-chuy-bravo/

333 Drew Barrymore: Colorful ‘Jay Leno’ http://www.justjared.com/2013/10/07/drew- 10/7/2013 2/9/2017 Appearance barrymore-colorful-jay-leno-appearance/

334 Eleanor Tomlinson: ‘The White Queen’ http://www.justjaredjr.com/2013/05/25/elean 5/25/2013 2/9/2017 Premieres August 10th or-tomlinson-the-white-queen-premieres- august-10th/

335 Exhibit Intentionally Omitted

336 Inside Who What Wear Co-Founder http://la.racked.com/2012/4/9/7729679/inside 4/2/2012 2/9/2017 Hillary Kerr’s Makeup Bag -who-what-wear-cofounder

337 Trail Mix http://tmagazine.blogs.nytimes.com/2012/07/ 7/12/2012 2/9/2017 12/trail-mix/

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338 Water Works Summer’s Best Swim http://tmagazine.blogs.nytimes.com/2012/05/ 5/04/2012 2/9/2017 04/water-works-summers-best-swim/?_r=0 05/04/2012

339 Valentines Day Gift Guide for Girls http://www.eonline.com/news/385315/valenti 2/5/2013 2/9/2017 ne-s-day-gift-guide-for-girls-flirty-finds- adored-by-hilary-duff-zooey-deschanel-and- more

340 2013 Wedding Gift Guide $150 and Under http://www.eonline.com/photos/9075/2013- 6/14/2013 2/9/2017 wedding-gift-guide-150-and-under

341 Valentines Day Gift Guide for Girls http://www.eonline.com/news/385315/valenti 2/5/2013 2/9/2017 ne-s-day-gift-guide-for-girls-flirty-finds- adored-by-hilary-duff-zooey-deschanel-and- more

342 2013 Wedding Gift Guide $150 and Under http://www.eonline.com/photos/9075/2013- 6/14/2013 2/9/2017 wedding-gift-guide-150-and-under

343 The Mother’s Day Gift Guide http://www.vanityfair.com/style/2013/05/mot 5/6/2013 2/9/2017 hers-day-gift-guide

344 Super-Cool Thing Alert: A Kate Spade http://www.glamour.com/story/super-cool- 4/3/2012 2/9/2017 New York Swimwear Choos Your Own thing-alert-a-kate Adventure-Style Video!

345 Jack and Kate Spade’s Collaboration with http:/fashionista.com/2014/10/kate-jack- 10/20/2014 2/10/2017 GapKids is Unbelievably Cute spade-gap-klds-collection

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346 Kate Spade’s New Travel Book Will http://www.racked.com/2014/9/30/7574871/k 09/30/2014 2/10/2017 Inspire Serious Wanderlust ate-spade-new-york-places-to-go-people-to- see-book

347 Jack Spade to Expand Menswear with Suit http://www.fashiontimes.com/home/news/ser 07/17/2014 2/10/2017 Collection vices/print.php?article_Id=9886

348 Jack Spade is Buttoned Up and Crisply http://thehighlow.com/category/kate-spade- 02/06/2014 2/10/2017 Tailored at First Fashion Week stories/jack-spade/ Presentation 349 A Behind-The-Scenes Look at Jack Spade http://www.esquire.com/style/a27221/jack- 02/05/2014 2/10/2017 Fall / Winter 2014 spade-preview-fall-2014/

Dated: February 10, 2017 New York, New York KATE SPADE LLC

/G. Roxanne Elings By: G. Roxanne Elings Lisa D. Keith Danielle Toaltoan DAVIS WRIGHT TREMAINE LLP 1251 Avenue of the Americas 21st Floor New York, New York 10020 (212) 489-8230

Attorneys for Kate Spade LLC

20 4828-1622-7137v.10 0096356-000005

CERTIFICATE OF SERVICE

I hereby certify that on this 10th day of February, 2017, a true and complete copy of the foregoing Kate Spade LLC’s Seventh Notice of Reliance, dated February 10, 2017, has been served upon Applicant’s counsel of record by via email to the following addresses:

Frank J. Gilbert, Esq. Douglas Schwartz, Esq. Schwartz & Cera LLP 201 California Street, Suite 450 San Francisco, CA 94111 [email protected] [email protected]

and

Deborah K. Squiers Cowan, Liebowitz & Latman, P.C. 114 W. 47th Street New York, NY 10036 [email protected]

/L. Danielle Toaltoan/ L. Danielle Toaltoan

21 4828-1622-7137v.10 0096356-000005 Exhibit 208

A NNUAL REPO R T 2 0 1 2 2012 CONSOLIDATED FINANCIAL HIGHLIGHTS: FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES Fifth & Pacific Companies, Inc. designs and markets a portfolio of retail-based, premium, global lifestyle brands including Juicy Couture, kate spade, and Lucky Brand. In addition, the Adelington Design Group, a private brand jewelry design and development group, markets brands through department stores and serves JCPenney via exclusive supplier agreements for the and Monet jewelry lines and Kohl's via an exclusive supplier agreement for Dana Buchman jewelry. The Company also has licenses for the Liz Claiborne New York brand available at QVC, and Lizwear which is distributed through the club store channel. Fifth & Pacific Companies, Inc. maintains a noncontrolling stake in Mexx, a European and Canadian apparel and accessories retail-based brand. On May 15, 2012, the Company began trading under its new stock symbol (NYSE: FNP).

(Amounts in thousands, except per common share data) 2012 2011 2010

NET SALES $ 1,505,094 $ 1,518,721 $ 1,623,235 GROSS PROFIT 842,975 809,391 791,296 OPERATING LOSS * (34,451) (96,252) (61,266) (LOSS) INCOME FROM CONTINUING OPERATIONS (59,456) 144,748 (99,362) NET LOSS ATTRIBUTABLE TO FIFTH & PACIFIC COMPANIES, INC. (74,505) (171,687) (251,467) PER COMMON SHARE DATA: BASIC (LOSS) INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO FIFTH & PACIFIC COMPANIES, INC. (0.54) 1.53 (1.05) NET LOSS ATTRIBUTABLE TO FIFTH & PACIFIC COMPANIES, INC. (0.68) (1.81) (2.67) DILUTED (LOSS) INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO FIFTH & PACIFIC COMPANIES, INC. (0.54) 1.28 (1.05) NET LOSS ATTRIBUTABLE TO FIFTH & PACIFIC COMPANIES, INC. (0.68) (1.35) (2.67) WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC 109,292 94,664 94,243 WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED ** 109,292 120,692 94,243 WORKING CAPITAL 36,407 124,772 39,043 TOTAL DEBT 406,294 446,315 577,812

NET SALES ($ MILLIONS)

2012 $1,505

2011 $1,519 2010 $1,623

WORKING CAPITAL ($ MILLIONS) 2012 $36 2011 $125 2010 $39

TOTAL DEBT ($ MILLIONS) 2012 $406 2011 $446 2010 $578

CASH FLOW FROM CONTINUING OPERATIONS ($ MILLIONS)

2012 $25 2011 $119 2010 $171

For further information, see Item 6 – Selected Financial Data and the Consolidated Financial Statements and notes thereto, which are included within the body of the accompanying report.

* During 2012, 2011 and 2010, we recorded pretax charges of $47.8 million, $90.1 million and $61.0 million, respectively, related to our streamlining initiatives, which are discussed in Note 13 of Notes to Consolidated Financial Statements.

During 2012, we recorded a pretax gain of $40.1 million related to the KSJ Buyout, which is discussed in Note 2 of Notes to Consolidated Financial Statements.

During 2011, we recorded a pretax gain of $287.0 million related to the sales of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands; (ii) the trademark rights in the US and Puerto Rico for MONET; (iii) the DANA BUCHMAN trademark; and (iv) the trademark rights related to our former Curve brand and selected other smaller fragrance brands.

During 2010, we recorded non-cash pretax impairment charges of $2.6 million primarily within our Adelington Design Group segment principally related to merchandising rights of our LIZ CLAIBORNE and former licensed DKNY® Jeans brands.

** Because we incurred losses from continuing operations in 2012 and 2010, outstanding stock options, nonvested shares and potentially dilutive shares issuable upon conversion of the Convertible Notes are antidilutive. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods. Dear Stockholders, Associates, Business Partners, and Friends:

Re-named, re-chartered, and re-invigorated—that’s what 2012 meant for our people and our Company.

After years reconstructing, rebuilding, and playing defense, we have moved squarely to offense, with some big wins during the year. And in the cases where we suffered some setbacks or disappointments, we faced those with appropriate self-examination and bias to action. On balance, we ended the year embracing our mantra—full steam ahead.

In 2012, on a comparable basis, we grew total sales and adjusted EBITDA significantly. Total shareholder return for the year was on the high end for the industry at +41%.

Kate Spade is now positioned among the industry greats—with a future marked by significant growth and “long runway” expansion. Beyond all the exciting metrics, this brand has now proven itself to be a platform business. We strengthened its international presence; we achieved industry-leading digital sales and marketing success; and we debuted an important, high potential sub-brand, Kate Spade SATURDAY. With all the excitement around this business, nothing is more thrilling than realizing we are only in the early chapters of what promises to be a long and exciting story.

Lucky Brand Jeans saw growth, profit expansion, and the beginnings of true lifestyle evolution. Led by one of the industry’s strongest management teams, this brand is resonating with its customer. Great fit, the newest trends, and some of the best in-store service you’ll find in the mall have contributed to Lucky Brand’s momentum. And like Kate Spade, we are only just getting started. The opportunity for sales growth and operating profit leverage is staggering.

Over at Juicy Couture, we forged ahead with reimaging the brand via product, store, and marketing improvements. And while we firmly believe we have established the right overall direction, we didn’t see the commercial results we expected in the second half of the year. But we believe this is short term, as we apply all of the operational and organizational changes at Juicy Couture that have turned our other retail based businesses around. In total, Juicy Couture remains one of the industry’s most alluring assets—with uncharacteristically strong brand equity around the world, a still-underdeveloped commercial presence, and special link to Hollywood’s emerging starlets.

Corporately, we concluded our last large-scale downsizing to bring our back-end cost structure in line with benchmarks. And under the stewardship of our Chief Operating Officer, George Carrara, we made critical investments in point-of-sale technology that promise to unlock a host of omnichannel functions for all of our brands globally—linking their front-ends and back-ends to enable superior customer service, better inventory management, and true Customer Relationship Management capability. We also prepared each brand for a major re-launch of e-commerce sites in 2013 with improved functionality.

With all the excitement surrounding the Company and its opportunities ahead, we ended the year by asserting that we remain fully committed to delivering value to our shareholders.

In all, I am extremely proud of our teams, our strategy, our portfolio, and our progress. As we forge into 2013, we continue to fully embrace our mantra—full steam ahead!

Sincerely yours,

William L. McComb Chief Executive Officer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ፼ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2012 or អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 1-10689 FIFTH & PACIFIC COMPANIES, INC. (Exact name of registrant as specified in its charter)

Delaware 13-2842791 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1441 Broadway, New York, New York 10018 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: 212-354-4900 Securities registered pursuant to Section 12(b) of the Act: Title of class Name of each exchange on which registered Common Stock, par value $1.00 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ፼ No អ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the ‘‘Act’’). Yes អ No ፼ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ፼ No អ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ፼ No អ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ፼ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer ፼ Accelerated filer អ Non-accelerated filer អ Smaller reporting company អ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes អ No ፼ Based upon the closing sale price on the New York Stock Exchange on June 29, 2012, the last business day of the registrant’s most recently completed second fiscal quarter, which quarter ended June 30, 2012, the aggregate market value of the registrant’s Common Stock, par value $1.00 per share, held by non-affiliates of the registrant on such date was approximately $1,201,969,000. For purposes of this calculation, only executive officers and directors are deemed to be the affiliates of the registrant. Number of shares of the registrant’s Common Stock, par value $1.00 per share, outstanding as of February 8, 2013: 119,822,091 shares. Documents Incorporated by Reference: Registrant’s Proxy Statement relating to its Annual Meeting of Stockholders to be held on May 14, 2013-Part III. TABLE OF CONTENTS

Page PART I Item 1 Business ...... 5 Item 1A Risk Factors ...... 20 Item 1B Unresolved Staff Comments ...... 35 Item 2 Properties ...... 35 Item 3 Legal Proceedings ...... 35 Item 4 Mine Safety Disclosures ...... 37

PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...... 37 Item 6 Selected Financial Data ...... 40 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 42 Item 7A Quantitative and Qualitative Disclosures About Market Risk ...... 69 Item 8 Financial Statements and Supplementary Data ...... 69 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...... 70 Item 9A Controls and Procedures ...... 70 Item 9B Other Information ...... 70

PART III Item 10 Directors, Executive Officers and Corporate Governance ...... 71 Item 11 Executive Compensation ...... 71 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...... 71 Item 13 Certain Relationships and Related Transactions, and Director Independence ...... 72 Item 14 Principal Accounting Fees and Services ...... 72

PART IV Item 15 Exhibits and Financial Statement Schedules ...... 72 Signatures ...... 80 Index to Consolidated Financial Statements and Schedule ...... F-1

1 STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Statements contained in, or incorporated by reference into, this Annual Report on Form 10-K, future filings by us with the Securities and Exchange Commission (‘‘SEC’’), our press releases, and oral statements made by, or with the approval of, our authorized personnel, that relate to our future performance or future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements are indicated by words or phrases such as ‘‘intend,’’ ‘‘anticipate,’’ ‘‘plan,’’ ‘‘estimate,’’ ‘‘target,’’ ‘‘aim,’’ ‘‘forecast,’’ ‘‘project,’’ ‘‘expect,’’ ‘‘believe,’’ ‘‘we are optimistic that we can,’’ ‘‘current visibility indicates that we forecast,’’ ‘‘contemplation’’ or ‘‘currently envisions’’ and similar phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control, that could cause actual results to differ materially from those suggested by the forward-looking statements, including, without limitation: • our ability to continue to have the necessary liquidity, through cash flows from operations and availability under our amended and restated revolving credit facility, may be adversely impacted by a number of factors, including the level of our operating cash flows, our ability to maintain established levels of availability under, and to comply with the financial and other covenants included in, our amended and restated revolving credit facility and the borrowing base requirement in our amended and restated revolving credit facility that limits the amount of borrowings we may make based on a formula of, among other things, eligible accounts receivable and inventory and the minimum availability covenant in our amended and restated revolving credit facility that requires us to maintain availability in excess of an agreed upon level; • general economic conditions in the United States, Europe and other parts of the world, including the impact of income tax changes and debt reduction efforts in the United States; • levels of consumer confidence, consumer spending and purchases of discretionary items, including fashion apparel and related products, such as ours; • restrictions in the credit and capital markets, which would impair our ability to access additional sources of liquidity, if needed; • changes in the cost of raw materials, labor, advertising and transportation which could impact prices of our products; • our ability to successfully implement our long-term strategic plans, including the continued growth of our KATE SPADE brand, our ability to sustain the recent improved performance in our LUCKY BRAND business, our ability to successfully improve the operations and results, creative direction and product offering at our JUICY COUTURE brand and our ability to expand into markets outside of the US such as China, Japan and Brazil and the risks associated with such expansion; • our dependence on a limited number of large US department store customers, and the risk of consolidations, restructurings, bankruptcies and other ownership changes in the retail industry and financial difficulties at our larger department store customers; • whether we will be successful operating the KATE SPADE business in Japan and the risks associated with such operation; • risks associated with the transition of the MEXX business to an entity in which we hold a minority interest and the possible failure of such entity that may make our interest therein of little or no

2 value and risks associated with the ability of the majority shareholder to operate the MEXX business successfully, which will impact the potential value of our minority interest; • our ability to anticipate and respond to constantly changing consumer demands and tastes and fashion trends, across multiple brands, product lines, shopping channels and geographies; • our ability to attract and retain talented, highly qualified executives, and maintain satisfactory relationships with our employees; • our ability to adequately establish, defend and protect our trademarks and other proprietary rights; • our ability to successfully develop or acquire new product lines, such as the KATE SPADE SATURDAY line, or enter new markets, such as China, Japan and Brazil or product categories, and risks related to such new lines, markets or categories; • risks associated with the sale of the LIZ CLAIBORNE family of brands to J.C. Penney Corporation, Inc. and the licensing arrangement with QVC, Inc., including, without limitation, our ability to maintain productive working relationships with these parties and possible changes or disputes in our other brand relationships or relationships with other retailers and existing licensees as a result, and the dependence of our ADELINGTON DESIGN GROUP business on third party arrangements and partners; • the impact of the highly competitive nature of the markets within which we operate, both within the US and abroad; • our reliance on independent foreign manufacturers, including the risk of their failure to comply with safety standards or our policies regarding labor practices; • risks associated with our buying/sourcing agreement with Li & Fung Limited, which results in a single third party foreign buying/sourcing agent for a significant portion of our products; • risks associated with the delay in our previously announced plan to close our Ohio distribution facility and transition to a third-party facility and our recently announced plan to continue to operate our Ohio distribution facility with a third party operations and labor management company to provide distribution operations services, including increased operating expenses, risks related to systems capabilities and risks related to our ability to continue to appropriately staff the Ohio facility; • a variety of legal, regulatory, political and economic risks, including risks related to the importation and exportation of product, tariffs and other trade barriers; • our ability to adapt to and compete effectively in the current quota environment in which general quota has expired on apparel products, but political activity seeking to re-impose quota has been initiated or threatened; • our exposure to currency fluctuations; • risks associated with material disruptions in our information technology systems, both owned and licensed, and with our third-party e-commerce platforms and operations; • risks associated with privacy breaches; • risks associated with credit card fraud and identity theft; • risks associated with third party service providers, both domestic and overseas, including service providers in the area of e-commerce; • limitations on our ability to utilize all or a portion of our US deferred tax assets if we experience an ‘‘ownership change’’; and

3 • the outcome of current and future litigation and other proceedings in which we are involved. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All subsequent written and oral forward-looking statements concerning the matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are qualified by these cautionary statements. Forward-looking statements are based on current expectations only and are not guarantees of future performance, and are subject to certain risks, uncertainties and assumptions, including those described in this Annual Report on Form 10-K in ‘‘Item 1A — Risk Factors.’’ We may change our intentions, beliefs or expectations at any time and without notice, based upon any change in our assumptions or otherwise. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. In addition, some factors are beyond our control. We undertake no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise.

WEBSITE ACCESS TO COMPANY REPORTS Our investor website can currently be accessed at www.fifthandpacific.com under ‘‘Investor Relations.’’ Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Registration Reports on Forms S-3 and S-4, Current Reports on Form 8-K and amendments to those reports filed or furnished to the SEC pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our investor website under the caption ‘‘Financial Reports — SEC Filings’’ promptly after we electronically file such materials with, or furnish such materials to, the SEC. No information contained on any of our websites is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. Information relating to corporate governance at our Company, including our Corporate Governance Guidelines, our Code of Ethics and Business Practices for all directors, officers, and employees, and information concerning our directors, Committees of the Board, including Committee charters, and transactions in Company securities by directors and executive officers, is available at our investor website under the captions ‘‘Corporate Governance’’ and ‘‘Financial Reports — SEC Filings.’’ Paper copies of these filings and corporate governance documents are available to stockholders free of charge by written request to Investor Relations, Fifth & Pacific Companies, Inc., 1441 Broadway, New York, New York 10018. Documents filed with the SEC are also available on the SEC’s website at www.sec.gov. We were incorporated in January 1976 under the laws of the State of Delaware. In this Annual Report on Form 10-K, unless the context requires otherwise, references to ‘‘Fifth & Pacific,’’ ‘‘our,’’ ‘‘us,’’ ‘‘we’’ and ‘‘the Company’’ mean Fifth & Pacific Companies, Inc. and its consolidated subsidiaries. Our fiscal year ends on the Saturday closest to January 1. All references to ‘‘2012’’ represent the 52 week fiscal year ended December 29, 2012. All references to ‘‘2011’’ represent the 52 week fiscal year ended December 31, 2011. All references to ‘‘2010’’ represent the 52 week fiscal year ended January 1, 2011.

4 PART I Item 1. Business. OVERVIEW AND NARRATIVE DESCRIPTION OF BUSINESS General Fifth & Pacific Companies, Inc. designs and markets a global portfolio of retail-based, premium brands including JUICY COUTURE, KATE SPADE and LUCKY BRAND. We also have a private brand jewelry design and development division that markets brands through department stores and serves J.C. Penney Corporation, Inc. (‘‘JCPenney’’) via exclusive supplier agreements for the LIZ CLAIBORNE and MONET jewelry lines and Kohl’s Corporation (‘‘Kohl’s’’) via an exclusive supplier agreement for DANA BUCHMAN jewelry. We also have licenses for the LIZ CLAIBORNE NEW YORK brand, available at QVC, Inc. (‘‘QVC’’) and LIZWEAR, which is distributed through the club store channel. We maintain a noncontrolling stake in MEXX, a European and Canadian apparel and accessories retail-based brand. Our operations and management structure reflect a brand-centric approach, designed to optimize the operational coordination and resource allocation of our businesses across multiple functional areas including specialty retail, outlet, concession, wholesale apparel, wholesale non-apparel, e-commerce and licensing. For a discussion of our segment reporting structure, see ‘‘Business Segments’’ below.

Recent Initiatives and Business Strategy We have continued to pursue transactions and initiatives with a significant impact on our portfolio of brands and which improve our operations or liquidity. During 2012 and early 2013, we: • positioned KATE SPADE for greater global growth, by, among other things, completing the acquisition (the ‘‘KSJ Buyout’’) of the 51.0% interest previously held by Sanei International Co., LTD (‘‘Sanei’’), in Kate Spade Japan Co., Ltd. (‘‘KSJ’’), which operates the KATE SPADE and JACK SPADE businesses in Japan (KSJ was a joint venture that was formed between Sanei and KATE SPADE in August 2009); • launched the KATE SPADE SATURDAY brand in the US and have planned its launch in Japan in March 2013; • continued to build on recent successes to drive growth at LUCKY BRAND, with the management team focused on leveraging LUCKY BRAND’s strong denim heritage while expanding existing product assortments and implementing new offerings, in addition to significantly improving the overall consumer shopping experience; • executed restructuring actions and hired a new CEO at JUICY COUTURE to lead turnaround efforts at that brand; • continued to reduce Corporate costs; • initiated actions to transition our outsourced order management, fulfillment and customer service functions related to each of our brands’ e-commerce operations away from our current third-party provider to a new third-party provider; and • contracted with a third-party facility operations management company to provide distribution operations services at our West Chester, Ohio distribution center (the ‘‘Ohio Facility’’) with a variable cost structure. We also continued to enhance our debt and liquidity profile through the following transactions: • the repurchase of the remaining 121.5 million euro aggregate principal balance of our former 5.0% euro Notes that were due July 2013 (the ‘‘Euro Notes’’);

5 • the issuance of an additional $152.0 million 10.5% Senior Secured Notes due April 2019 (the ‘‘Additional Notes’’); • the conversion of $60.4 million aggregate principal amount of our 6.0% Convertible Senior Notes due June 2014 (the ‘‘Convertible Notes’’) into 17.4 million shares of our common stock, leaving $8.8 million aggregate principal amount of the Convertible Notes outstanding; and • the repayment of all outstanding indebtedness under our amended and restated revolving credit facility (as amended to date, the ‘‘Amended Facility’’), leaving no amounts outstanding, $223.6 million available for borrowing (based on a borrowing base of $251.2 million and $27.7 million of outstanding letters of credit) and $59.5 million of cash and cash equivalents and marketable securities on hand as of December 29, 2012. Our business is organized in a brand-centric, streamlined operating model with a focus on achieving a competitive cost structure. Nevertheless, macroeconomic challenges and uncertainty continue to dampen consumer spending and unemployment levels remain high. Therefore, we continue to focus on the careful execution of our strategic plans and seek opportunities to improve our productivity and profitability. We have established our operating and financial goals based on the following strategies: • Turn around JUICY COUTURE. In December 2012, we appointed Paul Blum to be JUICY COUTURE’s Chief Executive Officer. He will be responsible for driving growth and turnaround initiatives and will focus on: (i) implementing improved pricing, merchandising and inventory allocation strategies; (ii) reworking the merchandising and design of handbags and other accessories to be more in-line aesthetically with the apparel; (iii) expanding the JUICY COUTURE baby and girls’ lines, as well as the intimates business; (iv) implementing outlet-specific strategies that have been successful at KATE SPADE and LUCKY BRAND, including product, visual merchandising, line planning, pricing, and promotions; and (v) accelerating international growth through joint ventures and other investments in foreign operations. • Continue to grow KATE SPADE. Our strategic initiatives for KATE SPADE include: (i) opening new retail locations in North America, Japan, Brazil and United Kingdom; (ii) adding international points of distribution; (iii) broadening the array of products and enhancing customer service; (iv) the launch of KATE SPADE SATURDAY; and (v) continued investment in e-commerce growth. • Create high quality top and bottom-line growth at LUCKY BRAND. The LUCKY BRAND management team will continue to leverage the brand’s strong denim heritage while expanding the core business and pursuing business opportunities in plus sizes, kids and handbags. Specific strategic initiatives for the brand also include developing the brand internationally, opening domestic outlet stores, and strengthening online and digital presence. • Focus on cash flow generation and manage liquidity. We are focused on driving operating cash flow generation and managing liquidity through consistent profitability of our brands, cost reductions and the efficient use of working capital.

Business Segments Our segment reporting structure reflects a brand-focused approach, designed to optimize the operational coordination and resource allocation of our businesses across multiple functional areas including specialty retail, retail outlets, concessions, wholesale apparel, wholesale non-apparel, e-commerce and licensing. The four reportable segments described below represent our brand-based activities for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker to evaluate performance and allocate resources. In identifying our

6 reportable segments, we consider economic characteristics, as well as products, customers, sales growth potential and long-term profitability. As such, we report our operations in four reportable segments: • JUICY COUTURE segment — consists of the specialty retail, outlet, concession, wholesale apparel, wholesale non-apparel (including accessories, jewelry and handbags), e-commerce and licensing operations of our JUICY COUTURE brand. • KATE SPADE segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of our KATE SPADE, KATE SPADE SATURDAY and JACK SPADE brands. • LUCKY BRAND segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of our LUCKY BRAND. • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the DANA BUCHMAN(*), LIZ CLAIBORNE and MONET brands; (ii) the wholesale non-apparel operations of the TRIFARI brand and licensed KENSIE brand; (iii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iv) the licensed LIZ CLAIBORNE NEW YORK brand. We, as licensor, also license 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. See Notes 1 and 18 of Notes to Consolidated Financial Statements and ‘‘Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’

JUICY COUTURE Our JUICY COUTURE brand offers luxurious, casual and fun women’s and girl’s apparel, as well as accessories and jewelry under various JUICY COUTURE trademarks. JUICY COUTURE products are sold predominately through wholly-owned specialty retail and outlet stores, select upscale specialty retail stores and department stores throughout the US, through a network of distributors and owned and licensed retail stores in Asia, Canada, Europe, South America and the Middle East, as well as through our JUICY COUTURE e-commerce website. In addition, JUICY COUTURE has existing licensing agreements for fragrances, footwear, optics, watches, swimwear, electronics cases and baby products.

KATE SPADE Our KATE SPADE brand offers fashion products (accessories, apparel and jewelry) for women under the KATE SPADE and KATE SPADE SATURDAY trademarks and for men under the JACK SPADE trademark. These products are sold primarily in the US through wholly-owned specialty retail and outlet stores, select specialty retail and upscale department stores, our operations in Japan, Brazil and the United Kingdom and through our KATE SPADE, KATE SPADE SATURDAY and JACK SPADE e-commerce websites, as well as through a joint venture in China and through a network of distributors in Asia and the Middle East. KATE SPADE’s product line includes handbags, small leather goods, fashion accessories, jewelry and apparel. In addition, KATE SPADE has existing licensing agreements for footwear, optics, fragrances, tabletop products, legwear, electronics cases, bedding and stationery. KATE SPADE SATURDAY products include apparel, handbags, small leather goods, jewelry, fashion accessories, footwear, optics, electronic cases, beauty, tabletop products and home decor´ items. JACK SPADE products include briefcases, travel bags, small leather goods and apparel.

(*) Our agreement to supply DANA BUCHMAN branded jewelry to Kohl’s expires on October 11, 2013.

7 LUCKY BRAND Our LUCKY BRAND offers an expanded assortment of men’s and women’s denim, woven and knit tops, dresses and sweaters, graphic tees, as well as accessories and jewelry, under various LUCKY BRAND trademarks. LUCKY BRAND products are available for sale at wholly-owned specialty retail and outlet stores in the United States and Canada, select department and specialty stores and through the LUCKY BRAND e-commerce website. LUCKY BRAND also has licensing agreements for children’s wear fragrances, footwear, swimwear, handbags, eyewear and electronic cases.

ADELINGTON DESIGN GROUP The operations within our Adelington Design Group segment consist principally of: • Exclusive supplier arrangements to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry and Kohl’s with DANA BUCHMAN branded jewelry; • An exclusive license to produce and sell jewelry under the KENSIE brand name; • A royalty free license through July 2020 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC through the 2009 previously existing license between the Company and QVC; • LIZWEAR, women’s apparel available through the club store channel; and • TRIFARI, a signature jewelry brand for women sold primarily in mid-tier department stores.

SALES AND MARKETING Domestic direct-to-consumer sales are made through our own retail and outlet stores and e-commerce websites. Our domestic wholesale sales are made primarily to department store chains and specialty retail store customers. Wholesale sales are also made to international customers, military exchanges and to other channels of distribution. In Europe, direct-to-consumer sales are made through our own retail and outlet stores, e-commerce websites and concession stores within department store locations. Wholesale sales are made primarily to department store and specialty retail store customers. In Canada, direct-to-consumer sales are made through our own retail and outlet stores. In Japan, KATE SPADE distributes its products mainly through 54 points of sale that include department store concessions retail stores and e-commerce. In other international markets, including the remainder of Asia, the Middle East and Central and South America, we operate principally through third party licensees, virtually all of which purchase products from us for re-sale at freestanding retail stores and dedicated department store shops they operate. We also have a direct-to-consumer and wholesale presence through distribution agreements, a joint venture in China for our KATE SPADE brand and our own retail stores. We continually monitor retail sales in order to directly assess consumer response to our products. During 2012, we continued our domestic in-store sales, marketing and merchandising programs designed to encourage multiple item regular price sales, build one-on-one relationships with consumers and maintain our merchandise presentation standards. These programs train sales associates on suggested selling techniques, product, merchandise presentation and client development strategies and are offered for JUICY COUTURE, KATE SPADE and LUCKY BRAND. Our retail stores reflect the distinct personalities of each brand, offering a unique shopping experience and exclusive merchandise.

Specialty Retail Stores, Outlet Stores and Concessions: As of December 29, 2012, we operated a total of 344 specialty retail stores under various Company trademarks, consisting of 295 retail stores within the US and 49 retail stores outside of the US (primarily in

8 Japan, Europe and Canada). As of December 29, 2012, we operated a total of 133 outlet stores under various Company-owned and licensed trademarks, consisting of 129 outlet stores within the US and 4 outlet stores outside of the US (primarily in Europe and Canada). Outside of North America, we operate concession stores in select retail stores, which are either owned or leased by a third party department store or specialty store retailer. As of December 29, 2012, we operated 32 KATE SPADE concession stores in Japan and two JUICY COUTURE concession stores in Europe. The following tables set forth select information, as of December 29, 2012, with respect to our specialty retail stores, outlet stores and concessions:

Approximate Number of Average Store JUICY COUTURE Stores Size (Square Feet) US Specialty Retail Stores ...... 71 3,400 Foreign Specialty Retail Stores ...... 7 2,300 US Outlet Stores ...... 50 3,000 Foreign Outlet Stores ...... 4 2,400 Concessions ...... 2 N/A

Approximate Number of Average Store KATE SPADE Stores Size (Square Feet) US Specialty Retail Stores ...... 50 2,000 Foreign Specialty Retail Stores ...... 29 1,100 US Outlet Stores ...... 31 2,100 Concessions ...... 32 N/A

Approximate Number of Average Store JACK SPADE Stores Size (Square Feet) US Specialty Retail Stores ...... 8 1,300 Foreign Specialty Retail Stores ...... 2 1,500 US Outlet Stores ...... 1 2,000

Approximate Number of Average Store LUCKY BRAND Stores Size (Square Feet) US Specialty Retail Stores ...... 166 2,400 Foreign Specialty Retail Stores ...... 11 2,300 US Outlet Stores ...... 47 2,800

E-commerce: Our products are sold on a number of branded websites. E-commerce continued to be an important business driver in 2012. We also operate several websites that provide information about our merchandise

9 but do not sell directly to customers. The following table sets forth select information concerning our branded websites:

Information and Direct to Website Information Only Consumer Sales www.fifthandpacific.com(a) ...... ឡ www.jackspade.com ...... ឡ www.juicycouture.com ...... ឡ www.katespade.com ...... ឡ www.katespade.jp ...... ឡ www.loveisnotabuse.com(b) ...... ឡ www.luckybrand.com ...... ឡ www.saturday.com(c) ...... ឡ www.saturday.jp(d) ...... ឡ

(a) This website offers investors information concerning the Company. (b) This website provides information and resources to address domestic violence matters. (c) This website is expected to launch in the US in Spring 2013. (d) This website is expected to launch in Japan in March 2013. We are currently executing a transition of our outsourced order management, fulfillment and customer service functions related to each of our brand’s e-commerce operations away from our current third-party provider to a new third-party provider. The transition includes certain updates to our current e-commerce platform software and functionality and generally involves a number of other third parties. The transition from the current provider is scheduled to be effected on a staged, brand-by-brand basis occurring over the next several months and is expected to be completed by the second quarter of 2013.

Wholesale: Wholesale sales (before allowances) to our 100 largest customers accounted for substantially all of our 2012 wholesale sales (before allowances). No single customer accounted for more than 10.0% of net sales for 2012. Many major department store groups make centralized buying decisions; accordingly, any material change in our relationship with any such group could have a material adverse effect on our operations. Sales to our domestic department and specialty retail store customers are made primarily through our and Los Angeles showrooms. Internationally, sales to our department and specialty retail store customers are made through showrooms in the United Kingdom. Orders from our wholesale customers generally precede the related shipping periods by several months. Our largest customers discuss with us retail trends and their plans regarding their anticipated levels of total purchases of our products for future seasons. These discussions are intended to assist us in planning the production and timely delivery of our products. We utilize in-stock reorder programs in several divisions to enable customers to reorder certain items through electronic means for quick delivery, as discussed below in the section entitled ‘‘Buying/Sourcing.’’ Many of our wholesale customers participate in our in-stock reorder programs through their own internal replenishment systems.

10 Licensing: We license many of our brands to third parties with expertise in certain specialized products and/or market segments, thereby extending each licensed brand’s market presence. As of December 29, 2012, we had 25 license arrangements, pursuant to which third party licensees produce merchandise under Company-owned trademarks in accordance with designs furnished or approved by us, the present terms of which (not including renewal terms) expire at various dates through 2017. Each of the licenses earns revenue based on a percentage of the licensee’s sales of the licensed products against a guaranteed minimum royalty, which generally increases over the term of the agreement. Income from our licensing operations is included in net sales for the segment under which the license resides. In October 2009, we entered into a multi-year license agreement with JCPenney, which granted JCPenney an exclusive right and license (subject to pre-existing licenses and certain limited exceptions) to use the LIZ CLAIBORNE, LIZ & CO., CLAIBORNE and CONCEPTS BY CLAIBORNE trademarks with respect to covered product categories and included the worldwide manufacturing of the licensed products and the sale, marketing, merchandising, advertising and promotion of the licensed products in the US and Puerto Rico. Under the agreement, JCPenney only used designs provided or approved by us. In November 2011, we sold the global trademark rights for the LIZ CLAIBORNE family of brands and the trademark rights in the US and Puerto Rico for the MONET brand to JCPenney for $267.5 million. The transaction provided for the sale of domestic and international trademark rights for LIZ CLAIBORNE, CLAIBORNE, LIZ, LIZ & CO., CONCEPTS BY CLAIBORNE, LC, ELISABETH, LIZGOLF, LIZSPORT, LIZ CLAIBORNE NEW YORK, LCNY and LIZWEAR and the sale of the trademark rights in the US and Puerto Rico for MONET. The LIZ CLAIBORNE NEW YORK and LIZWEAR trademarks are licensed back to us on a royalty-free basis through July 2020. In addition, certain other trademarks within the LIZ CLAIBORNE family of brands are licensed back to us on a royalty-free basis for sublicense to our pre-existing third party licensees of such trademarks. In October 2009, we also entered into a multi-year license agreement with QVC, granting rights (subject to pre-existing licenses) to certain trademarks and other intellectual property rights. QVC has the rights to use the LIZ CLAIBORNE NEW YORK brand with Isaac Mizrahi as creative director on any apparel, accessories, or home categories in the US and certain international markets. QVC merchandises and sources the product and we provide brand management oversight. The agreement provides for the payment to us of a royalty based on net sales of licensed products by QVC. Pursuant to the November 2011 sale transaction discussed above, we have a royalty-free license from JCPenney to continue to maintain the license with QVC for the LIZ CLAIBORNE NEW YORK trademark through July 2020.

11 The following table sets forth information with respect to certain licensed product categories of our brands:

Products Brands Bed & Bath ...... KATE SPADE Cosmetics & Fragrances ..... JUICY COUTURE; KATE SPADE; LUCKY BRAND Electronics Cases ...... JUICY COUTURE; KATE SPADE; LUCKY BRAND Footwear ...... JUICY COUTURE; KATE SPADE; LUCKY BRAND Handbags ...... LUCKY BRAND Hard Tabletop ...... KATE SPADE Intimate Apparel/Underwear . . LUCKY BRAND Kids/Baby ...... JUICY COUTURE; LUCKY BRAND Legwear and Socks ...... KATE SPADE Optics ...... JUICY COUTURE; KATE SPADE; LUCKY BRAND Sleepwear/Loungewear ...... LUCKY BRAND Stationery and Paper Goods . . KATE SPADE Sunglasses ...... JUICY COUTURE; KATE SPADE; LUCKY BRAND Swimwear ...... JUICY COUTURE; LUCKY BRAND Watches ...... JUICY COUTURE Window Treatments ...... KATE SPADE

Marketing: Marketing for our brands is focused on reinforcing brand relevance, increasing awareness, engaging consumers and guiding them to our retail stores and e-commerce sites. We use a variety of marketing strategies to enhance our brand equity and promote our brands. These initiatives include direct mail, in-store events and internet marketing, including the use of social media. We incurred expenses of $60.5 million, $49.3 million and $53.4 million for advertising, marketing and promotion for all brands in 2012, 2011 and 2010, respectively. In 2012, we continued our domestic in-store shop and fixture programs, which are designed to enhance the presentation of our products on department store selling floors generally through the use of proprietary fixturing, merchandise presentations and graphics. In-store shops operate under the following brand names: JACK SPADE, JUICY COUTURE, KATE SPADE, and LUCKY BRAND. Our accessories operations also offer an in-store shop and fixture program. In 2012, we installed an aggregate of 32 in-store shops. We plan to install an aggregate of approximately 40 additional in-store shops in 2013. For further information concerning our domestic and international sales, see Note 18 of Notes to Consolidated Financial Statements.

BUYING/SOURCING Pursuant to a buying/sourcing agency agreement, Li & Fung acts as the primary global apparel and accessories buying/sourcing agent for all brands in our portfolio, with the exception of our jewelry product lines. We pay to Li & Fung an agency commission based on the cost of product purchases using Li & Fung as our buying/sourcing agent. Our agreement with Li & Fung provides for a refund of a portion of the 2009 closing payment in certain limited circumstances, including a change of control of the Company, the divestiture or discontinuation of any current brand, or certain termination events. We are also obligated to use Li & Fung as our buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. The 2009 licensing arrangements with JCPenney in the US and Puerto Rico and with QVC resulted in the removal of buying/sourcing for a number of LIZ CLAIBORNE branded products sold under these licenses from the Li & Fung buying/sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $24.3 million of the closing payment received from Li &

12 Fung in the second quarter of 2010. The 2011 sales of the KENSIE, KENSIE GIRL and MAC & JAC trademarks resulted in the removal of buying/sourcing for such products sold from the Li & Fung buying/ sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $1.8 million of the closing payment received from Li & Fung in the second quarter of 2012. In addition, our agreement with Li & Fung is not exclusive; however, we are required to source a specified percentage of product purchases from Li & Fung. Products produced in Asia represent a substantial majority of our purchases. We also source product in the US and other regions. During 2012, approximately 300 suppliers located in 21 countries manufactured our products, with the largest finished goods supplier accounting for less than 7.0% of the total of finished goods we purchased. Purchases from our suppliers are processed utilizing individual purchase orders specifying the price and quantity of the items to be produced. Most of our products are purchased as completed product ‘‘packages’’ from our manufacturing contractors, where the contractor purchases all necessary raw materials and other product components, according to our specifications. When we do not purchase ‘‘packages,’’ we obtain fabrics, trimmings and other raw materials in bulk from various foreign and domestic suppliers, which are delivered to our manufacturing contractors for use in our products. We do not have any long-term, formal arrangements with any supplier of raw materials. To date, we have experienced little difficulty in satisfying our raw material requirements and consider our sources of supply adequate. We operate under substantial time constraints in producing each of our collections. In order to deliver, in a timely manner, merchandise which reflects current tastes, we attempt to schedule a substantial portion of our materials and manufacturing commitments relatively late in the production cycle, thereby favoring suppliers able to make quick adjustments in response to changing production needs and in time to take advantage of favorable (cost effective) shipping alternatives. However, in order to secure necessary materials and to schedule production time at manufacturing facilities, we must make substantial advance commitments prior to the receipt of firm orders from customers for the items to be produced. These advance commitments may have lead times in excess of five months. We continue to seek to reduce the time required to move products from design to the customer. If we misjudge our ability to sell our products, we could be faced with substantial outstanding fabric and/or manufacturing commitments, resulting in excess inventories. See ‘‘Item 1A — Risk Factors.’’ Our buying/sourcing arrangements with Li & Fung and with our foreign suppliers are subject to the risks of doing business abroad, including currency fluctuations and revaluations, restrictions on the transfer of funds, terrorist activities, pandemic disease and, in certain parts of the world, political, economic and currency instability. Our operations have not been materially affected by any such factors to date. However, due to the very substantial portion of our products that are produced abroad, any substantial disruption of our relationships with our foreign suppliers could adversely affect our operations. In addition, as Li & Fung is the buying/sourcing agent for a significant portion of our products, we are subject to the risk of having to rebuild such buying/sourcing capacity or find another agent or agents to replace Li & Fung in the event the agreement with Li & Fung terminates, or if Li & Fung is unable to fulfill its obligations under the agreement. In addition, as we rely on independent manufacturers, a manufacturer’s failure to ship product to us in a timely manner, or to meet quality or safety standards, could cause us to miss delivery dates to our retail stores or our wholesale customers. Failure to make deliveries on time could cause our retail customers to expect more promotions and our wholesale customers to seek reduced prices, cancel orders or refuse deliveries, all of which could have a material adverse effect on us. We maintain internal staff responsible for overseeing product safety compliance, irrespective of our agency agreement with Li & Fung.

13 Additionally, we are a certified and validated member of the United States Customs and Border Protection’s Customs-Trade Partnership Against Terrorism (‘‘C-TPAT’’) program and expect all of our suppliers shipping to the United States to adhere to our C-TPAT requirements, including standards relating to facility security, procedural security, personnel security, cargo security and the overall protection of the supply chain. In the event a supplier does not comply with our C-TPAT requirements, or if we determine that the supplier will be unable to correct a deficiency, we may terminate our business relationship with the supplier.

IMPORTS AND IMPORT RESTRICTIONS Virtually all of our merchandise imported into the United States, Asia, Canada, Europe and South America is subject to duties. The United States may unilaterally impose additional duties in response to a particular product being imported (from China or other countries) in such increased quantities as to cause (or threaten) serious damage to the relevant domestic industry (generally known as ‘‘anti-dumping’’ actions). Furthermore, additional duties, generally known as countervailing duties, can also be imposed by the US Government to offset subsidies provided by a foreign government to foreign manufacturers if the importation of such subsidized merchandise injures or threatens to injure a US industry. Legislative proposals have been put forward which, if adopted, would treat a manipulation by China of the value of its currency as actionable under the antidumping or countervailing duty laws. We are also subject to other international trade agreements and regulations, such as the North American Free Trade Agreement, the Central American Free Trade Agreement and the Caribbean Basin Initiative and other ‘‘special trade programs.’’ Each of the countries in which our products are sold has laws and regulations covering imports. Because the US and the other countries into which our products are imported and sold may, from time to time, impose new duties, tariffs, surcharges or other import controls or restrictions, including the imposition of ‘‘safeguard provisions,’’ ‘‘safeguard duties,’’ or adjust presently prevailing duty or tariff rates or levels on products being imported from other countries, we maintain a program of intensive monitoring of import restrictions and opportunities. We strive to reduce our potential exposure to import related risks through, among other things, adjustments in product design and fabrication and shifts of production among countries and manufacturers. In light of the substantial portion of our products that is manufactured by foreign suppliers, the enactment of new legislation or the administration of current international trade regulations, executive action affecting textile agreements, or changes in buying/sourcing patterns or quota provisions, could adversely affect our operations. The elimination of quota has resulted in an overall reduction in the cost of apparel. However, the implementation of any ‘‘safeguard provisions,’’ ‘‘countervailing duties,’’ any ‘‘anti-dumping’’ actions or any other actions impacting international trade can result in cost increases for certain categories of products and in disruption of the supply chain for certain product categories. See ‘‘Item 1A — Risk Factors.’’ Apparel and other products sold by us are also subject to regulation in the US and other countries by other governmental agencies, including, in the US, the Federal Trade Commission, US Fish and Wildlife Service and the Consumer Products Safety Commission. These regulations relate principally to product labeling, content and safety requirements, licensing requirements and flammability testing. We believe that we are in substantial compliance with those regulations, as well as applicable federal, state, local, and foreign regulations relating to the discharge of materials hazardous to the environment. We do not estimate any significant capital expenditures for environmental control matters either in the current year or in the near future. Our licensed products, licensing partners and buying/sourcing agents are also subject to regulation. Our agreements require our licensing partners and buying/sourcing agents to operate in compliance with all laws and regulations and we are not aware of any violations which could reasonably be expected to have a material adverse effect on our business or financial position, results of operations, liquidity or cash flows.

14 Although we have not suffered any material inhibition from doing business in desirable markets in the past, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce trademarks to new markets.

DISTRIBUTION We distribute a substantial portion of our products through leased facilities and the Ohio Facility. In August 2011, we entered into an agreement with Li & Fung for the provision of distribution services in the United States and at that time we planned to migrate from our Ohio Facility to the Li & Fung facility. In August 2012, we encountered systems and operational issues that delayed our planned migration of our product distribution function out of the Ohio Facility, resulting in increased operating costs during the second half of 2012. Subsequently, in light of the complexities of our distribution function, and the timing and expense issues encountered, we determined that it would be advisable to discontinue the migration of the product distribution function to Li & Fung, and we mutually agreed with Li & Fung to allow the distribution agreement with Li & Fung to expire as of January 31, 2013. Our current sourcing arrangements with Li & Fung are unaffected by the expiration of the distribution agreement. In connection with such expiration, we decided that, given the complex distribution needs of our businesses, we should continue to use the Ohio Facility, and on February 5, 2013, we entered into a contract with a third-party distribution center operations and labor management company to provide distribution operations services at the Ohio Facility with a variable cost structure. The third-party distribution center operations company has informed us that it intends to employ our prior employees at the facility. See ‘‘Item 1A — Risk Factors.’’

BACKLOG On February 1, 2013, our order book reflected unfilled customer orders for approximately $184.1 million of merchandise, as compared to approximately $155.4 million at February 3, 2012. These orders represent our order backlog. The amounts indicated include both confirmed and unconfirmed orders, which we believe, based on industry practice and our past experience, will be confirmed. We expect that substantially all such orders will be filled within the 2013 fiscal year. We note that the amount of order backlog at any given date is materially affected by a number of factors, including seasonality, the mix of product, the timing of the receipt and processing of customer orders and scheduling of the manufacture and shipping of the product, which in some instances is dependent on the desires of the customer. Accordingly, order book data should not be taken as providing meaningful period-to-period comparisons.

TRADEMARKS We own most of the trademarks used in connection with our businesses and products. The following table summarizes the principal trademarks we own and/or use in connection with our businesses and products: Company Owned Trademarks

AXCESS KATE SPADE SATURDAY BIRD BY JUICY COUTURE LUCKY BRAND COUTURE COUTURE LUCKY YOU LUCKY BRAND DIRTY ENGLISH MARVELLA JACK SPADE MONET(a) JUICY COUTURE SIGRID OLSEN KATE SPADE TRIFARI KATE SPADE NEW YORK

15 Third Party Owned Trademarks

DANA BUCHMAN(b) LIZ CLAIBORNE NEW YORK(d)(e) KENSIE(c) LIZWEAR(e) LIZ CLAIBORNE(b) MONET(b)(f)

(a) International rights only. (b) The Company provides jewelry for these brands under exclusive supplier arrangements. (c) The Company has an exclusive license to produce and sell jewelry under the KENSIE brand name. (d) As discussed above, QVC is the exclusive specialty retailer for LIZ CLAIBORNE NEW YORK merchandise in the product categories covered by the QVC license agreement (which is subject to pre-existing license agreements) in the US. (e) Licensed to the Company by JCPenney on a royalty free basis. (f) Domestic rights only. In addition, we own and/or use many other logos and secondary trademarks, such as the JUICY COUTURE crest and the LUCKY BRAND clover mark, associated with the above mentioned trademarks. We have registered, or applied for registration of, a multitude of trademarks throughout the world, including those referenced above, for use on a variety of apparel and apparel-related products, including accessories, home furnishings, cosmetics and jewelry, as well as for retail services. We regard our trademarks and other proprietary rights as valuable assets and believe that they have significant value in the marketing of our products. We vigorously protect our trademarks and other intellectual property rights against infringement. In general, trademarks remain valid and enforceable as long as the marks are used in connection with the related products and services and the required registration renewals are filed. We regard the license to use the trademarks and our other proprietary rights in and to the trademarks as valuable assets in marketing our products and, on a worldwide basis, vigorously seek to protect them against infringement. As a result of the appeal of our brands, our products have from time to time been the object of counterfeiting. We have implemented an enforcement program, which we believe has been generally effective in controlling the sale of counterfeit products in the US and in major markets abroad. In markets outside of the US, our rights to some or all of our trademarks may not be clearly established. In the course of our international expansion, we have experienced conflicts with various third parties who have acquired ownership rights in certain trademarks, which would impede our use and registration of some of our principal trademarks. While such conflicts are common and may arise again from time to time as we continue our international expansion, we have generally successfully resolved such conflicts in the past through both legal action and negotiated settlements with third party owners of the conflicting marks. Although we have not in the past suffered any material restraints or restrictions on doing business in desirable markets or in new product categories, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce new and additional brands, such as KATE SPADE SATURDAY, both in the US and in other markets.

COMPETITION Notwithstanding our position as a large fashion apparel and related accessories company in the US, we are subject to intense competition as the apparel and related product markets are highly competitive, both within the US and abroad. We compete with numerous retailers, designers and manufacturers of apparel and accessories, both domestic and foreign. We compete primarily on the basis of fashion, quality

16 and price. Our ability to compete successfully depends upon a variety of factors, including, among other things, our ability to: • anticipate and respond to changing consumer demands in a timely manner; • develop quality and differentiated products that appeal to consumers; • appropriately price products; • establish and maintain favorable brand name and recognition; • maintain and grow market share; • establish and maintain acceptable relationships with our retail customers; • provide appropriate service and support to retailers; • provide effective marketing support and brand promotion; • appropriately determine the size and identify the location of our retail stores and department store selling space; • protect our intellectual property; and • optimize our retail and supply chain capabilities. See ‘‘Item 1A — Risk Factors.’’ Our principal competitors vary by brand and include the following: • For JUICY COUTURE: Anthropologie, Marc by Marc Jacobs, JCrew, Michael Kors, Pink, Coach, Tory Burch and Diane von Furstenberg • For LUCKY BRAND: The Gap, Levi’s, Diesel, Guess, True Religion, 7 for all Mankind and Abercrombie & Fitch • For KATE SPADE: Burberry, Coach, Diane von Furstenberg, Marc by Marc Jacobs, Michael Kors and Tory Burch

EMPLOYEES At December 29, 2012, we had approximately 5,800 full-time employees worldwide, as compared to approximately 6,100 full-time employees at December 31, 2011. We are bound by collective bargaining agreements covering approximately 120 employees at our Ohio Facility and 16 employees at our North Bergen, New Jersey offices. During 2012, we were also party to a collective bargaining agreement covering employees at our distribution facility in Burnaby, Canada, which closed in January 2012; the collective bargaining agreement terminated effective with the closure of this facility. On July 13, 2011, a Memorandum of Agreement (the ‘‘Agreement’’) by and between the Company and the Chicago and Midwest Regional Joint Board of Workers United (the ‘‘Union’’) was ratified by the Union. The Agreement sets forth the terms and conditions pursuant to which we began to effectuate orderly layoffs of our employees at the Ohio Facility, in connection with the anticipated closure and sale of the Ohio Facility. The Agreement provided, among other things, that the terms and conditions of the collective bargaining agreement between the Company and the Union, effective June 17, 2008 to June 16, 2011, as previously extended to July 16, 2011 by the parties (the ‘‘CBA’’), were to remain in effect during the expected shutdown of the Ohio Facility, except as such terms are amended by the Agreement. Among other things, the Agreement provides that effective July 31, 2011, we no longer contribute to the multi- employer defined benefit pension plan (the ‘‘Fund’’), which is jointly sponsored by the Union and management representatives of the contributing employers pursuant to the Taft Hartley Act and regulated by the Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’). Prior to the cessation

17 of contributions, we contributed to the Fund pursuant to obligations arising under the CBA. See ‘‘Item 1A — Risk Factors,’’ and Note 9 of Notes to Consolidated Financial Statements. The Company has notified the employees covered by the CBA of the completion of layoffs on March 31, 2013, at which time the Agreement and CBA terminate. In August 2011, we entered into an agreement with Li & Fung for the provision of distribution services in the United States and at that time we planned to migrate from our Ohio Facility to the Li & Fung facility. Our distribution agreement with Li & Fung expired on January 31, 2013. In connection with such expiration, we decided that, given the complex distribution needs of our businesses, we should continue to use the Ohio Facility, and on February 5, 2013, we entered into a contract with a third-party distribution center operations and labor management company to provide distribution operations services at the Ohio Facility. The third-party distribution center operation company has informed us that it intends to employ our prior employees, including union employees, at the Ohio Facility. We remain bound by a collective bargaining agreement with Local 10, Metropolitan Area Joint Board, Workers United and Local 99, Metropolitan Distribution and Trucking Joint Board, Workers United, covering 18 employees at our New Jersey offices that extends through September 2014. This collective bargaining agreement, which was ratified by the Union on October 1, 2011, provides, among other things, that effective September 30, 2011 we no longer contribute to the Fund, which is jointly sponsored by the Union and management representatives of the contributing employers pursuant to the Taft Hartley Act and regulated by ERISA. Prior to the cessation of contributions, we contributed to the Fund pursuant to obligations arising under the CBA. We consider our relations with our non-union and union employees to be satisfactory and to date we have not experienced any interruption of our operations due to labor disputes. While our relations with the unions have historically been amicable, we cannot rule out the possibility of a labor dispute at one or more of our facilities relating to any facility closings, outsourcing or ongoing negotiations with respect to contracts that expire. Any such dispute could have a material adverse impact on our business.

CORPORATE SOCIAL RESPONSIBILITY We are committed to responsible corporate citizenship and giving back to our communities through a variety of avenues. We have several programs in place that support this commitment.

Monitoring Global Working Conditions We are committed to taking the actions we believe are necessary to ensure that our products are made in contracted factories with fair and decent working conditions. We continue this commitment as we operate under our buying/sourcing arrangement with Li & Fung, collaborating with Li & Fung to develop mutually acceptable audit documents and processes, training the Li & Fung audit staff on our compliance program and communicating our standards to Li & Fung suppliers and their workers. The major components of our compliance program are: (i) communicating our standards of engagement to workers, suppliers and associates; (ii) auditing and monitoring against those standards; (iii) providing workers with a confidential reporting channel; (iv) working with non-governmental organizations; and, (v) working closely with factory management to develop sustainable compliance programs. Suppliers are required to post our standards of engagement in the workers’ native language at all factories where our merchandise is being made. We have used various methods to educate workers regarding our standards and their rights, including development of booklets to better illustrate those standards and involving non-governmental organizations to train workers. The standards of engagement, along with detailed explanations of each standard, are included on our suppliers’ websites. All new suppliers must acknowledge our standards and agree to our monitoring requirements.

18 We have been a participating company in the Fair Labor Association (‘‘FLA’’) since its inception. The FLA is a collaborative effort comprised of socially responsible companies, colleges and universities and civil society organizations whose collective purpose is to improve working conditions at factories around the world. The FLA has developed a Workplace Code of Conduct, based on International Labor Organization standards and has created benchmarks to monitor adherence to those standards, or to perform remediation. Its monitoring program is a brand accountability system that places responsibility on companies to voluntarily achieve desired workplace standards in factories manufacturing their goods. In May 2005, we were in the first group of six companies accredited by the FLA, and we were reaccredited in June 2008. Re-accreditation signifies that we continue to focus our labor compliance program around FLA standards, benchmarks and protocols and have met the requirements of FLA participation. Traditionally, the re-accreditation period had been every three years. The FLA has extended the period to allow participating companies to modify their programs to comply with their revised standards and company obligations. We are, in turn, in the process of updating our program to meet these new standards. As of December 29, 2012, we had approximately 300 active factories on our roster. A total of approximately 180 were audited by our internal compliance team, Li & Fung auditors or third party auditors. Additionally, there were approximately 240 follow up audits. In many cases, we rely on our agents’ audit reports. As such, we continue to conduct shadow audits to confirm that audit protocols and findings are consistent between the two companies. Additionally, as a participating company in the FLA, our suppliers’ factories are also subject to independent, unannounced audits by accredited FLA monitors. We are aware that auditing only confirms compliance at the time of the audit, and we continue to look for ways to improve our monitoring program and work with suppliers to create sustainable compliance at their factories. Creating workers’ awareness and establishing a channel of communication for reporting issues of non-compliance are two important strategies. We encourage all factories to establish internal grievance procedures and give workers the opportunity to report their concerns directly to the Company. At our request, several major factories participated in FLA programs which aid in human resource management and developing internal grievance policies. More information about our monitoring program is available on our website.

Philanthropic Programs We have a number of philanthropic programs that support the nonprofit sector in our major operating communities. • The Fifth & Pacific Foundation, established as the Liz Claiborne Foundation in 1981, is a separate nonprofit legal entity supporting nonprofit organizations working with women to achieve economic independence. The Foundation supports programs in the US communities where our primary offices are located that offer essential job readiness training and increase access to tools that help women, including those affected by domestic violence, transition from poverty into successful independent living. Notwithstanding the Foundation’s name change in June 2012 to the Fifth & Pacific Foundation, the mission of the Foundation remains focused on women’s economic independence. • For more than ten years, we have been committed to creating opportunities for our associates to volunteer and give back to nonprofit organizations in its major operating communities. In 2012, Fifth & Pacific Companies, Inc. evolved its associate volunteering program to work with each of the three major brands to develop its own distinct strategy for community engagement. Furthermore, Fifth & Pacific Companies, Inc. continues to create Company-wide events that complement our philanthropy supporting women’s economic independence. • The Merchandise Donation Program provides direct charitable support to meet community needs. When available we donate product, samples, fixtures and furniture to several types of organizations, including clothing banks, programs for women and certain charitable interests of our associates.

19 • The Matching Gift Program supports and encourages the charitable interests of our associates. Our flexible program matches associates’ gifts at a rate of one to one in the areas of arts, health and safety, education, human services and the environment. Contributions to organizations where associates serve as voluntary board members are matched at a rate of two to one. • Love Is Not Abuse, our long-term campaign against domestic violence, was transitioned from a marketing campaign run by Fifth & Pacific Companies, Inc. to a program owned and operated by Break the Cycle, an existing, independent non-profit organization based in Los Angeles, CA that specializes in these issues. Initial funding for Love Is Not Abuse will be provided by the Fifth & Pacific Foundation for a discrete period of time. The work to assist our associates who might face issues with domestic violence in the work place continues uninterrupted and is run directly by Fifth & Pacific Companies, Inc. • KATE SPADE has worked with Women for Women International in an exclusive partnership entitled Hand In Hand, born from both organizations’ commitment to celebrating creativity, independence and individuality among women. KATE SPADE has supported Women for Women International by employing women in war-torn countries, and utilizing their traditional handcrafts in special collections, designed by the team in New York. The idea is to provide training, fair wages and dependable income in parts of the world where these opportunities are not the norm. KATE SPADE has aided the organization through retail co-marketing, promotion and events. KATE SPADE intends to continue to focus its philanthropic efforts on such objectives.

Environmental Initiatives We are committed to a long-term sustainable approach to caring for and safeguarding the environment. As such, we endeavor to balance environmental considerations and social responsibility with our business goals by evolving and implementing our corporate environmental policy, in addition to complying with environmental laws and regulations. Our current sustainability policy focuses on three major components — reducing waste, reusing and recycling — to help minimize our impact on the environment. In 2010, we conducted our first carbon footprint analysis following the criteria issued by the World Resources Institute and the World Business Council for Substantial Development. Our analysis covered our operations in the US (including offices, distribution centers and stores), and the transport of goods from domestic and foreign manufacturers to our distribution centers and stores in the US. We have used the findings to enhance our corporate environmental strategy, as well as provide a benchmark as we continue our efforts in the future. As our business, the economy, and the environment in which we operate evolve, we remain aware of the impact our actions have on the environment and revise and enhance our environmental approach, as appropriate.

Item 1A. Risk Factors. You should carefully consider the following risk factors, in addition to other information included in this Annual Report on Form 10-K and in other documents we file with the SEC, in evaluating us and our business. If any of the following risks occur, our business, financial condition, liquidity and results of operations could be materially adversely affected. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks emerge from time to time. Management cannot predict such new risk factors, nor can we assess the impact, if any, of such new risk factors on our business or the extent to which any factor or combination of factors may impact our business. Our ability to continue to have the necessary liquidity through cash flows from operations and availability under our Amended Facility may be adversely impacted by a number of factors. These factors include the level of our operating cash flows, our ability to maintain established levels of availability under, and to comply with the financial

20 and other covenants included in, our Amended Facility and the borrowing base requirement in our Amended Facility that limits the amount of borrowings we may make based on a formula of, among other things, eligible accounts receivable and inventory and the minimum availability covenant in our Amended Facility that requires us to maintain availability in excess of an agreed upon level. Our primary ongoing cash requirements are to: (i) fund seasonal working capital needs (primarily accounts receivable and inventory); (ii) fund capital expenditures related to the opening and refurbishing of our specialty retail and outlet stores and normal maintenance activities; (iii) fund remaining efforts associated with our streamlining initiatives, which include continued evolution of our distribution strategy, reconfigurations of corporate support functions, consolidation of office space and reductions in staff; (iv) invest in our information systems; (v) fund general operational and contractual obligations; and (vi) potentially repurchase or retire debt obligations. Under the Amended Facility, the aggregate commitments are $350.0 million. Our borrowing availability under the Amended Facility is determined primarily by the level of our eligible accounts receivable and inventory balances. As of December 29, 2012, we had $223.6 million of borrowing availability, no outstanding borrowings and $27.7 million of outstanding letters of credit under the Amended Facility. As a result of a May 2010 amendment to and restatement of our Amended Facility, the maturity date of the Amended Facility was extended from May 2011 to August 2014, provided that in the event that our Convertible Notes are not refinanced, purchased or defeased prior to March 15, 2014, then the maturity date shall be March 15, 2014. If any such refinancing or extension provides for a maturity date that is earlier than 91 days following August 6, 2014, then the maturity date shall be the date that is 91 days prior to the maturity date of such notes. In June 2012, we entered into a further amendment to the Amended Facility. The amendment, among other things, permitted us (i) to issue the Additional Notes, (ii) to pay the consideration for the June 6, 2012 Euro Notes repurchase and the July 12, 2012 Euro Notes redemption and (iii) to fund all or a portion of the KSJ Buyout, subject to certain tests and conditions. We are subject to various covenants and other requirements, such as financial requirements, reporting requirements and negative covenants. We are required to maintain minimum aggregate borrowing availability of not less than $45.0 million and must apply substantially all cash collections to reduce outstanding borrowings under the Amended Facility when availability under the Amended Facility falls below the greater of $65.0 million and 17.5% of the then-applicable aggregate commitments. Our borrowing availability under the Amended Facility is determined primarily by the level of our eligible accounts receivable and inventory balances. If we do not have a sufficient borrowing base at any given time, borrowing availability under our Amended Facility may trigger the requirement to apply substantially all cash collections to reduce outstanding borrowings or default and also may not be sufficient to support our liquidity needs. Insufficient borrowing availability under our Amended Facility would likely have a material adverse effect on our business, financial condition, liquidity and results of operations. We currently believe that the financial institutions under the Amended Facility are able to fulfill their commitments, although such ability to fulfill commitments will depend on the financial condition of our lenders at the time of borrowing. While there can be no certainty that availability under the Amended Facility plus cash on hand will be sufficient to fund our liquidity needs, based upon our current projections, we currently anticipate that our borrowing availability will be sufficient for at least the next 12 months. Over recent years, the economic environment has resulted in significantly lower employment levels, disposable income and actual and/or perceived wealth, lower consumer confidence and reduced retail sales. Further reductions in consumer spending, as well as a failure of consumer spending levels to rise to previous levels, or a worsening of current economic conditions would adversely impact our net sales and operating cash flows. In addition, the sufficiency and availability of our sources of liquidity may be affected by a variety of other factors, including, without limitation: (i) factors affecting the level of our operating cash flows, such as retailer and consumer acceptance of our products; (ii) the status of, and any adverse changes in, our credit ratings;

21 (iii) our ability to maintain required levels of borrowing availability and other covenants included in our debt and credit facilities; (iv) the financial wherewithal of our larger department store and specialty retail store customers; and (v) interest rate and exchange rate fluctuations. Also, our agreement with Li & Fung provides for a refund of a portion of the $75.0 million closing payment in certain limited circumstances, including a change in control of our Company, the divestiture of any of our current brands, or certain termination events. The 2009 licensing arrangements with JCPenney and QVC resulted in the removal of buying/sourcing for a number of LIZ CLAIBORNE branded products sold under these licenses from the Li & Fung buying/sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $24.3 million of the closing payment during the second quarter of 2010. The 2011 sales of the KENSIE, KENSIE GIRL and MAC & JAC trademarks resulted in the removal of buying/sourcing for such products sold from the Li & Fung buying/sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $1.8 million of the closing payment received from Li & Fung in the second quarter of 2012. Our agreement with Li & Fung is not exclusive; however, we are required to source a minimum value and a specified percentage of product purchases from Li & Fung. In November 2011, in connection with the Company’s sale of its LIZ CLAIBORNE brand and certain rights to its MONET brand to JCPenney, the Company entered into an agreement with JCPenney to develop exclusive brands for JCPenney, which included payment to the Company of a $20.0 million refundable advance. The agreement terminated by its terms without being exercised on February 1, 2013, and the $20.0 million advance was refunded to JCPenney on February 8, 2013 pursuant to the terms of the agreement. Should we be unable to comply with the requirements in the Amended Facility, we would be unable to borrow under such agreement, and any amounts outstanding would become immediately due and payable unless we were able to secure a waiver or an amendment under the Amended Facility. Should we be unable to borrow under the Amended Facility, or if outstanding borrowings thereunder become immediately due and payable, our liquidity may be significantly impaired, which could have a material adverse effect on our business, financial condition and results of operations. In addition, an acceleration of amounts outstanding under the Amended Facility would likely cause cross-defaults under our other outstanding indebtedness, including the Convertible Notes, the Euro Notes and the Senior Notes. In 2010, we received $171.5 million of net income tax refunds on previously paid taxes primarily due to a Federal law change in 2009 allowing our 2008 or 2009 domestic losses to be carried back for five years, with the fifth year limited to 50.0% of taxable income. We repaid amounts outstanding under our Amended Facility with the amount of such refunds. As a result of the US Federal tax law change extending the carryback period from two to five years and our carryback of our 2009 tax loss to 2004 and 2005, the IRS has the ability to re-open its past examinations of 2004 and 2005.

General economic conditions in the US, Europe and other parts of the world, including a continued weakening or instability of such economies, restricted credit markets and lower levels of consumer spending, can affect consumer confidence and consumer purchases of discretionary items, including fashion apparel and related products, such as ours. The economies of the US, Europe and other parts of the world in which we operate weakened significantly as a result of the global economic crisis that began in the second half of 2008 and which has for the most part persisted since then, with recent signs of modest improvement in the US. Our results are dependent on a number of factors impacting consumer spending, including, but not limited to: (i) general economic and business conditions both in the US and abroad; (ii) consumer confidence; (iii) wages and current and expected employment levels; (iv) the housing market; (v) consumer debt levels; (vi) availability of consumer credit; (vii) credit and interest rates; (viii) fluctuations in foreign currency exchange rates; (ix) fuel and energy costs; (x) energy shortages; (xi) the performance of the financial, equity and credit markets; (xii) taxes; (xiii) general political conditions, both domestic and abroad; and (xiv) the level of customer traffic within department stores, malls and other shopping and selling environments.

22 Global economic conditions over the past few years have included significant recessionary pressures and declines in employment levels, disposable income and actual and/or perceived wealth and declines in consumer confidence and economic growth. The current unstable economic environment has been characterized by a dramatic decline in consumer discretionary spending and has disproportionately affected retailers and sellers of consumer goods, particularly those whose goods represent discretionary purchases, including fashion apparel and related products such as ours. While the decline in consumer spending has recently moderated, these economic conditions could still lead to continued declines in consumer spending over the foreseeable future and may have resulted in a resetting of consumer spending habits that makes it unlikely that such spending will return to prior levels for the foreseeable future. A number of our markets continue to suffer particularly severe downturns, and we have experienced significant declines in revenues. While we have seen intermittent signs of stabilization in North America, there continues to be volatility in the European markets and there are no assurances that the global economy will continue to recover. If the global economy continues to be weak or deteriorates further, there will likely be a negative effect on our revenues, operating margins and earnings across all of our segments. Economic conditions have also led to a highly promotional environment and strong discounting pressure from both our wholesale and retail customers, which have had a negative effect on our revenues and profitability. This promotional environment may likely continue even after economic growth returns, as we expect that consumer spending trends are likely to remain at historically depressed levels for the foreseeable future. The domestic and international political situation also affects consumer confidence. The threat, outbreak or escalation of terrorism, military conflicts or other hostilities could lead to further decreases in consumer spending. The recent downturn and uncertain outlook in the global economy will likely continue to have a material adverse impact on our business, financial condition, liquidity and results of operations. Fluctuations in the price, availability and quality of the fabrics or other raw materials used to manufacture our products, as well as the price for labor, marketing and transportation, could have a material adverse effect on our cost of sales or our ability to meet our customers’ demands. The prices for such fabrics depend largely on the market prices for the raw materials used to produce them. Such factors may be exacerbated by legislation and regulations associated with global climate change. The price and availability of such raw materials may fluctuate significantly, depending on many factors. In the future, we may not be able to pass all or a portion of such higher prices on to our customers.

We cannot assure the successful implementation and results of our long-term strategic plans, including without limitation, our ability to sustain the improved performance of our Lucky Brand business, or our ability to successfully improve the operations and results, creative direction and product offering at our JUICY COUTURE brand.

Our ability to execute our long-term growth plan and achieve our projected results is subject to a variety of risks, including the fact that our strategic plan contemplates a continued expansion of our specialty retail business in our KATE SPADE, JUICY COUTURE and LUCKY BRAND segments. The successful operation and expansion of our specialty retail businesses are subject to, among other things, our ability to: (i) successfully expand the specialty retail store base; (ii) negotiate favorable leases; (iii) design and create appealing merchandise; (iv) manage inventory levels; (v) install and operate effective retail systems; (vi) apply appropriate pricing strategies; (vii) integrate such stores into our overall business mix; and (viii) successfully extend these brands into markets worldwide through distribution, licensing or joint venture arrangements or other business models, including in growing markets such as China. We may not be successful in this regard, and our inability to successfully expand our specialty retail business would have a material adverse effect on our business, financial condition, liquidity and results of operations. In 2012, we continued to closely manage spending and opened 41 retail stores and acquired 21

23 KATE SPADE stores in connection with the KSJ Buyout. We continue to monitor our capital spending and expect to open 80-85 retail stores in 2013. While we have worked to revitalize the JUICY COUTURE product offering, recent results at our JUICY COUTURE business have been challenging. The JUICY COUTURE results have been negatively impacted by a number of factors, including business process and operational issues, primarily related to inventory management, including buying, merchandising, allocation and underperformance of outlets, as well as product issues, including pricing, assortment and the underperformance of certain merchandise categories. We have taken, and will continue to take, actions designed to correct these issues, including implementing changes to JUICY COUTURE’s organizational structure and revising JUICY COUTURE’s business processes in an effort to improve efficiency and effectiveness. In December 2012, the Company appointed Paul Blum as CEO of JUICY COUTURE. There can be no assurances, however, that our actions will be successful; any continued operational or product issues could have an adverse impact on the operations and results of JUICY COUTURE and our business, financial position, liquidity and results of operations. We continue our efforts, which we began in January 2010, to reposition and drive profitability improvements for LUCKY BRAND. These efforts focus on leveraging LUCKY BRAND’s strong brand heritage and ensuring consistent availability of key products and sizes. As part of this effort, in January 2010, we hired current LUCKY BRAND CEO David DeMattei and Creative Director Patrick Wade. While we have seen recent improvement in the brand’s performance, there can be no assurances that we will be able to improve LUCKY BRAND’s results.

The 2011 sales of the global trademark rights to the LIZ CLAIBORNE family of brands and the sale of the trademark rights in the US and Puerto Rico for the MONET brand present risks, including, without limitation, the impact of such transactions on the LIZ CLAIBORNE brand licensing arrangements, our ability to continue a good working relationship with those licensees and possible changes or disputes in our other brand relationships or relationships with other retailers and existing licensees as a result of the transactions. In November 2011, we sold the global trademark rights to the LIZ CLAIBORNE family of brands and the trademark rights in the US and Puerto Rico for the MONET brand. In connection with this transaction, the Company maintains: (i) an exclusive supplier arrangement to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry; (ii) a royalty free license through July 2020 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC through the 2009 previously existing license between the Company and QVC; and (iii) a royalty-free license through July 2020 to use the LIZWEAR brand to design, manufacture and distribute LIZWEAR-branded products to the club store channel. In connection with the license agreements we entered into in 2009 with JCPenney and QVC, most of our then-existing LIZ CLAIBORNE product licensees began to work with QVC and JCPenney directly. Under our sale transaction with JCPenney, licenses under the LIZ CLAIBORNE family of brands have been licensed back to us. The working relationships established in 2009 will continue with current licensees under the LIZ CLAIBORNE family of brands. Such existing licensees and JCPenney and/or QVC might not be able to successfully work together on the license product categories. In the future, product licensees may make claims that the LIZ CLAIBORNE 2009 brand license arrangements adversely impacted their ongoing ability to sell LIZ CLAIBORNE merchandise. In addition, these transactions may have an adverse impact on sales of our other brands to our US department store customers. We operate in a highly competitive retail environment. Certain of our other US department store customers could still choose to decrease or eliminate the amount of other products purchased from us or change the manner of doing business with us as result of these transactions. Such a decision by a group of US department stores or any other significant customers could have a material adverse effect on our business, financial condition, results of operations, cash flows and liquidity.

24 The success of our business depends on our ability to anticipate and respond to constantly changing consumer demands and tastes and fashion trends, across multiple brands, product lines, shopping channels and geographies. The apparel and accessories industries have historically been subject to rapidly changing consumer demands and tastes and fashion trends and to levels of discretionary spending, especially for fashion apparel and related products, which levels are currently weak. These industries are also subject to being able to expand business to growing markets worldwide. We believe that our success is largely dependent on our ability to effectively anticipate, gauge and respond to changing consumer demands and tastes across multiple product lines, shopping channels and geographies, in the design, pricing, styling and production of our products and in the merchandising and pricing of products in our retail stores, and in the business model employed, and partners we select to work with, in new and growing markets worldwide. Our brands and products must appeal to a broad range of consumers whose preferences cannot be predicted with certainty and are subject to constant change. Also, we must maintain and enhance favorable brand recognition, which may be affected by consumer attitudes towards the desirability of fashion products bearing a ‘‘mega brand’’ label and which are widely available at a broad range of retail stores. Our success is also dependent on our ability to successfully extend our businesses into new territories and markets, such as China, Japan and Brazil. We attempt to schedule a substantial portion of our materials and manufacturing commitments relatively late in the production cycle. However, in order to secure necessary materials and ensure availability of manufacturing facilities, we must make substantial advance commitments, which may be up to five months or longer, prior to the receipt of firm orders from customers for the items to be produced. We need to translate market trends into appropriate, saleable product offerings relatively far in advance, while minimizing excess inventory positions, and correctly balance the level of our fabric and/or merchandise commitments with actual customer orders. We cannot assure that we will be able to continue to develop appealing styles and brands or successfully meet changing customer and consumer demands in the future. In addition, we cannot assure that any new products or brands that we introduce will be successfully received and supported by our wholesale customers or consumers. Our failure to gauge consumer needs and fashion trends by brand and respond appropriately, and to appropriately forecast our ability to sell products, could adversely affect retail and consumer acceptance of our products and leave us with substantial outstanding fabric and/or manufacturing commitments, resulting in increases in unsold inventory or missed opportunities. If that occurs, we may need to employ markdowns or promotional sales to dispose of excess inventory, which may harm our business and results. At the same time, our focus on inventory management may result, from time to time, in our not having a sufficient supply of products to meet demand and cause us to lose potential sales.

We cannot assure that we can attract and retain talented highly qualified executives, or maintain satisfactory relationships with our employees, both union and non-union. Our success depends, to a significant extent, both upon the continued services of our executive management team, including brand-level executives, as well as our ability to attract, hire, motivate and retain additional talented and highly qualified management in the future, including the areas of design, merchandising, sales, supply chain, marketing, production and systems, as well as our ability to hire and train qualified retail management and associates. In addition, we will need to provide for the succession of senior management, including brand-level executives. The loss of key members of management and our failure to successfully plan for succession could disrupt our operations and our ability to successfully operate our business and execute our strategic plan. We are bound by collective bargaining agreements covering approximately 120 employees at our Ohio Facility and 16 employees at our North Bergen, New Jersey offices. During 2011, we were also party to a collective bargaining agreement covering employees at our distribution facility in Burnaby, Canada, which closed in January 2012; the collective bargaining agreement terminated effective with the closure of this facility. We consider our relations with our non-union and union employees to be satisfactory and to date

25 we have not experienced any interruption of our operations due to labor disputes. While our relations with the unions have historically been amicable, we cannot rule out the possibility of a labor dispute at one or more of our facilities relating to any facility closings, outsourcing or ongoing negotiations with respect to contracts that expire. Any such dispute could have a material adverse impact on our business, financial position, liquidity and results of operations.

Costs related to withdrawal from a multi-employer pension fund could negatively affect our results of operations and cash flow. In the second quarter of 2011, we initiated actions to close our Ohio Facility, which was expected to result in the termination of all or a significant portion of our union employees. In the third quarter of 2011, we ceased contributing to a multi-employer defined benefit pension plan (the ‘‘Fund’’), which is regulated by the Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’). Under ERISA, cessation of employer contributions triggers an obligation by such employer for a ‘‘withdrawal liability’’ to such plan, with the amount of such withdrawal liability representing the portion of the plan’s underfunding allocable to the withdrawing employer. We incurred such a liability in the second quarter of 2011 and recorded a $17.6 million charge to Selling, general & administrative expenses (‘‘SG&A’’), related to our estimate of the withdrawal liability. Under applicable statutory rules, this withdrawal liability is payable over a period of time, and we previously estimated that we would pay such liability in equal quarterly installments over a period of eight to 12 years, with payments anticipated to commence in 2012. In February 2012, we were notified by the Fund that the Fund calculated our total withdrawal liability to be $19.1 million, a difference of approximately $1.5 million, and that 17 quarterly payments of $1.2 million would commence on March 1, 2012, and continue for four years, with a final payment of $1.0 million on June 1, 2016. In light of the Fund’s notice, we recorded an additional charge to SG&A in 2011. As of December 29, 2012, the accrued withdrawal liability was $14.3 million, which was included in Accrued expenses and Other non-current liabilities on the accompanying Consolidated Balance Sheet. We do not believe that this withdrawal liability amount or the schedule of payments will have a material adverse impact on our financial position, results of operations or cash flows.

We have experienced delays in our previously announced plan to close our Ohio Facility and transition to Li & Fung for a significant portion of our US distribution operations and have decided to discontinue the transition. While we intend to continue to use the Ohio Facility and have contracted with another third party to operate the facility, there continue to be risks in connection with the operations of our Ohio Facility. In connection with our streamlining initiatives, in July 2011, we announced our plan to close our Ohio Facility in the second half of 2012 and migrate the distribution function to a third party service provider, and that we had entered into a Memorandum of Agreement (the ‘‘Agreement’’) between us and the Chicago and Midwest Regional Joint Board of Workers United (the ‘‘Union’’), which was ratified by the Union. The Agreement set forth the terms and conditions pursuant to which we had planned to effectuate orderly layoffs of our employees at the Ohio Facility, in connection with the anticipated closure and sale of the Ohio Facility in the fourth quarter of 2012. The Agreement provided, among other things, that the terms and conditions of the collective bargaining agreement between the Company and the Union, effective June 17, 2008 to June 16, 2011, as previously extended to July 16, 2011 by the parties (the ‘‘CBA’’), were to remain in effect during the expected shutdown of the Ohio Facility, except as such terms are amended by the Agreement. In August 2011, we entered into an agreement with Li & Fung for the provision of distribution services in the United States and at that time we planned to migrate from our Ohio Facility to the Li & Fung facility.

26 In August 2012, we encountered systems and operational issues that have delayed our planned migration of our product distribution function out of the Ohio Facility, resulting in increased operating costs during the second half of 2012. Subsequently, we determined that it would be advisable to discontinue the migration of the product distribution function to Li & Fung, and we mutually agreed with Li & Fung to allow the distribution agreement with Li & Fung to expire as of January 31, 2013. Our current sourcing arrangements with Li & Fung are unaffected by the expiration of the distribution agreement. In connection with such expiration, we decided that, given the complex distribution needs of our businesses, we should continue to use the Ohio Facility, and on February 5, 2013, we entered into a contract with a third-party distribution center operations and labor management company to provide distribution operations services at the Ohio Facility. In addition, the Company has notified the employees covered by the Agreement of the completion of layoffs on March 31, 2013, at which time the Agreement and CBA terminate. The third-party distribution center operations company has informed us that it intends to employ our prior employees, including union employees, at the Ohio Facility. There are a number of risks associated with continuing to operate the Ohio Facility, including increased operating expenses in 2013, risks related to systems capabilities at the Ohio Facility and risks related to the ability of the third-party distribution center operations company to appropriately staff the Ohio Facility with both union and non-union employees on reasonable and appropriate terms. We also have limited ability to control our third-party distribution center operations company, and such company may take actions with respect to its employees without our approval and may not maintain good relations with its employees and unions. Issues that arise in connection with the operation of our Ohio Facility could cause supply disruptions and other logistical issues and could therefore have a material, adverse effect on our business, financial condition, liquidity and results of operations.

Our wholesale businesses are dependent to a significant degree on sales to a limited number of large US department store customers, and our business could suffer as a result of consolidations, restructurings, bankruptcies and other ownership changes in the retail industry, financial difficulties at our large department store customers. Many major department store groups make centralized buying decisions. Accordingly, any material change in our relationship with any such group could have a material adverse effect on our operations. We expect that our largest customers will continue to account for a significant percentage of our wholesale sales. Our continued partial dependence on sales to a limited number of large US department store customers is subject to our ability to respond effectively to, among other things: (i) these customers’ buying patterns, including their purchase and retail floor space commitments for apparel in general (compared with other product categories they sell) and our products specifically (compared with products offered by our competitors, including with respect to customer and consumer acceptance, pricing and new product introductions); (ii) these customers’ strategic and operational initiatives, including their continued focus on further development of their ‘‘private label’’ initiatives; (iii) these customers’ desire to have us provide them with exclusive and/or differentiated designs and product mixes; (iv) these customers’ requirements for vendor margin support; (v) any credit risks presented by these customers, especially given the significant proportion of our accounts receivable they represent; and (vi) the effect of any potential consolidation among these larger customers. We do not enter into long-term agreements with any of our wholesale customers. Instead, we enter into a number of purchase order commitments with our customers for each of our lines every season. A decision by the controlling owner of a group of stores or any other significant customer, whether motivated by competitive conditions, financial difficulties or otherwise, to decrease or eliminate the amount of merchandise purchased from us or to change their manner of doing business with us could have a material adverse effect on our business, financial condition, liquidity and results of operations. As a result of the recent unfavorable economic environment, we have experienced a softening of demand from a number of wholesale customers, such as large department stores, who have been highly promotional and have

27 aggressively marked down all of their merchandise, including our products. Any promotional pricing or discounting in response to softening demand may also have a negative effect on brand image and prestige, which may be difficult to counteract once the economy improves. Furthermore, this promotional activity may lead to requests from those customers for increased markdown allowances at the end of the season. Promotional activity at our wholesale customers will also often result in promotional activity at our retail stores, further eroding revenues and profitability. We sell our wholesale merchandise primarily to major department stores across the US and extend credit based on an evaluation of each customer’s financial condition, usually without requiring collateral. However, the financial difficulties of a customer could cause us to curtail or eliminate business with that customer. We may also assume more credit risk relating to our receivables from that customer. Our inability to collect on our trade accounts receivable from any of our largest customers could have a material adverse effect on our business, financial condition, liquidity and results of operations. Moreover, the difficult macroeconomic conditions and uncertainties in the global credit markets could negatively impact our customers and consumers which, in turn, could have an adverse impact on our business, financial condition, liquidity and results of operations.

We cannot assure that the MEXX business, in which we hold a minority interest, will be successful or that our minority interest in the new entity will not decrease in value. On October 31, 2011, we sold the global MEXX business to a new entity in which we retained a minority interest. Under the terms of such transaction, we have obligations regarding the transitioning of the MEXX business to the new entity, including the requirement that the Company provide certain transition services to the new entity. There are a number of risks associated with such transition, including the potential costs associated with such transition services. Such costs may negatively impact our business, financial condition, results of operations, cash flows and liquidity. The new entity may not be successful in its operation of the MEXX business, and our minority ownership may decrease in value. In addition, we have a number of disputes arising from the sale of the MEXX business. See ‘‘Item 3—Legal Proceedings.’’

Our business could suffer if we cannot adequately establish, defend and protect our trademarks and other proprietary rights. We believe that our trademarks and other proprietary rights are significantly important to our success and competitive position. Accordingly, we devote substantial resources to the establishment and protection of our trademarks and anti-counterfeiting activities. Counterfeiting of our products, particularly our JUICY COUTURE, LUCKY BRAND and KATE SPADE brands, continues, however, and in the course of our international expansion we have experienced conflicts with various third parties that have acquired or claimed ownership rights in some of our trademarks or otherwise have contested our rights to our trademarks. We have, in the past, resolved certain of these conflicts through both legal action and negotiated settlements, none of which, we believe, has had a material impact on our financial condition, liquidity or results of operations. However, the actions taken to establish and protect our trademarks and other proprietary rights might not be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as a violation of their trademarks and proprietary rights. Moreover, in certain countries others may assert rights in, or ownership of, our trademarks and other proprietary rights or we may not be able to successfully resolve such conflicts, or resolving such conflicts may require us to make significant monetary payments. In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the US. The loss of such trademarks and other proprietary rights, or the loss of the exclusive use of such trademarks and other proprietary rights, could have a material adverse effect on us. Any litigation regarding our trademarks or other proprietary rights could be time consuming and costly.

28 Our success will depend on our ability to successfully develop or acquire new product lines and enter new markets or product categories. We have in the past, and may, from time to time, acquire or develop new product lines, enter new markets or product categories, including through licensing arrangements, and/or implement new business models (such as the wholesale jewelry model we retain for the sold LIZ CLAIBORNE, DANA BUCHMAN, MONET and KENSIE/MAC & JAC brands and the recently announced KATE SPADE SATURDAY line). Such activities are accompanied by a variety of risks inherent in any such new business venture, including the following: • our ability to identify appropriate business development opportunities, including new product lines and new markets, including important growth markets such as China, Japan and Brazil; • new businesses, business models, product lines or market activities may require methods of operations, investments and marketing and financial strategies different from those employed in our other businesses, and may also involve buyers, store customers and/or competitors different from our historical buyers, store customers and competitors; • consumer acceptance of the new products or lines, and the impact on existing businesses given the new products or lines, including the pricing of such lines; • we may not be able to generate projected or satisfactory levels of sales, profits and/or return on investment for a new business or product line, and may also encounter unanticipated events and unknown or uncertain liabilities that could materially impact our business; • we may experience possible difficulties, delays and/or unanticipated costs in integrating the business, operations, personnel and/or systems of an acquired business and may also not be able to retain and appropriately motivate key personnel of an acquired business; • risks related to complying with different laws and regulations in new markets; • we may not be able to maintain product licenses, which are subject to agreement with a variety of terms and conditions, or to enter into new licenses to enable us to launch new products and lines; and • with respect to a business where we are not the brand owner, but instead act as an exclusive licensee or an exclusive supplier, such as the arrangements within our Adelington Design Group discussed above for the LIZ CLAIBORNE, MONET, DANA BUCHMAN and KENSIE brands, there are a number of inherent risks, including, without limitation, compliance with terms set forth in the applicable agreements, the level of orders placed by our business partners and the public perception and/or acceptance of our business partners, the brands or other product lines, which are not within our control.

The markets in which we operate are highly competitive, both within the US and abroad. We face intense competitive challenges from other domestic and foreign fashion apparel and accessories producers and retailers. Competition is based on a number of factors, including the following: • anticipating and responding to changing consumer demands in a timely manner; • establishing and maintaining favorable brand name and recognition; • product quality; • maintaining and growing market share; • exploiting markets outside of the US, including growth markets such as China; • developing quality and differentiated products that appeal to consumers;

29 • establishing and maintaining acceptable relationships with our retail customers; • pricing products appropriately; • providing appropriate service and support to retailers; • optimizing our retail and supply chain capabilities; • size and location of our retail stores and department store selling space; and • protecting intellectual property. Any increased competition, or our failure to adequately address these competitive factors, could result in reduced sales or prices, or both, which could have a material adverse effect on us. We also believe there is an increasing focus by the department stores to concentrate an increasing portion of their product assortments within their own private label products. These private label lines compete directly with our product lines and may receive prominent positioning on the retail floor by department stores. Finally, in the current economic environment, which is characterized by softening demand for discretionary items, such as apparel and related products, there has been a consistently increased level of promotional activity, both at our retail stores and at department stores, which has had an adverse effect on our revenues and profitability.

Our reliance on independent foreign manufacturers could cause delay and loss and damage our reputation and customer relationships. Also, there are risks associated with our agreement with Li & Fung, which results in a single foreign buying/sourcing agent for a significant portion of our products. We do not own any product manufacturing facilities; all of our products are manufactured in accordance with our specifications through arrangements with independent suppliers. Products produced in Asia represent a substantial majority of our sales. We also source product in the US and other regions, including approximately 300 suppliers manufacturing our products. At the end of 2012, such suppliers were located in 21 countries, with the largest finished goods supplier at such time accounting for less than 7.0% of the total of finished goods we purchased in 2012. A supplier’s failure to manufacture and deliver products to us in a timely manner or to meet our quality standards could cause us to miss the delivery date requirements of our customers for those items. The failure to make timely deliveries may drive customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us and our reputation in the marketplace. Also, a manufacturer’s failure to comply with safety and content regulations and standards, including with respect to children’s product and fashion jewelry, could result in substantial liability and damage to our reputation. While we provide our manufacturers with standards, and we employ independent testing for safety and content issues, we might not be able to prevent or detect all failures of our manufacturers to comply with such standards and regulations. Additionally, we require our independent manufacturers (as well as our licensees) to operate in compliance with applicable laws and regulations. While we believe that our internal and vendor operating guidelines promote ethical business practices and our staff periodically visits and monitors the operations of our independent manufacturers, we do not control these manufacturers or their labor practices. The violation of labor or other laws by an independent manufacturer used by us (or any of our licensees), or the divergence of an independent manufacturer’s (or licensee’s) labor practices from those generally accepted as ethical in the US, could interrupt, or otherwise disrupt the shipment of finished products to us or damage our reputation. Any of these, in turn, could have a material adverse effect on our business, financial condition, liquidity and results of operations. On February 23, 2009, we entered into a long-term, buying/sourcing agency agreement with Li & Fung, pursuant to which Li & Fung acts as the primary global apparel and accessories buying/sourcing agent for all brands in our portfolio, with the exception of our jewelry product lines. Pursuant to the

30 agreement, we received at closing on March 31, 2009 a payment of $75.0 million and an additional payment of $8.0 million to offset specific, identifiable, incremental expenses associated with the transaction. We pay to Li & Fung an agency commission based on the cost of our product purchases through Li & Fung. The 2009 licensing arrangements with JCPenney and QVC resulted in the removal of sourcing for a number of LIZ CLAIBORNE branded products sold under these licenses from the Li & Fung buying/sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $24.3 million of the closing payment during the second quarter of 2010. The 2011 sales of the KENSIE, KENSIE GIRL and MAC & JAC trademarks resulted in the removal of buying/sourcing for such products sold from the Li & Fung buying/sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $1.8 million of the closing payment received from Li & Fung in the second quarter of 2012. Our agreement with Li & Fung is not exclusive; however, we are required to buy/source a minimum value and a specified percentage of product purchases from Li & Fung. Our arrangements with foreign suppliers and with our foreign buying/sourcing agents are subject generally to the risks of doing business abroad, including currency fluctuations and revaluations, restrictions on the transfer of funds, terrorist activities, pandemic disease and, in certain parts of the world, political, economic and currency instability. Our operations have not been materially affected by any such factors to date. However, due to the very substantial portion of our products that are produced abroad, any substantial disruption of our relationships with our foreign suppliers could adversely affect our operations. Moreover, difficult macroeconomic conditions and uncertainties in the global credit markets could negatively impact our suppliers, which in turn, could have an adverse impact on our business, financial position, liquidity and results of operations.

Our international operations are subject to a variety of legal, regulatory, political and economic risks, including risks relating to the importation and exportation of product. We source most of our products outside the US through arrangements with independent suppliers in approximately 21 countries as of December 29, 2012. There are a number of risks associated with importing our products, including but not limited to the following: • the potential reimposition of quotas, which could limit the amount and type of goods that may be imported annually from a given country, in the context of a trade retaliatory case; • changes in social, political, legal and economic conditions or terrorist acts that could result in the disruption of trade from the countries in which our manufacturers or suppliers are located; • the imposition of additional regulations, or the administration of existing regulations, relating to products which are imported, exported or otherwise distributed; • the imposition of additional duties, tariffs, taxes and other charges or other trade barriers on imports or exports; • risks of increased sourcing costs, including costs for materials and labor and such increases potentially resulting from the elimination of quota on apparel products; • our ability to adapt to and compete effectively in the current quota environment, in which general quota has expired on apparel products, resulting in changing in sourcing patterns and lowered barriers to entry, but political activities which could result in the reimposition of quotas or other restrictive measures have been initiated or threatened; • significant delays in the delivery of cargo due to security considerations; • the imposition of antidumping or countervailing duty proceedings resulting in the potential assessment of special antidumping or countervailing duties; and

31 • the enactment of new legislation or the administration of current international trade regulations, or executive action affecting international textile agreements, including the US reevaluation of the trading status of certain countries and/or retaliatory duties, quotas or other trade sanctions, which, if enacted, would increase the cost of products purchased from suppliers in such countries. Any one of these or similar factors could have a material adverse effect on our business, financial condition, liquidity, results of operations and current business practices. Our ability to operate and be successful in new international markets and to operate and maintain the current level of sales in our existing international markets, including with respect to the KATE SPADE brand in Japan, China and Brazil and our JUICY COUTURE brand in China, is subject to risks associated with international operations. These include complying with a variety of foreign laws and regulations; adapting to local customs and culture; unexpected changes in regulatory requirements; new tariffs or other barriers in some international markets; political instability and terrorist attacks; changes in diplomatic and trade relationships; and general economic fluctuations in specific countries, markets or currencies. Any one of these or similar factors could have a material adverse effect on our business, financial condition, liquidity, results of operations and current business practices.

Our business and balance sheets are exposed to domestic and foreign currency fluctuations. While we generally purchase our products in US dollars, we source most of our products overseas. As a result, the cost of these products may be affected by changes in the value of the relevant currencies, including currency devaluations. Changes in currency exchange rates may also affect the US dollar value of the foreign currency denominated prices at which our international businesses sell products. Our international sales, as well as our international businesses’ inventory and accounts receivable levels, could be affected by currency fluctuations. In addition, with expected international expansion at KATE SPADE, JUICY COUTURE, and LUCKY BRAND, we may increase our exposure to such fluctuations. Although we from time to time may hedge some exposures to changes in foreign currency exchange rates arising in the ordinary course of business, we cannot assure that foreign currency fluctuations will not have a material adverse impact on our business, financial condition, liquidity or results of operations.

A material disruption in our information technology systems and e-commerce operations could adversely affect our business or results of operations. We rely extensively on our information technology (‘‘IT’’) systems to track inventory, manage our supply chain, record and process transactions, summarize results and manage our business. The failure of IT systems to operate effectively, problems with transitioning to upgraded or replacement systems or difficulty in integrating new systems could adversely impact our business. In addition, our IT systems are subject to damage or interruption from power outages, computer, network and telecommunications failures, computer viruses, security breaches and usage errors by our employees. If our IT systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our operations in the interim. Any material disruption in our IT systems could adversely affect our business or results of operations, as well as our ability to effect the transitions of the recently sold businesses. We are currently executing a transition of our outsourced order management, fulfillment and customer service functions related to each of our brands’ e-commerce operations away from our current third-party provider to a new third-party provider. The transition includes certain updates to our current e-commerce platform software and functionality and generally involves a number of other third parties. While the transition from the current provider is scheduled to be effected on a staged, brand-by-brand basis occurring over the next several months and is expected to be completed by the second quarter of 2013, we may not be able to successfully achieve the transition on the timetable currently contemplated, and the transition may not be successful or could encounter various difficulties and unexpected issues. Any

32 delays or issues that we encounter in the transition could have a material adverse effect on the businesses of our brands and could negatively affect our reputation, which in turn could have a material, adverse effect on our overall business, results of operations and financial condition, as well as impair customer confidence in our product offerings and/or overall services for a longer period thereafter.

Privacy breaches and liability for online content could negatively affect our reputation, credibility and business. We rely on third party computer hardware, software and fulfillment operations for our e-commerce operations and for the various social media tools and websites we use as part of our marketing strategy. There is a growing concern over the security of personal information transmitted over the internet, consumer identity theft and user privacy. Despite the implementation of reasonable security measures by us and our third party providers, these sites and systems may be susceptible to electronic or physical computer break-ins and security breaches. Any perceived or actual unauthorized disclosure of personally- identifiable information regarding our customers or website visitors could harm our reputation and credibility, decline our e-commerce net sales, impair our ability to attract website visitors and reduce our ability to attract and retain customers. Additionally, as the number of users of forums and social media features on our websites increases, we could be exposed to liability in connection with material posted on our websites by users and other third parties. Finally, we could incur significant costs in complying with the multitude of state, federal and foreign laws regarding unauthorized disclosure of personal information and, if we fail to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these laws, we could be subject to potential claims for damages and other remedies.

We may be exposed to risks and costs associated with credit card fraud and identity theft. A growing portion of our customer orders are placed through our e-commerce websites. In addition, a significant portion of our direct-to-consumer sales require us and other parties involved in processing transactions to collect and to securely transmit certain customer data, such as credit card information, over public networks. Third parties may have the ability to breach the security of customer transaction data. Although we take the security of our systems and the privacy of our customers’ confidential information seriously, there can be no assurances that our security measures will effectively prevent others from obtaining unauthorized access to our information and our customers’ information. Any security breach could cause consumers to lose confidence in the security of our website or stores and choose not to purchase from us. Any security breach could also expose us to risks of data loss, litigation and liability and could seriously disrupt our operations and harm our reputation, any of which could harm our business.

We rely on third parties to provide us with services in connection with the administration of certain aspects of our business. We have entered into agreements with overseas third party service providers, both domestic and overseas, to provide processing and administrative functions over a broad range of areas, and we may continue to do so in the future. These areas include finance and accounting, information technology, human resources, buying/sourcing, distribution functions, and e-commerce. Services provided by third parties could be interrupted as a result of many factors, including contract disputes. Any failure by third parties to provide us with these services on a timely basis or within our service level expectations and performance standards could result in a disruption of our operations and could have a material adverse effect on our business, financial condition, liquidity and results of operations. In addition, to the extent we are unable to maintain these arrangements, we would incur substantial costs, including costs associated with hiring new employees, in order to return these services in-house or to transition the services to other third parties.

33 Our ability to utilize all or a portion of our US deferred tax assets may be limited significantly if we experience an ‘‘ownership change.’’ As of December 29, 2012, we had US federal deferred tax assets of approximately $557.4 million, which include net operating loss (‘‘NOL’’) carryforwards and other items which could be considered net unrealized built in losses (‘‘NUBIL’’). Among other factors, our ability to utilize our NOL and/or our NUBIL items to offset future taxable income may be limited significantly if we experience an ‘‘ownership change’’ as defined in section 382 of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’). In general, an ownership change will occur if there is a cumulative increase in ownership of our stock by ‘‘5-percent shareholders’’ (as defined in the Code) that exceeds 50 percentage points over a rolling three-year period. The limitation arising from an ‘‘ownership change’’ under section 382 of the Code on our ability to utilize our US deferred tax assets depends on the value of our stock at the time of the ownership change. We continue to monitor changes in our ownership and do not believe we have a change in control as of December 29, 2012. If all or a portion of our deferred tax assets are subject to limitation because we experience an ownership change, depending on the value of our stock at the time of the ownership change, our future cash flows could be adversely impacted due to increased tax liability. As of December 29, 2012, substantially all tax benefit of the US deferred tax assets has been offset with a full valuation allowance that was recognized in our financial statements.

The outcome of current and future litigations and other proceedings in which we are involved may have a material adverse effect on our results of operations, liquidity or cash flows. On November 27, 2012, Kate Spade LLC received a demand letter from Saturdays Surf LLC, a company that sells surfboards, wetsuits, and men’s apparel, alleging that the name of KATE SPADE’s new global women’s lifestyle brand, ‘‘KATE SPADE SATURDAY,’’ infringes the trademark rights of Saturdays Surf LLC. On December 19, 2012, Kate Spade LLC filed a complaint in the United States District Court for the Southern District of New York seeking a declaration that its KATE SPADE SATURDAY trademark does not infringe the trademark rights of Saturdays Surf LLC. Saturdays Surf LLC filed an answer and counterclaims on February 7, 2013. On February 13, 2013, Saturdays Surf LLC filed a motion for a temporary restraining order and preliminary injunction to block us from launching KATE SPADE SATURDAY. On the same day, the District Court denied the motion for a temporary restraining order, allowing the launch to go forward as planned, and set a schedule for expedited briefing, discovery, and hearing on the preliminary injunction motion. The preliminary injunction motion is expected to be heard on April 18, 2013. We are vigorously defending against these claims, and based on our examination of this matter and our experience to date, while there can be no assurances that an adverse decision would not have a material adverse impact on our results of operations, liquidity or cash flows, we believe we are likely to prevail. We are a party to several litigations and other proceedings and claims which, if determined unfavorably to us, could have a material adverse effect on our results of operations, liquidity or cash flows. We may in the future become party to other claims and legal actions which, either individually or in the aggregate, could have a material adverse effect on our results of operations, liquidity or cash flows. In addition, any of the current or possible future legal proceedings in which we may be involved could require significant management and financial resources, which could otherwise be devoted to the operation of our business.

34 Item 1B. Unresolved Staff Comments. None.

Item 2. Properties. Our distribution and administrative functions are conducted in both leased and owned facilities. We also lease space for our specialty retail and outlet stores. We believe that our existing facilities are well maintained, in good operating condition and are adequate for our present level of operations, although from time to time we use unaffiliated third parties to provide distribution services to meet our distribution requirements. Our principal executive offices, as well as certain sales, merchandising and design staffs, are located at 1441 Broadway, New York, New York, where we lease 51,000 square feet. The lease contains certain renewal options and rights of first refusal for additional space. We own and operate a 297,000 square foot office building in North Bergen, New Jersey, which houses operational staff. The following table sets forth information with respect to our key properties:

Approximate Square Footage Leased/ Location(a) Primary Use Occupied Owned West Chester, OH ...... Apparel Distribution Center 601,000 Owned North Bergen, NJ ...... Offices 297,000 Owned 2 Park Avenue, New York, NY ...... Offices 96,000 Leased 1440 Broadway, New York, NY ...... Offices 67,000 Leased Arleta, CA ...... Offices 64,000 Leased 1441 Broadway, New York, NY ...... Offices 51,000 Leased Los Angeles, CA ...... Offices 50,000 Leased

(a) We also lease showroom, warehouse and office space in various other domestic and international locations. We closed our Allentown, Pennsylvania and Dayton, New Jersey distribution centers during 2008, for which we remain obligated under the respective leases.

Item 3. Legal Proceedings. On January 25, 2013, Gores Malibu Holdings (Luxembourg) S.a.r.l. filed a complaint in the United States District Court for the Southern District of New York against Fifth and Pacific Companies, Inc. and Fifth & Pacific Companies Foreign Holdings, Inc. (amended on February 5, 2013). The complaint claims $15.0 million in damages for alleged breaches of the merger agreement related to the sale of the global MEXX business, including breaches of tax and tax-related covenants, breaches of interim operating covenants and breaches of reimbursement obligations related to employee bonuses. In addition, as previously disclosed, we and Gores Malibu are currently in dispute resolution proceedings with respect to working capital adjustments that are required to be made under the Merger Agreement. We cannot currently predict the outcomes of these proceedings. On November 27, 2012, Kate Spade LLC received a demand letter from Saturdays Surf LLC, a company that sells surfboards, wetsuits, and men’s apparel, alleging that the name of KATE SPADE’s new global women’s lifestyle brand, ‘‘KATE SPADE SATURDAY,’’ infringes the trademark rights of Saturdays Surf LLC. On December 19, 2012, Kate Spade LLC filed a complaint in the United States District Court for the Southern District of New York seeking a declaration that its KATE SPADE SATURDAY trademark does not infringe the trademark rights of Saturdays Surf LLC. Saturdays Surf LLC filed an answer and counterclaims on February 7, 2013. On February 13, 2013, Saturdays Surf LLC filed a motion for a temporary restraining order and preliminary injunction to block us from launching KATE SPADE

35 SATURDAY. On the same day, the District Court denied the motion for a temporary restraining order, allowing the launch to go forward as planned, and set a schedule for expedited briefing, discovery, and hearing on the preliminary injunction motion. The preliminary injunction motion is expected to be heard on April 18, 2013. We are vigorously defending against these claims, and based on our examination of this matter and our experience to date, while there can be no assurances that an adverse decision would not have a material adverse impact on our results of operations, liquidity or cash flows, we believe we are likely to prevail. The Company is a party to several other pending legal and other 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 (see Notes 1, 9 and 22 of Notes to Consolidated Financial Statements).

Executive Officers of the Registrant. Information as to the executive officers of the Company, as of February 15, 2013 is set forth below:

Name Age Position(s) William L. McComb . 50 Chief Executive Officer George M. Carrara . . 44 Executive Vice President — Chief Financial Officer and Chief Operating Officer Nicholas Rubino .... 51 Senior Vice President — Chief Legal Officer, General Counsel and Secretary Robert Vill ...... 56 Senior Vice President — Finance and Treasurer Linda Yanussi ...... 51 Senior Vice President — Information Technology and Global Operations Executive officers serve at the discretion of the Board of Directors. Mr. McComb joined the Company as Chief Executive Officer and a member of the Board of Directors on November 6, 2006. Prior to joining the Company, Mr. McComb was a company group chairman at Johnson & Johnson. During his 14-year tenure with Johnson & Johnson, Mr. McComb oversaw some of the company’s largest consumer product businesses and brands, including Tylenol, Motrin and Clean & Clear. He also led the team that repositioned and restored growth to the Tylenol brand and oversaw the growth of J&J’s McNeil Consumer business with key brand licenses such as St. Joseph aspirin, where he implemented a strategy to grow the brand beyond the over-the-counter market by adding pediatric prescription drugs. Mr. McComb serves on the Boards of the American Apparel & Footwear Association and the National Retail Federation, and is a trustee of The Pennington School. He is a member of Kilts Center for Marketing’s steering committee at The University of Chicago Booth School of Business. He is also a member of the Business Roundtable. Mr. Carrara joined the Company in April 2012 as Executive Vice President, Chief Financial Officer and Chief Operating Officer. Prior to that, he had held numerous finance positions at Tommy Hilfiger over the prior 12 years, including Chief Financial Officer for the Jeans division from 1999 to 2003; Chief Operating Officer and Chief Financial Officer of wholesale operations from 2003 to 2004; Executive Vice President of US Operations — Wholesale and Retail from 2004 to 2005 and Chief Operating Officer from 2006 to 2011. Mr. Rubino joined the Company in May 1994 as an Associate General Counsel. In May 1996, he was appointed Deputy General Counsel and in March 1998 became Vice President, Deputy General Counsel. He was appointed Corporate Secretary in July 2001. Mr. Rubino was promoted to General Counsel in June 2007 and assumed his current position in October 2008. Prior to joining the Company, he was a Corporate Associate at Kramer Levin Naftalis & Frankel, LLP.

36 Mr. Vill joined the company as Vice President, Treasury and Investor Relations in April 1999 and has held various financial positions since. From 2005 through 2007, he also had responsibility for divisional finance and in March 2012, served as Interim Chief Financial Officer. In his current position, Mr. Vill serves as Corporate Treasurer and head of Investor Relations and has joint responsibility for the Corporate FP&A, Accounting and Tax Departments. Prior to joining the Company, Mr. Vill was Vice President, Finance for Hanover Direct in 1998. Prior to that, he held numerous positions during his seven year tenure at Saks Fifth Avenue, leading up to his role as Vice President-Treasurer. Ms. Yanussi joined the Company in April 2012 as Vice President of Information Technology and assumed her current position in January 2013. Prior to joining the Company, she held various positions at Tommy Hilfiger over a period of eleven years, most recently as Senior Vice President of Operations and Logistics, North America at Tommy Hilfiger for over four years and Vice President of Operations prior to that.

Item 4. Mine Safety Disclosures. Not applicable.

PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. MARKET INFORMATION Effective May 15, 2012, our common stock trades on the NYSE under the symbol FNP. Prior to that date, our common stock traded on the NYSE under the symbol LIZ. The table below sets forth the high and low closing sale prices of our common stock for the periods indicated.

Fiscal Period High Low 2012: 1st Quarter ...... $13.36 $ 8.61 2nd Quarter ...... 13.88 10.13 3rd Quarter ...... 13.83 9.25 4th Quarter ...... 12.78 10.05 2011: 1st Quarter ...... $ 7.55 $ 4.61 2nd Quarter ...... 6.77 5.04 3rd Quarter ...... 6.74 4.02 4th Quarter ...... 9.18 4.14

HOLDERS On February 15, 2013, the closing sale price of our common stock was $17.08. As of February 15, 2013, the approximate number of record holders of common stock was 3,837.

DIVIDENDS We did not pay any dividends during 2012 or 2011.

37 PERFORMANCE GRAPH Comparison of Cumulative Five Year Return $160

$140

$120

$100

$80

$60

$40

$20

$0 12/07 12/08 12/09 12/10 12/11 12/12

Fifth & Pacific Companies S&P 500 S&P Smallcap 600

Prior Benchmarking Group New Benchmarking Group 19FEB201302152475

2007 2008 2009 2010 2011 2012 Fifth & Pacific Companies, Inc. $100.00 $ 13.25 $28.68 $36.48 $ 43.97 $ 63.43 S&P 500 Index 100.00 63.00 79.67 91.67 93.61 108.59 S&P SmallCap 600 100.00 68.93 86.55 109.32 110.43 128.46 New Benchmarking Group(a) 100.00 49.53 97.29 123.84 117.19 134.26 Prior Benchmarking Group(b) 100.00 51.57 100.22 128.74 127.29 134.84

(a) The New Benchmarking Group consisted of Abercrombie & Fitch Co.; Aeropostale, Inc.; American Apparel, Inc.; American Eagle Outfitters, Inc.; Ann, Inc.; Bebe Stores, Inc.; Chico’s FAS, Inc.; Coach, Inc.; Guess?, Inc.; Express, Inc.; Michael Kors Holdings Limited; New York & Company, Inc.; Pacific Sunwear of California, Inc.; True Religion Apparel, Inc.; Tumi Holdings Inc.; Urban Outfitters, Inc. and Wet Seal, Inc. (b) The Prior Benchmarking Group consisted of Abercrombie & Fitch Co.; Aeropostale, Inc.; American Apparel, Inc.; American Eagle Outfitters, Inc.; Ann, Inc.; Bebe Stores, Inc.; Charming Shoppes, Inc.; Chico’s FAS, Inc.; Coach, Inc.; Guess?, Inc.; Express, Inc.; New York & Company, Inc.; Pacific Sunwear of California, Inc.; Polo Ralph Lauren Corporation; The Talbots, Inc.; True Religion Apparel, Inc.; Urban Outfitters, Inc. and Wet Seal, Inc. The line graph above compares the cumulative total stockholder return on the Company’s Common Stock over a 5-year period with the return on (i) the Standard & Poor’s 500 Stock Index (‘‘S&P 500’’) (which the Company’s shares ceased to be a part of as of the close of business on December 1, 2008); (ii) the Standard & Poor’s SmallCap 600 Stock Index (‘‘S&P SmallCap 600’’) (which the Company’s shares became a part of on December 2, 2008); and (iii) two indices comprised of the Company and: (a) the previously designated compensation peer group (the ‘‘Prior Benchmarking Group’’) designated by the Board’s Compensation Committee in consultation with its compensation consultants, against which executive compensation practices of the Company are compared and (b) the new compensation peer group (the ‘‘New Benchmarking Group’’) designated by the Compensation Committee in October 2012 in consultation with its compensation consultants, which reflects a total of two additions to and three

38 deletions from the Prior Benchmarking Group. We have historically constructed our compensation benchmarking group based on companies with comparable products, revenue composition and size. We believe the New Benchmarking Group provides a more meaningful comparison in terms of comparable products, revenue composition and size in light of changes in the Company’s operations over the past year. In accordance with SEC disclosure rules, the measurements are indexed to a value of $100 at December 28, 2007 (the last trading day before the beginning of our 2008 fiscal year) and assume that all dividends were reinvested.

UNREGISTERED SALES OF EQUITY SECURITIES During the fourth quarter of 2012, holders of $11.8 million aggregate principal amount of the Convertible Notes converted all such outstanding Convertible Notes into 3,357,586 shares of our common stock. We paid accrued interest on the holders’ Convertible Notes through the settlement date in cash. The issuance of the shares of our common stock was exempt from any registration requirements under the Securities Act of 1933, as amended, pursuant to Section 3(a)(9) of the Securities Act.

ISSUER PURCHASES OF EQUITY SECURITIES The following table summarizes information about our purchases during the quarter ended December 29, 2012, of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934:

Total Number of Maximum Shares Approximate Purchased Dollar Value of as Part of Shares that Publicly May Yet Be Total Number of Announced Purchased Shares Plans or Under the Plans Purchased Average Price Programs (In or Programs Period (In thousands)(a) Paid Per Share thousands) (In thousands)(b) September 30, 2012 – October 27, 2012 .... — $——$28,749 October 28, 2012 – December 1, 2012 ..... ———28,749 December 2, 2012 – December 29, 2012 . . . ———28,749 Total – 13 Weeks Ended December 29, 2012 — $——$28,749

(a) Includes shares withheld to cover tax-withholding requirements relating to the vesting of restricted stock issued to employees pursuant to the Company’s shareholder-approved stock incentive plans. (b) The Company initially announced the authorization of a share buyback program in December 1989. Since its inception, the Company’s Board of Directors has authorized the purchase under the program of an aggregate of $2.275 billion of the Company’s stock. The Amended Facility currently restricts the Company’s ability to repurchase stock.

39 Item 6. Selected Financial Data. The following table sets forth certain information regarding our results of operations and financial position and is qualified in its entirety by the Consolidated Financial Statements and notes thereto, which appear elsewhere herein.

2012 2011 2010 2009 2008 (Amounts in thousands, except per common share data) Net sales ...... $1,505,094 $1,518,721 $1,623,235 $1,928,754 $2,457,642 Gross profit ...... 842,975 809,391 791,296 855,189 1,038,074 Operating loss ...... (34,451) (96,252) (61,266) (168,179) (461,301) (Loss) income from continuing operations(a) (59,456) 144,748 (99,362) (123,923) (511,269) Net loss ...... (74,505) (171,687) (252,309) (306,410) (951,559) Net loss attributable to Fifth & Pacific Companies, Inc...... (74,505) (171,687) (251,467) (305,729) (951,811) Working capital ...... 36,407 124,772 39,043 244,379 432,174 Total assets ...... 902,523 950,004 1,257,659 1,605,903 1,905,452 Total debt ...... 406,294 446,315 577,812 658,151 743,639 Total Fifth & Pacific Companies, Inc. stockholders’ (deficit) equity ...... (126,930) (108,986) (24,170) 216,548 503,647 Per common share data: Basic (Loss) income from continuing operations attributable to Fifth & Pacific Companies, Inc...... (0.54) 1.53 (1.05) (1.31) (5.46) Net loss attributable to Fifth & Pacific Companies, Inc...... (0.68) (1.81) (2.67) (3.26) (10.17) Diluted (Loss) income from continuing operations attributable to Fifth & Pacific Companies, Inc...... (0.54) 1.28 (1.05) (1.31) (5.46) Net loss attributable to Fifth & Pacific Companies, Inc...... (0.68) (1.35) (2.67) (3.26) (10.17) Dividends paid ...... ————0.23 Weighted average shares outstanding, basic . 109,292 94,664 94,243 93,880 93,606 Weighted average shares outstanding, diluted(b) ...... 109,292 120,692 94,243 93,880 93,606

(a) During 2012, 2011 and 2010, we recorded pretax charges of $47.8 million, $90.1 million and $61.0 million, respectively, related to our streamlining initiatives, which are discussed in Note 13 of Notes to Consolidated Financial Statements. During 2009 and 2008, we recorded pretax charges of $120.6 million and $77.8 million related to our streamlining initiatives. During 2012, we recorded a pretax gain of $40.1 million related to the KSJ Buyout (see Note 2 of Notes to Consolidated Financial Statements). During 2011, we recorded a pretax gain of $287.0 million related to the sales of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands; (ii) the trademark rights in the US and Puerto Rico for MONET; (iii) the DANA BUCHMAN trademark; and (iv) the trademark rights related to our former Curve brand and selected other smaller fragrance brands. During 2010, we recorded non-cash pretax impairment charges of $2.6 million primarily within our Adelington Design Group segment principally related to merchandising rights of our LIZ CLAIBORNE and former licensed DKNY↧ Jeans brands. During 2009, we recorded non-cash pretax impairment charges of $2.8 million related to goodwill and $14.2 million related to other intangible assets in our Adelington Design Group segment.

40 During 2008, we sold a distribution center and recorded a gain of $14.3 million. During 2008, we recorded non-cash pretax impairment charges of (i) $382.4 million related to goodwill previously recorded in our former Domestic-Based Direct Brands segment and (ii) $10.0 million in our Adelington Design Group segment related to our Villager, Crazy Horse and Russ trademark. During 2009, we recorded pretax charges of $19.2 million primarily related to retailer assistance associated with the transition of our LIZ CLAIBORNE brands to license arrangements and other accounts receivable allowances associated with exiting activities. In addition, during 2008 we recorded additional pretax charges related to our strategic review aggregating $58.6 million primarily related to inventory and accounts receivable allowances associated with the termination of certain cosmetics product offerings, the closure of certain brands and various professional and consulting costs. (b) Because we incurred losses from continuing operations in 2012, 2010, 2009 and 2008, outstanding stock options, nonvested shares and potentially dilutive shares issuable upon conversion of the Convertible Notes are antidilutive. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods.

41 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Business/Segments Our segment reporting structure reflects a brand-focused approach, designed to optimize the operational coordination and resource allocation of our businesses across multiple functional areas including specialty retail, retail outlets, concessions, wholesale apparel, wholesale non-apparel, e-commerce and licensing. The four reportable segments described below represent our brand-based activities for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker (‘‘CODM’’) to evaluate performance and allocate resources. In identifying our reportable segments, we consider economic characteristics, as well as products, customers, sales growth potential and long-term profitability. As such, we report our operations in four reportable segments: • JUICY COUTURE segment — consists of the specialty retail, outlet, concession, wholesale apparel, wholesale non-apparel (including accessories, jewelry and handbags), e-commerce and licensing operations of our JUICY COUTURE brand. • KATE SPADE segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of our KATE SPADE, KATE SPADE SATURDAY and JACK SPADE brands. • LUCKY BRAND segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of our LUCKY BRAND. • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the DANA BUCHMAN(*), LIZ CLAIBORNE and MONET brands; (ii) the wholesale non-apparel operations of the TRIFARI brand and licensed KENSIE brand; (iii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iv) the licensed LIZ CLAIBORNE NEW YORK brand.

(*) Our agreement to supply DANA BUCHMAN branded jewelry to Kohl’s expires on October 11, 2013. The operations associated with our AXCESS brand concluded with Kohl’s in Fall 2011, and the operations of our former licensed DKNY↧ Jeans family of brands concluded in January 2012. Each was included in the results of the Adelington Design Group segment. We, as licensor, also license 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.

Market Environment The industries in which we operate have historically been subject to cyclical variations, including recessions in the general economy. Our results are dependent on a number of factors impacting consumer spending, including but not limited to, general economic and business conditions; consumer confidence; wages and employment levels; the housing market; levels of perceived and actual consumer wealth; consumer debt levels; availability of consumer credit; credit and interest rates; fluctuations in foreign currency exchange rates; fuel and energy costs; energy shortages; the performance of the financial equity and credit markets; tariffs and other trade barriers; taxes; general political conditions, both domestic and abroad; and the level of customer traffic within department stores, malls and other shopping and selling environments.

42 Macroeconomic challenges and uncertainty continue to dampen consumer spending, unemployment levels remain high, consumer retail traffic remains inconsistent and the retail environment remains promotional. In addition, economic conditions in international markets in which we operate, including Europe and Asia, remain uncertain and volatile. We continue to focus on the execution of our strategic plans and improvements in productivity, with a primary focus on operating cash flow generation, retail execution and international expansion. We will also continue to carefully manage liquidity and spending.

Competitive Profile We operate in global fashion markets that are intensely competitive and subject to, among other things, macroeconomic conditions and consumer demands, tastes and discretionary spending habits. As we anticipate that the global economic uncertainty will continue into the foreseeable future, we will continue to carefully manage spending. We will continue our streamlining efforts to drive cost out of our operations through initiatives that are aimed at driving efficiencies as well as improvements in working capital and operating cash flows. In summary, the measure of our success in the future will depend on our ability to continue to navigate through an uncertain macroeconomic environment with challenging market conditions, execute on our strategic vision, including attracting and retaining the management talent necessary for such execution, designing and delivering products that are acceptable to the marketplaces that we serve, sourcing the manufacture and distribution of our products on a competitive and efficient basis, sustaining recent improved performance in our LUCKY BRAND business, improving the operations and results, executing turn around actions at our JUICY COUTURE business while expanding its international operations, and continuing to drive profitable growth at KATE SPADE. Our plan to improve operations and results at our JUICY COUTURE brand includes implementing improved pricing, merchandising and inventory allocation strategies, reworking the merchandising and design of handbags and other accessories to be more in-line aesthetically with the apparel and expanding the JUICY COUTURE baby and girls’ lines, as well as the intimates business. Reference is also made to the other economic, competitive, governmental and technological factors affecting our operations, markets, products, services and prices as set forth in this Annual Report on Form 10-K, including, without limitation, under ‘‘Statement Regarding Forward — Looking Statements’’ and ‘‘Item 1A — Risk Factors.’’

Recent Developments and Operational Initiatives During 2012 and early 2013, we continued to pursue transactions and initiatives with a significant impact on our portfolio of brands and which improve our operations or liquidity. On October 31, 2012, our wholly-owned subsidiary Kate Spade, LLC, through its own wholly-owned Japanese subsidiary KSJ Co., Ltd. (‘‘KSJ’’), a Japanese kabushiki kaisha, acquired the 51.0% interest (the ‘‘KSJ Buyout’’) in KSJ that was previously held by Sanei International Co., LTD, (‘‘Sanei’’). KSJ was a joint venture that was formed between Sanei and KATE SPADE in August 2009. KSJ operated the KATE SPADE, KATE SPADE SATURDAY and JACK SPADE businesses in Japan, and KATE SPADE will continue to operate such businesses in Japan through its Japanese subsidiary. The purchase price for the KSJ Buyout was $41.0 million, net of $0.4 million of cash acquired. We also launched the KATE SPADE SATURDAY brand in Japan and plan its launch in the US in Spring 2013. We have executed restructuring actions at JUICY COUTURE and hired a new CEO to lead turnaround efforts at that brand and continued to reduce corporate costs. In the second quarter of 2011, we initiated actions to close our Ohio distribution center (the ‘‘Ohio Facility’’), which was previously expected to be completed the fourth quarter of 2012. In August 2011, we entered into an agreement with Li & Fung Limited (‘‘Li & Fung’’) for distribution services in the United

43 States for our Company-owned retail stores, as well as for our wholesale business. In August 2012, we encountered systems and operational issues that delayed the migration of our product distribution function out of the Ohio Facility, resulting in increased operating costs during the second half of 2012. Subsequently, we determined that it would be advisable to discontinue the migration of the product distribution function to Li & Fung, and we mutually agreed with Li & Fung to allow the distribution agreement with Li & Fung to expire as of January 31, 2013. In connection with such expiration, we have discontinued the migration of our distribution function to Li & Fung and have decided to continue to utilize the Company-owned Ohio distribution center for such function. On February 5, 2013, we entered into a contract with a third-party facility operations management company to provide distribution operations services at the Ohio Facility with a variable cost structure.

Debt and Liquidity Enhancements In January 2013, holders of $11.2 million aggregate principal amount of our 6.0% Convertible Senior Notes due June 2014 (the ‘‘Convertible Notes’’) converted all of such outstanding Convertible Notes into 3.2 million shares of our common stock. On July 12, 2012, we completed the optional redemption of the remaining 52.9 million euro aggregate principal amount of 5.0% Notes due July 2013 (the ‘‘Euro Notes’’) for 55.4 million euro, plus accrued interest. The redemption was funded by a portion of the net proceeds from our issuance of $152.0 million aggregate principal amount (the ‘‘Additional Notes’’) of 10.5% Senior Secured Notes due April 15, 2019 in June 2012. On June 8, 2012, we completed the offering of the Additional Notes at 108.25% of par value. We used a portion of the net proceeds of $160.6 million from the issuance of the Additional Notes to repay outstanding borrowings under our amended and restated revolving credit facility (as amended to date, the ‘‘Amended Facility’’) and to fund the redemption of the remaining 52.9 million euro aggregate principal amount of Euro Notes discussed above. We used the remaining proceeds to fund the KSJ Buyout, discussed above and for general corporate purposes. In 2012, holders of $49.4 million aggregate principal amount of our 6.0% Convertible Notes converted all of such outstanding Convertible Notes into 14.2 million shares of our common stock. In 2012, in privately-negotiated transactions, we repurchased 68.6 million euro aggregate principal amount of the Euro Notes for total consideration of 70.2 million euro, plus accrued interest. We ended fiscal 2012 with no outstanding indebtedness under the Amended Facility and $59.5 million of cash and cash equivalents and marketable securities on hand. Our cost reduction efforts have included tighter controls surrounding discretionary spending and streamlining initiatives that have included rationalization of distribution centers and office space, store closures and staff reductions, including consolidation of certain support and production functions and outsourcing certain corporate functions. We have also engaged more extensively in direct shipping and other arrangements. We expect that our streamlining initiatives will provide long-term cost savings. We will also continue to closely manage spending, with 2013 capital expenditures expected to be approximately $105.0-$115.0 million, compared to $85.8 million in 2012. For a discussion of certain risks relating to our recent initiatives, see ‘‘Item 1A — Risk Factors.’’

Discontinued Operations We have completed various disposal transactions including: (i) the closure of the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico in January 2011; (ii) the closure of our LIZ CLAIBORNE concessions in Europe in the first quarter of 2011; (iii) the closure of our MONET concessions in Europe in December 2011; (iv) the sale of an 81.25% interest in the global MEXX business

44 in October 2011; and (v) the sale of the KENSIE, KENSIE GIRL and MAC & JAC trademarks in October 2011. The activities of the global MEXX business, our KENSIE, KENSIE GIRL and MAC & JAC brands, our closed LIZ CLAIBORNE outlet stores in the US and Puerto Rico, our closed LIZ CLAIBORNE concessions in Europe and closed MONET concessions in Europe have been segregated and reported as discontinued operations for all periods presented. We continue activities with the LIZ CLAIBORNE family of brands, MONET brand and DANA BUCHMAN brand and therefore the activities of those brands have not been presented as discontinued operations.

2012 Overall Results Our 2012 results reflected: • A $175.2 million decrease in net sales related to brands that have been licensed or exited related principally to the conclusion of: (i) wholesale sales in early 2012 for the former licensed DKNY↧ Jeans family of brands; (ii) AXCESS wholesale sales in Fall 2011; and (iii) licensing revenues related to the LIZ CLAIBORNE family of brands and the DANA BUCHMAN brand, due to the sales of the trademark rights for such brands in the fourth quarter of 2011; • Significant net sales growth and improved gross margin at KATE SPADE and, to a lesser extent, at LUCKY BRAND; and • Reduced performance at JUICY COUTURE primarily during the third and fourth quarters of 2012 due to lower than expected full-price inventory sell-through (driven by merchandise mix and inventory allocation issues), underperformance of certain merchandise categories and underperformance of outlets. During 2012, we recorded the following pretax items: • A $40.1 million gain on acquisition of subsidiary related to the KSJ Buyout; • A $9.8 million net loss on the extinguishment of debt in connection with the conversion of $49.4 million of our Convertible Notes into 14.2 million shares of our common stock and the repurchase or redemption of the remaining 121.5 million euro aggregate principal amount of our Euro Notes; and • Expenses associated with our streamlining initiatives of $47.8 million and charges primarily associated with other exiting activities of $2.1 million. Our 2011 results reflected: • A $234.0 million decrease in net sales related to brands that have been licensed or exited, related principally to remaining wholesale sales that concluded in the first half of 2010 for the LIZ CLAIBORNE family of brands as we transitioned to the licensing model under the former arrangement with JCPenney and the arrangement with QVC; and • Mixed comparable direct-to-consumer performance in our segments, reflecting reduced consumer demand and inconsistent traffic patterns and levels of consumer spending. During 2011, we recorded the following pretax items: • A net $287.0 million gain related to the sales of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands; (ii) the trademark rights in the US and Puerto Rico for MONET; (iii) the DANA BUCHMAN trademark; and (iv) the trademark rights related to our former Curve brand and selected other smaller fragrance brands;

45 • A $5.2 million net gain on the extinguishment of debt in connection with the repurchase of 228.5 million euro aggregate principal amount of our Euro Notes and the conversion of $20.8 million of our Convertible Notes into 6,163,221 shares of our common stock; • Expenses associated with our streamlining initiatives of $90.1 million and charges primarily associated with other exiting activities of $7.7 million; and • A $5.0 million foreign currency translation gain related to our Euro Notes (see ‘‘Financial Position, Liquidity and Capital Resources — Hedging Activities’’).

Net Sales Net sales in 2012 were $1.505 billion, a decrease of $13.6 million or 0.9%, compared to 2011 net sales of $1.519 billion. Excluding the impact of a $175.2 million decline in net sales related to brands that have been licensed or exited, net sales increased $161.6 million, or 10.6%. Net sales increased in our KATE SPADE and LUCKY BRAND segments, partially offset by a decline in net sales within our JUICY COUTURE segment. The decrease in net sales due to brands that have been exited related principally to the conclusion of: (i) wholesale sales in early 2012 for the former licensed DKNY↧ Jeans family of brands; (ii) AXCESS wholesale sales in Fall 2011; and (iii) licensing revenues related to the LIZ CLAIBORNE family of brands and the DANA BUCHMAN brand due to the sales of the trademark rights for such brands in the fourth quarter of 2011.

Gross Profit and (Loss) Income from Continuing Operations Gross profit in 2012 was $843.0 million, an increase of $33.6 million compared to 2011, primarily due to increased net sales and gross profit rates in our KATE SPADE and LUCKY BRAND segments, partially offset by decreased net sales in our Adelington Design Group and JUICY COUTURE segments. Our gross profit rate increased from 53.3% in 2011 to 56.0% in 2012 due to an increased proportion of sales from direct-to-consumer operations in our KATE SPADE and LUCKY BRAND segments, partially offset by greater than planned promotional activity at JUICY COUTURE. We recorded a loss from continuing operations of $(59.5) million in 2012, as compared to income from continuing operations of $144.7 million in 2011. The year-over-year change primarily reflected: (i) a $287.0 million gain on the 2011 sales of the global trademark rights for the LIZ CLAIBORNE family of brands, the trademark rights in the US and Puerto Rico for MONET, the DANA BUCHMAN trademark and the trademark rights related to our former Curve brand and selected other smaller fragrance brands; (ii) a $40.1 million gain on the KSJ Buyout; (iii) a $33.6 million increase in gross profit; (iv) a $27.2 million decrease in Selling, general & administrative expenses (‘‘SG&A’’); and (v) losses on extinguishment of debt in 2012 compared to gains on extinguishment of debt in 2011.

Balance Sheet We ended 2012 with a net debt position (total debt less cash and cash equivalents and marketable securities) of $346.8 million as compared to $265.7 million at year-end 2011. The $81.1 million increase in our net debt primarily reflected: (i) the funding of $85.8 million of capital and in-store shop expenditures over the last 12 months; (ii) the payment of $41.0 million for the KSJ Buyout; and (iii) the conversion of $49.4 million aggregate principal amount of our Convertible Notes into 14.2 million shares of our common stock. We generated $24.6 million in cash from continuing operations over the past 12 months.

RESULTS OF OPERATIONS As discussed above, we present our results based on four reportable segments.

46 2012 vs. 2011 The following table sets forth our operating results for the year ended December 29, 2012 (52 weeks), compared to the year ended December 31, 2011 (52 weeks):

Fiscal Years Ended Variance December 29, December 31, 2012 2011 $ % Dollars in millions Net Sales ...... $1,505.1 $1,518.7 $ (13.6) (0.9)% Gross Profit ...... 843.0 809.4 33.6 4.2% Selling, general & administrative expenses .... 877.5 904.7 27.2 3.0% Impairment of intangible assets ...... — 1.0 1.0 * Operating Loss ...... (34.5) (96.3) 61.8 64.2% Other (expense) income, net ...... (0.1) 0.2 (0.3) * Gain on acquisition of subsidiary ...... 40.1 — 40.1 * Gain on sales of trademarks, net ...... — 287.0 (287.0) * (Loss) gain on extinguishment of debt, net .... (9.8) 5.2 (15.0) * Interest expense, net ...... (51.7) (57.2) 5.5 9.6% Provision (benefit) for income taxes ...... 3.5 (5.8) (9.3) * (Loss) Income from Continuing Operations ..... (59.5) 144.7 (204.2) * Discontinued operations, net of income taxes . . (15.0) (316.4) 301.4 95.3% Net Loss ...... $ (74.5) $ (171.7) $ 97.2 56.6%

* Not meaningful.

Net Sales Net sales for 2012 were $1.505 billion, a decrease of $13.6 million or 0.9%, as compared to net sales for 2011 of $1.519 billion. Excluding the impact of a $175.2 million decline in net sales related to brands that have been licensed or exited, net sales increased $161.6 million, or 10.6%. The decrease in net sales due to brands that have been exited related principally to the conclusion of: (i) wholesale sales in early 2012 for the former licensed DKNY↧ Jeans family of brands; (ii) AXCESS wholesale sales in Fall 2011; and (iii) licensing revenues related to the LIZ CLAIBORNE family of brands and the DANA BUCHMAN brand due to the sales of the trademark rights for such brands in the fourth quarter of 2011. Net sales increased in our KATE SPADE and LUCKY BRAND segments, partially offset by a decline in net sales within our JUICY COUTURE segment. Net sales results for our segments are provided below: • JUICY COUTURE net sales were $498.6 million, a 6.0% decrease compared to 2011, which primarily reflected decreases in our wholesale non-apparel, specialty retail and outlet operations, partially offset by increases in our e-commerce and wholesale apparel operations. We ended 2012 with 78 specialty retail stores, 54 outlet stores and 2 concessions, reflecting the net addition over the last 12 months of 3 outlet stores and the net closure of 3 concessions. Key operating metrics for our JUICY COUTURE retail operations included the following: – Average retail square footage in 2012 was approximately 428 thousand square feet, a 2.1% increase compared to 2011; – Sales productivity was $685 per average square foot as compared to $674 for 2011; and

47 – Comparable direct-to-consumer net sales, inclusive of e-commerce and concessions, decreased 3.5% in 2012. • LUCKY BRAND net sales were $461.7 million, a 10.4% increase compared to 2011, reflecting increases in wholesale apparel, outlet, specialty retail and e-commerce operations, partially offset by a decrease in our wholesale non-apparel operations. We ended 2012 with 177 specialty retail stores and 47 outlet stores, reflecting the net closure over the last 12 months of 2 specialty retail stores and the net addition of 5 outlet stores. Key operating metrics for our LUCKY BRAND retail operations included the following: – Average retail square footage in 2012 was approximately 560 thousand square feet, a 1.2% decrease compared to 2011; – Sales productivity was $440 per average square foot as compared to $420 for 2011; and – Comparable direct-to-consumer net sales increased by 10.0% in 2012. • KATE SPADE net sales were $461.9 million, a 47.6% increase compared to 2011; reflecting increases across all operations in the segment. Net sales in 2012 included $16.0 million of KSJ net sales in our consolidated results. We ended 2012 with 89 specialty retail stores, 32 outlet stores and 32 concessions, reflecting the net addition over the last 12 months of 18 specialty retail stores and 3 outlet stores and the acquisition of 21 specialty retail stores and 32 concessions. Key operating metrics for our KATE SPADE retail operations included the following: – Average retail square footage in 2012 was approximately 170 thousand square feet, inclusive of the acquisition of KSJ, a 15.2% increase compared to 2011; – Sales productivity was $1,016 per average square foot as compared to $934 for 2011; and – Comparable direct-to-consumer net sales increased by 29.5% in 2012. • Adelington Design Group net sales were $82.8 million, a decrease of $174.0 million, or 67.8%, compared to 2011, substantially all of which related to brands that have been exited, as discussed above. Comparable direct-to-consumer net sales are calculated as follows: • New stores become comparable after 14 full fiscal months of operations (on the first day of the 15th full fiscal month); • Except in unusual circumstances, closing stores become non-comparable one full fiscal month prior to the scheduled closing date; • A remodeled store will be changed to non-comparable when there is a 20.0% or more increase/ decrease in its selling square footage (effective at the start of the fiscal month when construction begins). The store becomes comparable again after 14 full fiscal months from the re-open date; • A store that relocates becomes non-comparable when the new location is materially different from the original location (in respect to selling square footage and/or traffic patterns); • Stores that are acquired are not comparable until they have been reflected in our results for a period of 12 months; and • E-commerce sales are comparable after 12 full fiscal months from the website launch date (on the first day of the 13th full month). Net sales per average square foot is defined as net sales divided by the average of beginning and end of period gross square feet.

48 Gross Profit Gross profit in 2012 was $843.0 million (56.0% of net sales), compared to $809.4 million (53.3% of net sales) in 2011. The increase in gross profit is primarily due to increased net sales and gross profit rates in our KATE SPADE and LUCKY BRAND segments, partially offset by decreased net sales in our Adelington Design Group and JUICY COUTURE segments. The improvement in the gross profit rate was primarily driven by our KATE SPADE and LUCKY BRAND segments, partially offset by greater than planned promotional activity at JUICY COUTURE. Expenses related to warehousing activities, including receiving, storing, picking, packing and general warehousing charges are included in SG&A; accordingly, our gross profit may not be directly comparable to others who may include these expenses as a component of cost of goods sold.

Selling, General & Administrative Expenses SG&A decreased $27.2 million, or 3.0%, to $877.5 million in 2012 compared to 2011. The change in SG&A reflected the following: • An $88.2 million decrease associated in our Adelington Design Group segment related to the exited brands discussed above and reduced Corporate costs; • A $41.9 million decrease in expenses associated with our streamlining initiatives and brand-exiting activities; and • A $102.9 million increase in SG&A in our KATE SPADE, LUCKY BRAND and JUICY COUTURE segments, primarily reflecting: (i) increased compensation related expenses at KATE SPADE and LUCKY BRAND; (ii) increased advertising expenses and e-commerce fees across all three reportable segments; (iii) increased rent and other store operating expenses at KATE SPADE, primarily related to direct-to-consumer expansion; and (iv) a net increase in fixed asset charges at JUICY COUTURE. SG&A as a percentage of net sales was 58.3%, compared to 59.6% in 2011, primarily reflecting increased net sales in our KATE SPADE and LUCKY BRAND segments, which exceeded the proportionate increase in SG&A in those segments.

Impairment of Intangible Assets In 2011, we recorded aggregate non-cash impairment charges of $1.0 million within our Adelington Design Group segment, primarily related to the merchandising rights of our MONET and former licensed DKNY↧ Jeans brands due to decreased use of such intangible assets.

Operating Loss Operating loss for 2012 was $34.5 million ((2.3)% of net sales), compared to an operating loss of $96.3 million ((6.3)% of net sales) in 2011.

Other (Expense) Income, Net Other (expense) income, net amounted to $(0.1) million in 2012 and $0.2 million in 2011. Other (expense) income, net consists primarily of (i) foreign currency transaction gains and losses, including the impact of the partial dedesignation of the hedge of our investment in certain euro-denominated functional currency subsidiaries, which resulted in the recognition of foreign currency translation gains and losses on our Euro Notes within earnings in 2011; and (ii) equity in the earnings of our equity investees.

49 Gain on Acquisition of Subsidiary In 2012, we recorded a $40.1 million gain on the KSJ Buyout, resulting from the adjustment of our pre-existing 49.0% interest in KSJ to estimated fair value.

Gain on Sales of Trademarks, Net In 2011, we recorded a $287.0 million gain on the sale of trademark rights related to the sale of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands; (ii) the trademark rights in the US and Puerto Rico for MONET; (iii) the DANA BUCHMAN trademark; and (iv) the trademark rights related to our former Curve brand and selected other smaller fragrance brands.

(Loss) Gain on Extinguishment of Debt, Net In 2012, we recorded a $(9.8) million loss on the extinguishment of debt in connection with the conversion of $49.4 million of our Convertible Notes into 14.2 million shares of our common stock and the repurchase or redemption of 121.5 million euro aggregate principal amount of our Euro Notes. In 2011, we recorded a $5.2 million gain on the extinguishment of debt in connection with the repurchase of 228.5 million euro aggregate principal amount of our Euro Notes and the conversion of $20.8 million of our Convertible Notes into 6.2 million shares of our common stock.

Interest Expense, Net Interest expense, net decreased to $51.7 million in 2012 from $57.2 million in 2011, primarily reflecting a decrease of $14.3 million due to the redemptions and repurchases of the Euro Notes discussed above, a $4.5 million decrease due to a reduction in the principal amount of our Convertible Notes and a $3.1 million decrease in interest expense related to reduced borrowings under our Amended Facility, partially offset by an increase of $15.6 million in interest expense related to the Senior Notes.

Provision (Benefit) for Income Taxes In 2012, we recorded a provision for income taxes of $3.5 million, compared to a benefit for income taxes of $(5.8) million in 2011. The income tax provision 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. We did not record income tax benefits for substantially all losses incurred during 2012 and 2011, as it is not more likely than not that we will utilize such benefits due to the combination of our history of pretax losses and our ability to carry forward or carry back tax losses or credits.

(Loss) Income from Continuing Operations (Loss) income from continuing operations in 2012 was $(59.5) million, or (4.0)% of net sales, compared to $144.7 million in 2011, or 9.5% of net sales. Earnings per share (‘‘EPS’’), Basic from continuing operations was $(0.54) in 2012 and $1.53 in 2011. EPS, Diluted from continuing operations was $(0.54) in 2012 and $1.28 in 2011.

Discontinued Operations, Net of Income Taxes Loss from discontinued operations in 2012 was $15.0 million, compared to $316.4 million in 2011, reflecting a loss on disposal of discontinued operations of $11.9 million and a $3.1 million loss from discontinued operations in 2012, as compared to a loss on disposal of discontinued operations of $222.2 million and a $94.2 million loss from discontinued operations in 2011. EPS, Basic from discontinued operations was $(0.14) in 2012 and $(3.34) in 2011. EPS, diluted from discontinued operations was $(0.12) in 2012 and $(2.63) in 2011.

50 Net Loss Net loss in 2012 decreased to $74.5 million from $171.7 million in 2011. EPS, Basic was $(0.68) in 2012 and $(1.81) in 2011. EPS, Diluted was $(0.68) in 2012 and $(1.35) in 2011.

Segment Adjusted EBITDA Our Chief Executive Officer has been identified as the CODM. During the fourth quarter of 2012, we determined that our 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 is also a key metric utilized in our annual bonus and long-term incentive plans. Segment Adjusted EBITDA excludes: (i) depreciation and amortization; (ii) charges due to streamlining initiatives and brand-exiting activities; and (iii) losses on asset disposals and impairments. Unallocated Corporate costs also exclude non-cash share-based compensation expense. In addition, Segment Adjusted EBITDA does not include Corporate expenses associated with the following functions: corporate finance, investor relations, communications, legal, human resources and information technology shared services and costs of executive offices and corporate facilities, which are included in Unallocated Corporate costs. We do not allocate amounts reported below Operating loss to our reportable segments, other than equity income (loss) in equity method investees. Our definition of Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Segment Adjusted EBITDA for our reportable segments and Unallocated Corporate costs are provided below. Fiscal Years Ended Variance December 29, December 31, 2012 2011 $ % In thousands Reportable Segments Adjusted EBITDA: JUICY COUTURE ...... $24,554 $ 64,237 $(39,683) (61.8)% LUCKY BRAND...... 34,676 25,389 9,287 36.6% KATE SPADE(a) ...... 94,994 57,370 37,624 65.6% Adelington Design Group ...... 21,009 38,868 (17,859) (45.9)% Total Reportable Segments Adjusted EBITDA ...... 175,233 185,864 Unallocated Corporate Costs ...... (70,744) (90,158) Depreciation and amortization, net(b) ...... (64,681) (72,322) Charges due to streamlining initiatives and brand-exiting activities, impairment of intangible assets and loss on asset disposals and impairments, net(c) ...... (67,725) (112,228) Share-based compensation ...... (7,779) (5,756) Equity loss (income) included in Reportable Segments Adjusted EBITDA ...... 1,245 (1,652) Operating Loss ...... (34,451) (96,252) Other (expense) income, net(a) ...... (168) 282 Gain on acquisition of subsidiary ...... 40,065 — Gain on sales of trademarks, net ...... — 286,979 (Loss) gain on extinguishment of debt, net ...... (9,754) 5,157 Interest expense, net ...... (51,684) (57,188) Provision (benefit) for income taxes ...... 3,464 (5,770) (Loss) Income from Continuing Operations ...... $(59,456) $ 144,748

(a) Amounts include equity in the (losses) earnings of equity method investees of $(1.2) million and $1.7 million in 2012 and 2011, respectively. (b) Excludes amortization included in Interest expense, net. (c) See Note 13 of Notes to Consolidated Financial Statements for a discussion of streamlining charges.

51 A discussion of Segment Adjusted EBITDA of our reportable segments and Unallocated Corporate costs for 2012 and 2011 follows: • JUICY COUTURE Adjusted EBITDA in 2012 was $24.6 million (4.9% of net sales), compared to Adjusted EBITDA of $64.2 million (12.1% of net sales) in 2011. The period-over-period change reflected (i) decreased gross profit, as discussed above; and (ii) an increase in SG&A related to advertising expenses and professional fees. • LUCKY BRAND Adjusted EBITDA in 2012 was $34.7 million (7.5% of net sales), compared to Adjusted EBITDA of $25.4 million (6.1% of net sales) in 2011. The period-over-period change reflected increased gross profit, as discussed above, partially offset by an increase in SG&A related to payroll and advertising expenses. • KATE SPADE Adjusted EBITDA in 2012 was $95.0 million (20.6% of net sales), compared to $57.4 million (18.3% of net sales) in 2011. The period-over-period increase reflected an increase in gross profit, as discussed above, partially offset by an increase in SG&A related to direct-to-consumer expansion, including an increase in payroll related expenses, advertising expenses and e-commerce fees. KATE SPADE Adjusted EBITDA in 2012 included $0.5 million of Adjusted EBITDA from KSJ in its results. • Adelington Design Group Adjusted EBITDA in 2012 was $21.0 million (25.4% of net sales), compared to Adjusted EBITDA of $38.9 million (15.1% of net sales) in 2011. The decrease in Adjusted EBITDA reflected reduced gross profit and SG&A related to brands that have been exited, as discussed above. Unallocated Corporate costs include costs for corporate finance, investor relations, communications, legal, human resources and information technology shared services and costs of executive offices and corporate facilities. Unallocated Corporate costs decreased to $70.7 million in 2012 from $90.2 million in 2011 due to reduced payroll and related expenses, occupancy costs and professional fees. The decrease in those expenses resulted principally from corporate streamlining actions executed throughout 2011 and 2012, which included reductions in staff and rationalization of office space. We also decreased discretionary spending.

52 2011 vs. 2010 The following table sets forth our operating results for the year ended December 31, 2011 (52 weeks), compared to the year ended January 1, 2011 (52 weeks):

Fiscal Years Ended Variance December 31, January 1, 2011 2011 $ % Dollars in millions Net Sales ...... $1,518.7 $1,623.2 $(104.5) (6.4)% Gross Profit ...... 809.4 791.3 18.1 2.3% Selling, general & administrative expenses ...... 904.7 850.0 (54.7) (6.4)% Impairment of intangible assets ...... 1.0 2.6 1.6 61.5% Operating Loss ...... (96.3) (61.3) (35.0) (57.1)% Other income, net ...... 0.2 26.6 (26.4) * Gain on sales of trademarks, net ...... 287.0 — 287.0 * Gain on extinguishment of debt, net ...... 5.2 — 5.2 * Interest expense, net ...... (57.2) (55.7) (1.5) (2.7)% (Benefit) provision for income taxes ...... (5.8) 9.0 14.8 * Income (Loss) from Continuing Operations ...... 144.7 (99.4) 244.1 * Discontinued operations, net of income taxes ...... (316.4) (152.9) (163.5) * Net Loss ...... (171.7) (252.3) 80.6 31.9% Net loss attributable to the noncontrolling interest ...... — (0.8) (0.8) * Net Loss Attributable to Fifth & Pacific Companies, Inc. . . . $ (171.7) $ (251.5) $ 79.8 31.7%

* Not meaningful.

Net Sales Net sales for 2011 were $1.519 billion, a decrease of $104.5 million or 6.4%, as compared to net sales for 2010 of $1.623 billion. Excluding the impact of a $234.0 million decline in net sales related to brands that have been licensed or exited, net sales increased $129.5 million, or 8.0%. The decrease in net sales due to brands that have been licensed or exited related principally to remaining wholesale sales that concluded in the first half of 2010 for the LIZ CLAIBORNE family of brands as we transitioned to the licensing model under the former arrangement with JCPenney in the US and Puerto Rico and the arrangement with QVC. Net sales increased in our KATE SPADE, LUCKY BRAND and our ongoing Adelington Design Group segments, partially offset by a decline in net sales within our JUICY COUTURE segment. Net sales results for our segments are provided below: • JUICY COUTURE net sales were $530.7 million, a 6.4% decrease compared to 2010, which primarily reflected decreases in our wholesale apparel, wholesale non-apparel and specialty retail operations, partially offset by increases in our e-commerce and outlet operations. We ended 2011 with 78 specialty retail stores, 51 outlet stores and 5 concessions, reflecting the net addition over the last 12 months of 4 specialty retail stores and the net closure of 1 outlet store. Key operating metrics for our JUICY COUTURE retail operations included the following: – Average retail square footage in 2011 was approximately 419 thousand square feet, a 13.4% increase compared to 2010; – Sales productivity was $674 per average square foot as compared to $745 for 2010; and

53 – Comparable direct-to-consumer net sales, inclusive of e-commerce and concessions, decreased 7.1% in 2011. Until September 2010, the JUICY COUTURE website was operated by a third party, and our sales to that third party were reflected as wholesale sales. JUICY COUTURE e-commerce comparable sales calculations for the first nine months of 2010 were based on the retail sales data provided by the third party operator. • LUCKY BRAND net sales were $418.2 million, an 8.1% increase compared to 2010, reflecting increases in specialty retail, e-commerce, wholesale apparel, outlet and licensing operations, partially offset by a decrease in our wholesale non-apparel operations. We ended 2011 with 179 specialty retail stores and 42 outlet stores, reflecting the net closure over the last 12 months of 10 specialty retail stores and the net addition of 4 outlet stores. Key operating metrics for our LUCKY BRAND retail operations included the following: – Average retail square footage in 2011 was approximately 565 thousand square feet, a 3.6% decrease compared to 2010; – Sales productivity was $420 per average square foot as compared to $365 for 2010; and – Comparable direct-to-consumer net sales increased by 15.6% in 2011. • KATE SPADE net sales were $312.9 million, a 69.8% increase compared to 2010, reflecting increases across all operations in the segment. We ended 2011 with 50 specialty retail stores and 29 outlet stores, reflecting the net addition over the last 12 months of 6 specialty retail stores. Key operating metrics for our KATE SPADE retail operations included the following: – Average retail square footage in 2011 was approximately 148 thousand square feet, a 4.5% increase compared to 2010; – Sales productivity was $934 per average square foot as compared to $666 for 2010; and – Comparable direct-to-consumer net sales increased by 68.9% in 2011. • Adelington Design Group net sales were $256.9 million, a decrease of $228.4 million, or 47.1%, compared to 2010, reflecting the following: – A $234.0 million, or 48.2%, decrease due to brands that have been licensed or exited, related principally to remaining wholesale sales that concluded in the first half of 2010 for the LIZ CLAIBORNE family of brands as we transitioned to the licensing model under the former arrangement with JCPenney in the US and Puerto Rico and the arrangement with QVC; and – A net $5.6 million, or 1.1%, increase related to sales of our ongoing Adelington Design Group business.

54 Gross Profit Gross profit in 2011 was $809.4 million (53.3% of net sales), compared to $791.3 million (48.7% of net sales) in 2010. The increase in gross profit is primarily due to increased direct-to-consumer net sales in our KATE SPADE, LUCKY BRAND and JUICY COUTURE segments, partially offset by decreases in net sales in our Adelington Design Group segment and JUICY COUTURE wholesale operations. The gross profit rate improved in our Adelington Design Group segment due to our transition of the LIZ CLAIBORNE family of brands to a licensing model, which remained in effect until the sale of the global trademark rights to the LIZ CLAIBORNE family of brands to JCPenney in November 2011.

Selling, General & Administrative Expenses SG&A increased $54.7 million, or 6.4%, to $904.7 million in 2011 compared to 2010. The change in SG&A reflected the following: • A $27.3 million increase in expenses associated with our streamlining initiatives and brand-exiting activities, including (i) charges of $42.0 million related to the then-planned closure of our Ohio Facility and (ii) other contractual commitments primarily related our LIZ CLAIBORNE operations, including litigation charges, legal fees and severance; • A $22.9 million increase in expenses associated with retail store expansion, primarily at KATE SPADE and JUICY COUTURE, inclusive of increased advertising expenses; • An $18.1 million increase in e-commerce fees primarily related to our KATE SPADE and JUICY COUTURE operations due to increased volume; • An increase of $6.1 million in retail impairment charges primarily related to JUICY COUTURE specialty stores; and • A $19.7 million decrease primarily associated with our Adelington Design Group segment as we transitioned to the licensing model under the former arrangement with JCPenney in the US and Puerto Rico and the arrangement with QVC. SG&A as a percentage of net sales was 59.6%, compared to 52.4% in 2010, primarily reflecting increased SG&A in our KATE SPADE, JUICY COUTURE and LUCKY BRAND segments to support direct-to-consumer growth and decreased net sales in our Adelington Design Group segment, which exceeded the proportionate reduction in SG&A.

Impairment of Intangible Assets In 2011, we recorded aggregate non-cash impairment charges of $1.0 million within our Adelington Design Group segment, primarily related to the merchandising rights of our MONET and former licensed DKNY↧ Jeans brands due to decreased use of such intangible assets. In 2010, we recorded non-cash impairment charges of $2.6 million primarily within our Adelington Design Group segment, principally related to merchandising rights of our LIZ CLAIBORNE and former licensed DKNY↧ Jeans brands.

Operating Loss Operating loss for 2011 was $96.3 million ((6.3)% of net sales), compared to an operating loss of $61.3 million ((3.8)% of net sales) in 2010.

Other Income, Net Other income, net amounted to $0.2 million in 2011 and $26.6 million in 2010. Other income, net consisted primarily of (i) foreign currency transaction gains and losses, including the impact of the partial dedesignation of the hedge of our investment in certain euro-denominated functional currency

55 subsidiaries, which resulted in the recognition of foreign currency translation gains and losses on our Euro Notes within earnings; and (ii) equity in the earnings of our equity investees.

Gain on Sales of Trademarks, Net In 2011, we recorded a $287.0 million gain on the sale of trademark rights related to the sale of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands; (ii) the trademark rights in the US and Puerto Rico for MONET; (iii) the DANA BUCHMAN trademark; and (iv) the trademark rights related to our former Curve brand and selected other smaller fragrance brands.

Gain on Extinguishment of Debt, Net In 2011, we recorded a $5.2 million gain on the extinguishment of debt in connection with the repurchase of 228.5 million euro aggregate principal amount of our Euro Notes and the conversion of $20.8 million of our Convertible Notes into 6.2 million shares of our common stock.

Interest Expense, Net Interest expense, net increased to $57.2 million in 2011 from $55.7 million in 2010, reflecting $17.0 million of interest expense related to the Senior Notes, which were issued in April 2011. The change in interest expense also reflected a $9.8 million reduction in amortization of deferred financing costs, including a $6.9 million write-off of debt issuance costs in 2010 as a result of a reduction in the size of our Amended Facility, and a $6.3 million reduction in interest expense due to the redemption of the Euro Notes discussed above.

(Benefit) Provision for Income Taxes In 2011, we recorded a benefit for income taxes of $(5.8) million, compared to a provision for income taxes of $9.0 million in 2010. The income tax provision primarily represented decreases in deferred tax liabilities for indefinite-lived intangible assets, current tax on operations in certain jurisdictions and a decrease in the accrual for uncertain tax positions. We did not record income tax benefits for substantially all losses incurred during 2011 and 2010, as it is not more likely than not that we will utilize such benefits due to the combination of our history of pretax losses and our ability to carry forward or carry back tax losses or credits.

Income (Loss) from Continuing Operations Income (loss) from continuing operations in 2011 was $144.7 million, or 9.5% of net sales, compared to $(99.4) million in 2010, or (6.1)% of net sales. EPS, Basic from continuing operations attributable to Fifth & Pacific Companies, Inc. was $1.53 in 2011 and $(1.05) in 2010. EPS, Diluted from continuing operations attributable to Fifth & Pacific Companies, Inc. was $1.28 in 2011 and $(1.05) in 2010.

Discontinued Operations, Net of Income Taxes Loss from discontinued operations in 2011 was $316.4 million, compared to $152.9 million in 2010, reflecting a loss on disposal of discontinued operations of $222.2 million and a $94.2 million loss from discontinued operations in 2011, as compared to a loss on disposal of discontinued operations of $27.5 million and a $125.4 million loss from discontinued operations in 2010. EPS, Basic from discontinued operations attributable to Fifth & Pacific Companies, Inc. was $(3.34) in 2011 and $(1.62) in 2010. EPS, diluted from discontinued operations attributable to Fifth & Pacific Companies, Inc. was $(2.63) in 2011 and $(1.62) in 2010.

56 Net Loss Attributable to Fifth & Pacific Companies, Inc. Net loss attributable to Fifth & Pacific Companies, Inc. in 2011 decreased to $171.7 million from $251.5 million in 2010. EPS, Basic was $(1.81) in 2011 and $(2.67) in 2010. EPS, Diluted was $(1.35) in 2011 and $(2.67) in 2010.

Segment Adjusted EBITDA Segment Adjusted EBITDA for our reportable segments and Unallocated Corporate costs are provided below.

Fiscal Years Ended Variance December 31, 2011 January 1, 2011 In thousands (52 Weeks) (52 Weeks) $ % Reportable Segments Adjusted EBITDA: JUICY COUTURE ...... $ 64,237 $106,869 $(42,632) (39.9)% LUCKY BRAND...... 25,389 13,350 12,039 90.2% KATE SPADE(a) ...... 57,370 25,419 31,951 125.7% Adelington Design Group ...... 38,868 39,964 (1,096) (2.7)% Total Reportable Segments Adjusted EBITDA . . . 185,864 185,602 Unallocated Corporate Costs ...... (90,158) (84,338) Depreciation and amortization, net(b) ...... (72,322) (76,516) Charges due to streamlining initiatives and brand- exiting activities, impairment of intangible assets and loss on asset disposals and impairments, net(c) ...... (112,228) (78,703) Share-based compensation ...... (5,756) (6,342) Equity income included in Reportable Segments Adjusted EBITDA ...... (1,652) (969) Operating Loss ...... (96,252) (61,266) Other income, net(a) ...... 282 26,689 Gain on sales of trademarks, net ...... 286,979 — Gain on extinguishment of debt, net ...... 5,157 — Interest expense, net ...... (57,188) (55,741) (Benefit) provision for income taxes ...... (5,770) 9,044 Income (loss) from Continuing Operations .... $144,748 $(99,362)

(a) Amounts include equity in the earnings of equity method investees of $1.7 million and $1.0 million in 2011 and 2010, respectively. (b) Excludes amortization included in Interest expense, net. (c) See Note 13 of Notes to Consolidated Financial Statements for a discussion of streamlining charges. A discussion of Segment Adjusted EBITDA of our reportable segments and Unallocated Corporate costs for 2011 and 2010 follows: • JUICY COUTURE Adjusted EBITDA in 2011 was $64.2 million (12.1% of net sales), compared to Adjusted EBITDA of $106.9 million (18.9% of net sales) in 2010. The period-over-period change reflected (i) an increase in SG&A related to direct-to-consumer expansion, including an increase in professional fees and advertising expenses; and (ii) decreased gross profit, as discussed above.

57 • LUCKY BRAND Adjusted EBITDA in 2011 was $25.4 million (6.1% of net sales), compared to Adjusted EBITDA of $13.4 million (3.5% of net sales) in 2010. The period-over-period change primarily reflected an increase in gross profit. • KATE SPADE Adjusted EBITDA in 2011 was $57.4 million (18.3% of net sales), compared to $25.4 million (13.8% of net sales) in 2010. The period-over-period increase reflected an increase in gross profit, as discussed above, partially offset by an increase in SG&A related to direct-to-consumer expansion, including an increase in payroll related expenses, professional fees and advertising expenses. • Adelington Design Group Adjusted EBITDA in 2011 was $38.9 million (15.1% of net sales), in 2011, compared to Adjusted EBITDA of $40.0 million (8.2% of net sales) in 2010. The decrease in Adjusted EBITDA reflected reduced SG&A and gross profit, including a reduction related to the LIZ CLAIBORNE family of brands as we transitioned to a licensing model, which remained in effect until the sale of the global trademark rights to the LIZ CLAIBORNE family of brands to JCPenney in November 2011, as discussed above. Unallocated Corporate costs include costs for corporate finance, investor relations, communications, legal, human resources and information technology shared services and costs of executive offices and corporate facilities. Unallocated Corporate costs increased to $90.2 million in 2011 from $84.3 million in 2010 due to increased payroll expenses, occupancy costs and professional fees.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES Cash Requirements Our primary ongoing cash requirements are to: (i) fund seasonal working capital needs (primarily accounts receivable and inventory); (ii) fund capital expenditures related to the opening and refurbishing of our specialty retail and outlet stores and normal maintenance activities; (iii) fund remaining efforts associated with our streamlining initiatives, which include continued evolution of our distribution strategy, reconfiguration of corporate support functions, consolidation of office space and reductions in staff; (iv) invest in our information systems; (v) fund operational and contractual obligations, including the refund of a $20.0 million advance from JCPenney in February 2013; and (vi) potentially repurchase or retire debt obligations. We expect that our streamlining initiatives will provide long-term cost savings.

Sources and Uses of Cash Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, as well as borrowings through our lines of credit. 6.0% Convertible Senior Notes. The Convertible Notes are convertible during any fiscal quarter if the last reported sale price of our common stock during 20 out of the last 30 trading days in the prior fiscal quarter equals or exceeds $4.2912 (which is 120% of the applicable conversion price). As a result of stock price performance, the Convertible Notes were convertible during the fourth quarter of 2012 and are convertible during the first quarter of 2013. If the Convertible Notes are surrendered for conversion, we may settle the conversion value of each of the Convertible Notes in the form of cash, stock or a combination of cash and stock, at our discretion. During 2012 and early 2013, holders of $60.4 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 17.4 million shares of our common stock, leaving approximately $8.8 million of Convertible Notes outstanding as of the date of this report. 10.5% Senior Secured Notes. We used the net proceeds of $212.9 million from the April 7, 2011 issuance of 10.5% Senior Secured Notes due April 15, 2019 (the ‘‘Original Notes,’’ together with the Additional Notes, the ‘‘Senior Notes’’) primarily to fund a tender offer (the ‘‘Tender Offer’’) to repurchase 128.5 million euro aggregate principal amount of our then-outstanding Euro Notes. The remaining

58 proceeds were used for general corporate purposes. On June 8, 2012, we completed the offering of the Additional Notes. We used a portion of the net proceeds of the offering of the Additional Notes to repay outstanding borrowings under our Amended Facility and to fund the redemption of 52.9 million euro aggregate principal of Euro Notes on July 12, 2012. We used the remaining proceeds to fund a portion of the purchase of a 51.0% interest in KSJ and for general corporate purposes. The Senior Notes mature on April 15, 2019 and are guaranteed on a senior secured basis by certain of the Company’s current and future domestic subsidiaries. The Senior Notes and the guarantees are secured on a first-priority basis by a lien on certain of the Company’s trademarks and on a second-priority basis by the other assets of the Company and of the guarantors that secure the Company’s Amended Facility. The indenture governing the Senior Notes contains provisions that may require the Company to offer to repurchase the Senior Notes at 101% of their aggregate principal amount upon certain defined ‘‘Change of Control’’ events. In addition, the indenture may require that the proceeds from sales of the Company’s assets (subject to various exceptions and the ability of the Company to apply the proceeds to repay indebtedness or reinvest in its business) be used to offer to repurchase the Senior Notes at 100% of their aggregate principal amount. The indenture also contains other standard high-yield debt covenants, which limit the Company’s ability to incur additional indebtedness, incur additional liens, make asset sales, make dividend payments and investments, make payments and other transfers between itself and its subsidiaries, enter into affiliate transactions and merge or consolidate with other entities. Pursuant to a registration rights agreement executed as part of the offering of Original Notes, we agreed, on or before April 7, 2012, (i) to use reasonable best efforts to consummate an offer to issue new Senior Notes (having terms substantially identical to those of the Original Notes) whose issuance is registered with the SEC in exchange for the Original Notes (the ‘‘Original Notes Exchange Offer’’); and (ii) if required, to have a shelf registration statement declared effective with respect to resales of the Original Notes. We filed and had declared effective a registration statement on Form S-4 (the ‘‘Form S-4 Registration Statement’’) registering the Original Notes Exchange Offer and on February 13, 2013 commenced the Original Notes Exchange Offer (which is scheduled to expire on March 15, 2013). Nevertheless, as a result of not having complied with the above-described registration requirements, pursuant to the terms of the registration rights agreement relating to the Original Notes, we are required to pay additional interest on the Original Notes until the Original Notes Exchange Offer is completed. Additional interest on the Original Notes began accruing on April 10, 2012 at a rate of 0.25% per annum and continued to accrue at that rate through (and including) July 8, 2012. On July 9, 2012, additional interest on the Original Notes began accruing at a rate of 0.50% per annum and continued to accrue at that rate through (and including) October 6, 2012. On October 7, 2012, additional interest on the Original Notes began accruing at a rate of 0.75% per annum and continued to accrue at that rate through (and including) January 4, 2013. On January 5, 2013, the rate of additional interest on the Original Notes increased to the maximum of 1.00% per annum. Accrued additional interest has been paid on the Original Notes through October 15, 2012. Accrued additional interest will next be paid on the Original Notes (or the corresponding Senior Notes issued in the Original Notes Exchange Offer, as the case may be) on April 15, 2013 to holders of record on April 1, 2013. Pursuant to a registration rights agreement executed as part of the offering of Additional Notes, the Company agreed, on or before October 15, 2012, (i) to use reasonable best efforts to consummate an offer to issue new Senior Notes (having terms substantially identical to those of the Additional Notes) whose issuance is registered with the SEC in exchange for the Additional Notes (the ‘‘Additional Notes Exchange Offer’’); (ii) if required, to have a shelf registration statement declared effective with respect to resales of the Additional Notes; and (iii) complete the Original Notes Exchange Offer. The Form S-4 Registration Statement also covers the Additional Notes Exchange Offer, which commenced on February 13, 2013 and is scheduled to expire on March 15, 2013. Nevertheless, as a result

59 of not having complied with the above-described registration requirements, pursuant to the terms of the registration rights agreement relating to Additional Notes, the Company is required to pay additional interest on the Additional Notes until the Original Notes Exchange Offer and the Additional Notes Exchange Offer are completed. Additional interest on the Additional Notes began accruing on October 16, 2012 at a rate of 0.25% per annum and continued to accrue at that rate through (and including) January 13, 2013. On January 14, 2013, additional interest on the Additional Notes began to accrue at a rate of 0.50% per annum. The rate of additional interest will increase by 0.25% per annum for each 90 days elapsed after January 14, 2013 that the Original Notes Exchange Offer and the Additional Notes Exchange Offer are not completed, up to a maximum of 1.00% per annum. Additional interest will be paid to holders of the Additional Notes (or the corresponding Senior Notes issued in the Additional Notes Exchange Offer, as the case may be) on April 15, 2013 to holders of record on April 1, 2013. Amended Facility. Under the Amended Facility, availability is the lesser of $350.0 million or a borrowing base that is computed monthly and comprised primarily of our eligible accounts receivable and inventory. The Amended Facility will expire in August 2014, provided that in the event that our remaining $8.8 million of Convertible Notes are not refinanced, purchased or defeased prior to March 15, 2014, then the maturity date shall be March 15, 2014. If any such refinancing or extension provides for a maturity date that is earlier than 91 days following August 6, 2014, then the maturity date shall be the date that is 91 days prior to the maturity date of such notes. We are subject to various covenants and other requirements, such as financial requirements, reporting requirements and negative covenants. We are required to maintain minimum aggregate borrowing availability of not less than $45.0 million and must apply substantially all cash collections to reduce outstanding borrowings under the Amended Facility when availability under the Amended Facility falls below the greater of $65.0 million and 17.5% of the then-applicable commitments. Our borrowing availability under the Amended Facility is determined primarily by the level of our eligible accounts receivable and inventory balances. Based on our forecast of borrowing availability under the Amended Facility, we anticipate that cash flows from operations and the projected borrowing availability under our Amended Facility will be sufficient to fund our liquidity requirements for at least the next 12 months. There can be no certainty that availability under the Amended Facility will be sufficient to fund our liquidity needs. Should we be unable to comply with the requirements in the Amended Facility, we would be unable to borrow under such agreement and any amounts outstanding would become immediately due and payable, unless we were able to secure a waiver or an amendment under the Amended Facility. Should we be unable to borrow under the Amended Facility, or if outstanding borrowings thereunder become immediately due and payable, our liquidity would be significantly impaired, which would have a material adverse effect on our business, financial condition and results of operations. In addition, an acceleration of amounts outstanding under the Amended Facility would likely cause cross-defaults under our other outstanding indebtedness, including the Convertible Notes and the Senior Notes. The sufficiency and availability of our projected sources of liquidity may be adversely affected by a variety of factors, including, without limitation: (i) the level of our operating cash flows, which will be impacted by retailer and consumer acceptance of our products, general economic conditions and the level of consumer discretionary spending; (ii) the status of, and any adverse changes in, our credit ratings; (iii) our ability to maintain required levels of borrowing availability under the Amended Facility and to comply with other covenants included in our debt and credit facilities; (iv) the financial wherewithal of our larger department store and specialty retail store customers; and (v) interest rate and exchange rate fluctuations. Because of the continuing uncertainty and risks relating to future economic conditions, we may, from time to time, explore various initiatives to improve our liquidity, including issuance of debt securities, sales of various assets, additional cost reductions and other measures. In addition, where conditions permit, we may also, from time to time, seek to retire, exchange or purchase our outstanding debt in privately- negotiated transactions or otherwise. We may not be able to successfully complete any such actions.

60 Cash and Debt Balances. We ended 2012 with $59.5 million in cash and cash equivalents and marketable securities, compared to $180.6 million at the end of 2011 and with $406.3 million of debt outstanding, compared to $446.3 million at the end of 2011. The $81.1 million increase in our net debt primarily reflected: (i) the funding of $85.8 million of capital and in-store shop expenditures over the last 12 months; (ii) the use of $41.0 million for the KSJ Buyout; and (iii) the conversion of $49.4 million aggregate principal amount of our Convertible Notes into 14.2 million shares of our common stock. We generated $24.6 million in cash from continuing operations over the past 12 months. Accounts Receivable increased $2.0 million, or 1.7%, at year-end 2012 compared to year-end 2011, primarily due to increased wholesale sales in our KATE SPADE and LUCKY BRAND segments and an increase resulting from the KSJ acquisition, partially offset by (i) brands that have been exited in our Adelington Design Group segment and (ii) decreased wholesale sales in our JUICY COUTURE segment. Inventories increased $27.2 million, or 14.1% at year-end 2012 compared to year-end 2011, primarily due to an increase in KATE SPADE inventory, to support growth initiatives and the impact of the acquisition of KSJ, partially offset by the impact of brands that have been exited in our Adelington Design Group segment. Borrowings under our Amended Facility peaked at $65.5 million during 2012, compared to a peak of $234.8 million in 2011. There were no outstanding borrowings under this facility at December 29, 2012 and December 31, 2011. Net cash provided by operating activities of our continuing operations was $24.6 million in 2012, compared to $119.2 million in 2011. This $94.6 million period-over-period change was primarily due to a $160.6 million decrease related to working capital items, partially offset by improved earnings in 2012 compared to 2011 (excluding depreciation and amortization, foreign currency gains and losses, impairment charges and other non-cash items). The operating activities of our discontinued operations used $13.2 million and $136.2 million of cash in the fiscal years ended December 29, 2012 and December 31, 2011, respectively. Net cash (used in) provided by investing activities of our continuing operations was $(131.1) million in 2012, compared to $230.5 million in 2011. Net cash used in investing activities in 2012 primarily reflected the use of $85.8 million for capital and in-store shop expenditures, $41.0 million for the KSJ Buyout, and $5.0 million for investments in and advances to KS China Co., Limited (‘‘KSC’’), our equity investee. Net cash provided by investing activities in 2011 primarily reflected the receipt of net proceeds of $309.7 million in connection with the sales of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands and the trademark rights in the US and Puerto Rico for the MONET brand; (ii) the DANA BUCHMAN trademark; and (iii) the trademarks for our former Curve fragrance brands and selected other smaller fragrance brands. The proceeds we received from dispositions in 2011 were partially offset by the use of $77.1 million for capital and in-store shop expenditures, inclusive of $23.0 million for the purchase of the Ohio distribution center and $2.5 million for investments in and advances to KSC. The investing activities of our discontinued operations provided $77.4 million of cash and 2011. Net cash provided by (used in) financing activities of our continuing operations was $1.1 million in 2012, compared to $(125.4) million in 2011. The $126.5 million period-over-period change primarily reflected a net increase of $95.6 million from issuances and repayments of long term debt, a $20.4 million decrease in net cash used in borrowing activities under our Amended Facility, a $5.9 million increase in proceeds received from the exercise of stock options and a decrease of $4.0 million related to payments of deferred financing fees. The financing activities of our discontinued operations used $2.7 million of cash in 2011.

Commitments and Capital Expenditures During the first quarter of 2009, we entered into an agreement with Hong Kong-based, global consumer goods exporter Li & Fung, whereby Li & Fung was appointed as our buying/sourcing agent for

61 all of our brands and products (other than jewelry) and we received a payment of $75.0 million at closing and an additional payment of $8.0 million in the second quarter of 2009 to offset specific, incremental, identifiable expenses associated with the transaction. Our agreement with Li & Fung provides for a refund of a portion of the closing payment in certain limited circumstances, including a change of control of the Company, the divestiture of any current brand, or certain termination events. We are also obligated to use Li & Fung as our buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. The 2009 licensing arrangements with JCPenney in the US and Puerto Rico and QVC resulted in the removal of buying/sourcing for a number of LIZ CLAIBORNE branded products sold under these licenses from the Li & Fung buying/sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $24.3 million of the closing payment received from Li & Fung in the second quarter of 2010. The 2011 sales of the KENSIE, KENSIE GIRL and MAC & JAC trademarks resulted in the removal of buying/sourcing for such products sold from the Li & Fung buying/ sourcing arrangement. As a result, under our agreement with Li & Fung, we refunded $1.8 million of the closing payment received from Li & Fung in the second quarter of 2012. In addition, our agreement with Li & Fung is not exclusive; however, we are required to source a specified percentage of product purchases from Li & Fung. In connection with the disposition of the 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 153 store leases were assigned to third parties, for which we remain secondarily liable for the remaining obligations on 130 such leases. As of December 29, 2012, the future aggregate payments under these leases amounted to $190.0 million and extended to various dates through 2025. In the second quarter of 2011, we initiated actions to close the Ohio Facility, which was expected to result in the termination of all or a significant portion of our union employees (see Note 13 of Notes to Consolidated Financial Statements). During the third quarter of 2011, we ceased contributing to a union- sponsored multi-employer defined benefit pension plan (the ‘‘Fund’’), which is regulated by the Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’). Under ERISA, cessation of employer contributions to a multi-employer defined benefit pension plan is likely to trigger an obligation by such employer for a ‘‘withdrawal liability’’ to such plan, with the amount of such withdrawal liability representing the portion of the plan’s underfunding allocable to the withdrawing employer. We incurred such a liability in the second quarter of 2011 and recorded a $17.6 million charge to SG&A related to our estimate of the withdrawal liability. Under applicable statutory rules, this withdrawal liability is payable over a period of time, and we previously estimated that we would pay such liability in equal quarterly installments over a period of eight to 12 years. In February 2012, we were notified by the Fund that the Fund calculated our total withdrawal liability to be $19.1 million, a difference of approximately $1.5 million, and that 17 quarterly payments of $1.2 million would commence on March 1, 2012, and continue for four years, with a final payment of $1.0 million on June 1, 2016. As of December 29, 2012, the accrued withdrawal liability was $14.3 million, which was included in Accrued expenses and Other non-current liabilities on the accompanying Consolidated Balance Sheet. In June 2011, we established KSC, a joint venture in China with E-Land Fashion China Holdings, Limited. The joint venture is a Hong Kong limited liability company and its purpose is to market and distribute small leather goods and other fashion products and accessories in China under the KATE SPADE brand. The joint venture operates under the name of KSC for an initial 10 year period and commenced operations in the fourth quarter of 2011. We account for our 40.0% interest in KSC under the equity method of accounting. We made capital contributions to KSC of $5.0 million and $2.5 million in 2012 and 2011, respectively and are required to make capital contributions to KSC of $5.5 million in 2013. During the fourth quarter of 2011, KSC reacquired the existing KATE SPADE business in China from Globalluxe Kate Spade HK Limited (‘‘Globalluxe’’).

62 Additionally, we agreed that we or one of our affiliates will reacquire existing KATE SPADE businesses in Southeast Asia in 2014 from Globalluxe, with the purchase price based upon a multiple of Globalluxe’s earnings, subject to a cap of $30.0 million. On June 27, 2012, we received notification of Gores’ calculation of the working capital adjustments related to the MEXX Transaction, pursuant to the terms of the agreement. We have disputed such calculation and have notified Gores that the adjustment should result instead in a payment to us. We do not expect that any amount that may be payable to Gores related to such adjustments will have a material adverse impact on our financial position, results of operations, liquidity or cash flows. On January 25, 2013, Gores Malibu Holdings (Luxembourg) S.a.r.l. filed a complaint in the United States District Court for the Southern District of New York against Fifth and Pacific Companies, Inc. and Fifth & Pacific Companies Foreign Holdings, Inc. (amended on February 5, 2013). The complaint claims $15.0 million in damages for alleged breaches of the Merger Agreement related to the sale of the global MEXX business, including breaches of tax and tax-related covenants, breaches of interim operating covenants and breaches of reimbursement obligations related to employee bonuses. In addition, as previously disclosed, we and Gores Malibu are currently in dispute resolution proceedings with respect to working capital adjustments that are required to be made under the Merger Agreement. We cannot currently predict the outcomes of these proceedings although we do not believe any such amount will be material to our financial position or results of operations. We will continue to closely manage spending, with a slight increase in projected 2013 capital expenditures to approximately $105.0-$115.0 million, compared to $85.8 million in 2012. These expenditures primarily relate to our plan to open 80-85 Company-owned retail stores globally, the continued technological upgrading of our management information systems and costs associated with the refurbishment of selected specialty retail and outlet stores. We expect capital expenditures and working capital cash needs to be financed with cash provided by operating activities and our amended and restated revolving credit facility. The following table summarizes as of December 29, 2012 our contractual cash obligations by future period (see Notes 1, 9 and 10 of Notes to Consolidated Financial Statements):

Payments Due by Period Less than After Contractual cash obligations * 1 year 1-3 years 4-5 years 5 years Total (In millions) Operating lease commitments ...... $104.2 $200.6 $159.5 $201.4 $ 665.7 Capital lease obligations ...... 4.5 ———4.5 Inventory purchase commitments ...... 205.1 ———205.1 6.0% Convertible Senior Notes(a) ...... 19.9 ———19.9 Interest on 6.0% Convertible Senior Notes(b) 1.2 0.6 —— 1.8 10.5% Senior Secured Notes ...... ———372.0 372.0 Interest on 10.5% Senior Secured Notes(b)(c) 39.4 78.8 78.8 52.2 249.2 Pension withdrawal liability(d) ...... 4.9 9.8 2.2 — 16.9 Refund to JCPenney ...... 20.0 ———20.0 Investments in equity investee(e) ...... 5.5 ———5.5 Total ...... $404.7 $289.8 $240.5 $625.6 $1,560.6

* The table above does not include our secondary liability for assigned leases and amounts recorded for uncertain tax positions. We cannot estimate the amounts or timing of payments related to uncertain tax positions as we have not yet entered into substantive settlement discussions with taxing authorities. (a) Includes $11.2 million aggregate principal amount of 6.0% Convertible Senior Notes that were converted in January 2013.

63 (b) Interest is fixed per annum. (c) Does not include estimated additional interest of $1.3 million. (d) Includes interest of $1.7 million. (e) We agreed that the Company or one of our affiliates will reacquire existing KATE SPADE businesses in Southeast Asia in 2014 from Globalluxe, with the purchase price based upon a multiple of Globalluxe’s earnings, subject to a cap of $30.0 million. That amount is not included as it is not determinable. Debt consisted of the following:

December 29, December 31, In thousands 2012 2011 5.0% Euro Notes(a) ...... $ — $157,139 6.0% Convertible Senior Notes(b) ...... 18,287 60,270 10.5% Senior Secured Notes(c) ...... 383,662 220,085 Capital lease obligations ...... 4,345 8,821 Total debt ...... $406,294 $446,315

(a) The change in the balance of these euro-denominated notes reflected the redemption or repurchase of the remaining Euro Notes since December 31, 2011. (b) The balance at December 29, 2012 and December 31, 2011 represented principal of $19.9 million and $69.2 million, respectively, and an unamortized debt discount of $1.6 million and $8.9 million, respectively. (c) The increase in the balance reflected the issuance of $152.0 million aggregate principal amount of Additional Notes at 108.25% of par value on June 8, 2012. For information regarding our debt and credit instruments, refer to Note 10 of Notes to Consolidated Financial Statements. As discussed in Note 10 of Notes to Consolidated Financial Statements, in May 2010, we completed a second amendment to and restatement of our revolving credit agreement. Availability under the Amended Facility shall be the lesser of $350.0 million or a borrowing base that is computed monthly and comprised primarily of our eligible accounts receivable and inventory. A portion of the funds available under the Amended Facility not in excess of $200.0 million is available for the issuance of letters of credit, whereby standby letters of credit may not exceed $65.0 million. As of December 29, 2012, availability under our Amended Facility was as follows:

Letters of Total Borrowing Outstanding Credit Available Excess (a) (a) (b) In thousands Facility Base Borrowings Issued Capacity Capacity Amended Facility(a) ..... $350,000 $251,237 $ — $27,654 $223,583 $178,583

(a) Availability under the Amended Facility is the lesser of $350.0 million or a borrowing base comprised primarily of eligible accounts receivable and inventory. (b) Excess capacity represents available capacity reduced by the minimum required aggregate borrowing availability under the Amended Facility of $45.0 million.

Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements.

64 Hedging Activities Our operations are exposed to risks associated with fluctuations in foreign currency exchange rates. In order to reduce exposures related to changes in foreign currency exchange rates, we use foreign currency collars, forward contracts and swap contracts to hedge specific exposure to variability in forecasted cash flows associated primarily with inventory purchases and intercompany loans mainly of our recently acquired KATE SPADE business in Japan. We may use foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated intercompany loans. In order to mitigate currency exposure related to such loans, we entered into forward contracts to sell 4.0 billion yen for $47.5 million. Transaction gains of $1.0 million related to these derivative instruments were reflected within Other (expense) income, net for the year ended December 29, 2012. In prior years, we hedged our net investment position in certain euro-denominated functional currency subsidiaries by designating a portion of the outstanding Euro Notes as the hedging instrument in a net investment hedge. To the extent the hedge was effective, related foreign currency translation gains and losses were recorded within Other comprehensive loss. Translation gains and losses related to the ineffective portion of the hedge were recognized in current operations within Other (expense) income, net. In connection with the sale of an 81.25% interest in the global MEXX business on October 31, 2011, we dedesignated the remaining amount of the Euro Notes that had been previously designated as a hedge of the Company’s net investment in certain euro-denominated functional currency subsidiaries. Accordingly, all foreign currency transaction gains or losses related to the remaining Euro Notes were recorded in earnings beginning on November 1, 2011 until the Euro Notes were fully retired in the third quarter of 2012. We recognized the following foreign currency translation (losses) gains related to the net investment hedge:

Fiscal Years Ended In thousands December 31, 2011 January 1, 2011 Effective portion recognized within Accumulated OCI ..... $(10,216) $13,095 Ineffective portion recognized within Other (expense) income, net ...... 4,954 21,555 Also, as a result of the sale of the interest in the global MEXX business, our net investment in certain euro-denominated functional currency subsidiaries was substantially liquidated, and the cumulative translation adjustment recognized on our Euro Notes through October 31, 2011 was written off and included within Loss on disposal of discontinued operations, net of income taxes on the accompanying Consolidated Statement of Operations (see Note 19 of Notes to Consolidated Financial Statements). We occasionally use short-term foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with certain expected transactions. In order to mitigate the exposure related to the Tender Offer, we entered into forward contracts to sell $182.0 million for 128.0 million euro, which settled in the second quarter of 2011. During the second quarter of 2011, we entered into forward contracts designated as non-hedging derivative instruments maturing in July 2011 to sell $15.7 million for 11.0 million euro. The transaction gains of $2.5 million related to these derivative instruments were reflected within Other (expense) income, net for the year ended December 31, 2011.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

65 the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods. Estimates by their nature are based on judgments and available information. The estimates that we make are based upon historical factors, current circumstances and the experience and judgment of our management. We evaluate our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluations. Therefore, actual results could materially differ from those estimates under different assumptions and conditions. For accounts receivable, we estimate the net collectibility, considering both historical and anticipated trends as well as an evaluation of economic conditions and the financial positions of our customers. For inventory, we review the aging and salability of our inventory and estimate the amount of inventory that we will not be able to sell in the normal course of business. This distressed inventory is written down to the expected recovery value to be realized through off-price channels. If we incorrectly anticipate these trends or unexpected events occur, our results of operations could be materially affected. We utilize various valuation methods to determine the fair value of acquired tangible and intangible assets. For inventory, the method uses the expected selling prices of finished goods. Intangible assets acquired are valued using a discounted cash flow model. Should any of the assumptions used in these projections differ significantly from actual results, material impairment losses could result where the estimated fair values of these assets become less than their carrying amounts. For accrued expenses related to items such as employee insurance, workers’ compensation and similar items, accruals are assessed based on outstanding obligations, claims experience and statistical trends; should these trends change significantly, actual results would likely be impacted. Changes in such estimates, based on more accurate information, may affect amounts reported in future periods. We are not aware of any reasonably likely events or circumstances, which would result in different amounts being reported that would materially affect our financial condition or results of operations.

Revenue Recognition Revenue is recognized from our wholesale, retail and licensing operations. Revenue within our wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. We review and refine these estimates on a monthly basis based on current experience, trends and retailer performance. Our historical estimates of these costs have not differed materially from actual results. Retail store revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. We do not recognize revenue for estimated gift card breakage. Licensing revenues are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees.

66 Income Taxes Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. We also assess the likelihood of the realization of deferred tax assets and adjust the carrying amount of these deferred tax assets by a valuation allowance to the extent we believe it more likely than not that all or a portion of the deferred tax assets will not be realized. We consider many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in our effective tax rate in future periods for various reasons including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is our policy to recognize the impact of an uncertain income tax position on our income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. We record interest expense and penalties payable to relevant tax authorities as income tax expense.

Accounts Receivable — Trade, Net In the normal course of business, we extend credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on an evaluation of historical and anticipated trends, the financial condition of our customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with our customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. Should circumstances change or economic or distribution channel conditions deteriorate significantly, we may need to increase our provisions. Our historical estimates of these costs have not differed materially from actual results.

Inventories, Net Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. We continually evaluate the composition of our inventories by assessing slow-turning, ongoing product as well as prior seasons’ fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of our individual product lines, the impact of market trends and economic conditions and the value of current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. We review our inventory position on a monthly basis and adjust our estimates based on revised

67 projections and current market conditions. If economic conditions worsen, we incorrectly anticipate trends or unexpected events occur, our estimates could be proven overly optimistic and required adjustments could materially adversely affect future results of operations. Our historical estimates of these costs and our provisions have not differed materially from actual results.

Intangibles, Net Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. Our annual impairment test is performed as of the first day of the third fiscal quarter. The fair values of purchased intangible assets with indefinite lives, primarily trademarks and tradenames, are estimated and compared to their carrying values. We estimate the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We recognize an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset’s value may be impaired. Impairment testing is based on a review of forecasted operating cash flows and the profitability of the related brand. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to our Consolidated Statement of Operations. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Intangible merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years. As a result of the impairment analysis performed in connection with our purchased trademarks with indefinite lives, no impairment charges were recorded during 2012, 2011 or 2010. During 2011, we recorded non-cash impairment charges of $1.0 million primarily within our Adelington Design Group segment principally related to merchandising rights of our MONET and former licensed DKNY↧ Jeans brands due to decreased use of such intangible assets. During 2010, we recorded non-cash impairment charges of $2.6 million primarily within our Adelington Design Group segment principally related to merchandising rights of our LIZ CLAIBORNE and former licensed DKNY↧ Jeans brands due to decreased use of such intangible assets.

Accrued Expenses Accrued expenses for employee insurance, workers’ compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted.

Share-Based Compensation We recognize compensation expense based on the fair value of employee share-based awards, including stock options and restricted stock, net of estimated forfeitures. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will

68 be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share-based awards expected to be forfeited prior to vesting. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.

Inflation The rate of inflation over the past few years has not had a significant impact on our sales or profitability.

ACCOUNTING PRONOUNCEMENTS For a discussion of recently adopted and recent accounting pronouncements, see Notes 1 and 21 of Notes to Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We finance our capital needs through available cash and cash equivalents and marketable securities, operating cash flows, letters of credit and our Amended Facility. Our floating rate Amended Facility exposes us to market risk for changes in interest rates. Loans thereunder bear interest at rates that vary with changes in prevailing market rates. We do not speculate on the future direction of interest rates. As of December 29, 2012 and December 31, 2011, we did not have exposure to changing market rates as there were no amounts outstanding under our Amended Facility. As of December 29, 2012, we have not employed interest rate hedging to mitigate such risks with respect to our floating rate facility. We believe that our Convertible Notes and Senior Notes, which are fixed rate obligations, partially mitigate the risks with respect to our variable rate financing. We transact business in multiple currencies, resulting in exposure to exchange rate fluctuations. We mitigate the risks associated with changes in foreign currency exchange rates through the use of foreign exchange forward contracts and collars to hedge transactions denominated in foreign currencies for periods of generally less than one year. Gains and losses on contracts which hedge specific foreign currency denominated commitments are recognized in the period in which the underlying hedged item affects earnings. As of December 29, 2012, we had forward contracts with net notional amounts of $47.5 million. Unrealized gains for outstanding foreign currency forward contracts were $1.0 million. A sensitivity analysis to changes in foreign currency exchange rates indicated that if the yen weakened by 10.0% against the US dollar, the fair value of these instruments would increase by $5.2 million at December 29, 2012. Conversely, if the yen strengthened by 10.0% against the US dollar, the fair value of these instruments would decrease by $4.2 million at December 29, 2012. Any resulting changes in the fair value of the instruments would be partially offset by changes in the underlying balance sheet positions. We do not hedge all transactions denominated in foreign currency. We are exposed to credit related losses if the counterparties to our derivative instruments fail to perform their obligations. We systemically measure and assess such risk as it relates to the credit ratings of these counterparties, all of which currently have satisfactory credit ratings and therefore we do not expect to realize losses associated with counterparty default.

Item 8. Financial Statements and Supplementary Data. See the ‘‘Index to Consolidated Financial Statements and Schedule’’ appearing at the end of this Annual Report on Form 10-K for information required under this Item 8.

69 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.

Item 9A. Controls and Procedures. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated our disclosure controls and procedures at the end of each of our fiscal quarters. Our Chief Executive Officer and Chief Financial Officer concluded that, as of December 29, 2012, our disclosure controls and procedures were effective to ensure that all information required to be disclosed is recorded, processed, summarized and reported within the time periods specified, and that information required to be filed in the reports that we file or submit under the Securities Exchange Act of 1934 (‘‘the Exchange Act’’) is accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure. Management has excluded from its assessment the internal control over financial reporting at KSJ, which was acquired on October 31, 2012 and whose financial statements constitute 4.7% of Total assets and 1.0% of Net sales as of and for the year ended December 29, 2012. There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended December 29, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. See ‘‘Index to Consolidated Financial Statements and Schedule’’ appearing at the end of this Annual Report on Form 10-K for Management’s Report on Internal Control Over Financial Reporting.

Item 9B. Other Information. None.

70 PART III Item 10. Directors, Executive Officers and Corporate Governance. With respect to our Executive Officers, see ‘‘Executive Officers of the Registrant’’ in Part I of this Annual Report on Form 10-K. Information regarding Section 16(a) compliance, the Audit Committee (including membership and Audit Committee Financial Experts but excluding the ‘‘Audit Committee Report’’), our code of ethics and background of our Directors appearing under the captions ‘‘Section 16(a) Beneficial Ownership Reporting Compliance,’’ ‘‘Corporate Governance,’’ ‘‘Additional Information-Company Code of Ethics and Business Practices’’ and ‘‘Election of Directors’’ in our Proxy Statement for the 2013 Annual Meeting of Shareholders (the ‘‘2013 Proxy Statement’’) is hereby incorporated by reference.

Item 11. Executive Compensation. Information called for by this Item 11 is incorporated by reference to the information set forth under the headings ‘‘Compensation Discussion and Analysis’’ and ‘‘Executive Compensation’’ (other than the Board Compensation Committee Report) in the 2013 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. EQUITY COMPENSATION The following table summarizes information about the stockholder approved Fifth & Pacific Companies, Inc. Outside Directors’ 1991 Stock Ownership Plan (the ‘‘Outside Directors’ Plan’’); Fifth & Pacific Companies, Inc. 1992 Stock Incentive Plan; Fifth & Pacific Companies, Inc. 2000 Stock Incentive Plan (the ‘‘2000 Plan’’); Fifth & Pacific Companies, Inc. 2002 Stock Incentive Plan (the ‘‘2002 Plan’’); Fifth & Pacific Companies, Inc. 2005 Stock Incentive Plan (the ‘‘2005 Plan’’); and Fifth & Pacific Companies, Inc. 2011 Stock Incentive Plan (the ‘‘2011 Plan’’), which together comprise all of our existing equity compensation plans, as of December 29, 2012. In January 2006, we adopted the Fifth & Pacific Companies, Inc. Outside Directors’ Deferral Plan, which amended and restated the Outside Directors’ Plan by eliminating equity grants under the Outside Directors’ Plan, including the annual grant of shares of Common Stock. The last grant under the Outside Directors’ Plan was made on January 10, 2006. All subsequent Director stock grants have been made under the remaining shareholder approved plans.

Number of Securities Remaining Available for Number of Securities to be Weighted Average Exercise Future Issuance Under Issued Upon Exercise of Price of Outstanding Equity Compensation Plans Outstanding Options, Options, Warrants and (Excluding Securities Plan Category Warrants and Rights Rights Reflected in Column) Equity Compensation Plans Approved by Stockholders . 7,749,009(a) $12.21(b) 259,235(c) Equity Compensation Plans Not Approved by Stockholders ...... — N/A — Total ...... 7,749,009(a) $12.21(b) 259,235(c)

(a) Includes (i) 835,816 shares of Common Stock issuable under the 2002, 2005 and 2011 Plans pursuant to participants’ elections thereunder to defer certain director compensation; and (ii) 1,164,500 performance shares granted to a group of key executives, of which the number of shares earned will be determined by the achievement of the performance criteria set forth in the performance share arrangement and range from 0 - 225% of target.

71 (b) Performance Shares and shares of Common Stock issuable under the 2000, 2002, 2005 and 2011 Plans pursuant to participants’ election thereunder to defer certain director compensation were not included in calculating the Weighted Average Exercise Price. (c) In addition to options, warrants and rights, the 2000 Plan, the 2002 Plan, the 2005 Plan and the 2011 Plan authorize the issuance of restricted stock, unrestricted stock and performance stock. Each of the 2000 and the 2002 Plans contains a sub-limit on the aggregate number of shares of restricted Common Stock, which may be issued; the sub-limit under the 2000 Plan is set at 1,000,000 shares and the sub-limit under the 2002 Plan is set at 1,800,000 shares. The 2005 Plan contains an aggregate 2,000,000 shares sub-limit on the number of shares of restricted stock, restricted stock units, unrestricted stock and performance shares that may be awarded. The 2011 Plan contains an aggregate 1,500,000 shares sub-limit on the number of shares of restricted stock, restricted stock units, unrestricted stock and performance shares that may be awarded. For purposes of computing the number of shares available for grant, awards other than stock options and stock appreciation rights will be counted against the 2011 Plan maximum in a 1.6-to-1.0 ratio. Security ownership information of certain beneficial owners and management as called for by this Item 12 is incorporated by reference to the information set forth under the heading ‘‘Security Ownership of Certain Beneficial Owners and Management’’ in the 2013 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence. Information called for by this Item 13 is incorporated by reference to the information set forth under the headings ‘‘Certain Relationships and Related Transactions’’ in the 2013 Proxy Statement.

Item 14. Principal Accounting Fees and Services. Information called for by this Item 14 is incorporated by reference to the information set forth under the heading ‘‘Ratification of the Appointment of the Independent Registered Public Accounting Firm’’ in the 2013 Proxy Statement.

PART IV Item 15. Exhibits and Financial Statement Schedules. (a) 1. Financial Statements ...... Refer to Index to Consolidated Financial Statements on Page F-1 (a) 2. Schedule SCHEDULE II — Valuation and Qualifying Accounts . . F-67 NOTE: Schedules other than those referred to above and parent company financial statements have been omitted as inapplicable or not required under the instructions contained in Regulation S-X or the information is included elsewhere in the financial statements or the notes thereto.

72 (a) 3. Exhibits

Exhibit No. Description 2(a) — Merger Agreement, dated as of September 1, 2011, by and among Registrant and Liz Claiborne Foreign Holdings, Inc. and Gores Malibu Holdings (Luxembourg) S.a.r.l., EuCo B.V. (incorporated herein by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K dated September 6, 2011). 2(b) — Asset Purchase Agreement, dated as of September 1, 2011, by and among Registrant and Liz Claiborne Canada Inc. and Gores Malibu Holdings (Luxembourg) S.a.r.l., 3256890 Nova Scotia Limited (incorporated herein by reference to Exhibit 2.2 to Registrant’s Current Report on Form 8-K dated September 6, 2011). 3(a) — Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) to Registrant’s Current Report on Form 8-K dated May 28, 2009). 3(b) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) to Registrant’s Current Report on Form 8-K dated June 3, 2010). 3(c) — Certificate of Ownership and Merger, amending the Certificate of Incorporation to change the name of the Registrant to Fifth & Pacific Companies, Inc. (incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated May 18, 2012). 3(c) — By-Laws of Registrant, as amended through May 27, 2010 (incorporated herein by reference to Exhibit 3(b) to Registrant’s Current Report on Form 8-K dated June 3, 2010). 4(a) — Specimen certificate for Registrant’s Common Stock, par value $1.00 per share (incorporated herein by reference to Exhibit 4(a) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 26, 1992). 4(b) — Registration Rights Agreement, dated as of June 8, 2012, by and among Fifth & Pacific Companies, Inc., the Guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the several Initial Purchasers (incorporated herein by reference to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q filed on July 26, 2012). 4(c) — Registration Rights Agreement, dated as of April 7, 2011, between Registrant and its Guarantors and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated herein by reference to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2011). 4(d) — Indenture, dated as of April 7, 2011 among Fifth & Pacific Companies, Inc., the Guarantors party thereto and U.S. Bank National Association as Trustee and Collateral Agent (incorporated herein by reference to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q filed on April 28, 2011). 4(d)(i) — Form of Exchange Notes (included in Exhibit 4(d)). 4(e) — First Supplemental Indenture, dated September 21, 2011, among Fifth & Pacific Companies, Inc., the Guarantors party thereto and U.S. Bank National Association as Trustee and Collateral Agent (incorporated herein by reference to Exhibit 4.2 to Registrant’s Form S-4 dated January 18, 2013). 4(f) — Second Supplemental Indenture, dated October 7, 2011, among Fifth & Pacific Companies, Inc., the Guarantors party thereto and U.S. Bank National Association as Trustee and Collateral Agent (incorporated herein by reference to Exhibit 4.3 to Registrant’s Form S-4 dated January 18, 2013).

73 Exhibit No. Description 4(g) — Third Supplemental Indenture, dated December 27, 2012, among Fifth & Pacific Companies, Inc., the Guarantors party thereto and U.S. Bank National Association as Trustee and Collateral Agent (incorporated herein by reference to Exhibit 4.4 to Registrant’s Form S-4 dated January 18, 2013). 4(h) — Pledge and Security Agreement, dated as of April 7, 2011, by and among Fifth & Pacific Companies, Inc., the other Grantors listed on the signature pages thereof and U.S. Bank National Association, as Collateral Agent (incorporated herein by reference to Exhibit 4.4 to Registrant’s Quarterly Report on Form 10-Q filed on April 28, 2011). 4(i) — Intercreditor Agreement, dated as of April 7, 2011, by and between JPMorgan Chase Bank, N.A., as U.S. Collateral Agent under the Credit Agreement, and U.S. Bank National Association, as trustee and Collateral Agent under the Indenture, acknowledged by Fifth & Pacific Companies and its domestic subsidiaries listed on the signature pages thereof (incorporated herein by reference to Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q filed on April 28, 2011). 10(a)*+ — Description of Fifth & Pacific Companies, Inc. 2012 Employee Incentive Plan. 10(b)+ — The Fifth & Pacific Companies 401(k) Savings and Profit Sharing Plan, as amended and restated (incorporated herein by reference to Exhibit 10(g) to Registrant’s 2002 Annual Report). 10(b)(i)+ — First Amendment to the Fifth & Pacific Companies 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(i) to the 2003 Annual Report). 10(b)(ii)+ — Second Amendment to the Fifth & Pacific Companies 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(ii) to the 2003 Annual Report). 10(b)(iii)+ — Third Amendment to the Fifth & Pacific Companies 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(iii) to the 2003 Annual Report). 10(b)(iv)+ — Trust Agreement (the ‘‘401(k) Trust Agreement’’) dated as of October 1, 2003 between Registrant and Fidelity Management Trust Company (incorporated herein by reference to Exhibit 10(e)(iv) to the 2003 Annual Report). 10(b)(v)+ — First Amendment to the 401(k) Trust Agreement (incorporated herein by reference to Exhibit 10(e)(v) to Registrant’s Annual Report on Form 10-K for the fiscal year ended January 1, 2005 (the ‘‘2004 Annual Report’’). 10(b)(vi)+ — Second Amendment to the 401(k) Trust Agreement (incorporated herein by reference to Exhibit 10(e)(vi) to the 2004 Annual Report). 10(c)+ — Liz Claiborne, Inc. Amended and Restated Outside Directors’ 1991 Stock Ownership Plan (the ‘‘Outside Directors’ 1991 Plan’’) (incorporated herein by reference to Exhibit 10(m) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 1995). 10(c)(i)+ — Amendment to the Outside Directors’ 1991 Plan, effective as of December 18, 2003 (incorporated herein by reference to Exhibit 10(f)(i) to the 2003 Annual Report). 10(c)(ii)+ — Form of Option Agreement under the Outside Directors’ 1991 Plan (incorporated herein by reference to Exhibit 10(m)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 1996). 10(c)(iii)+ — Liz Claiborne, Inc. Outside Directors’ Deferral Plan (incorporated herein by reference to Exhibit 10(f)(iii) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 [the ‘‘2005 Annual Report’’]). 10(d)+ — Liz Claiborne, Inc. 1992 Stock Incentive Plan (the ‘‘1992 Plan’’) (incorporated herein by reference to Exhibit 10(p) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 1991).

74 Exhibit No. Description 10(e)+ — Liz Claiborne, Inc. 2000 Stock Incentive Plan (the ‘‘2000 Plan’’) (incorporated herein by reference to Exhibit 4(e) to Registrant’s Form S-8 dated as of January 25, 2001). 10(e)(i)+ — Amendment No. 1 to the 2000 Plan (incorporated herein by reference to Exhibit 10(h)(i) to the 2003 Annual Report). 10(e)(ii)+ — Form of Option Grant Certificate under the 2000 Plan (incorporated herein by reference to Exhibit 10(z)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2000 (the ‘‘2000 Annual Report’’)). 10(e)(iii)+ — Form of 2006 Special Performance-Based Restricted Stock Confirmation under the 2000 Plan (incorporated herein by reference to Exhibit 10(h)(v) to the 2005 Annual Report). 10(e)(iv)+ — Form of Executive Severance Agreement (incorporated herein by reference to Exhibit 99.1 to Registrant’s Current Report on Form 8-K dated January 28, 2011). 10(e)(v) — Form of Special Retention Award Agreement under the Company’s 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K dated June 17, 2011) 10(f)+ — Liz Claiborne, Inc. 2002 Stock Incentive Plan (the ‘‘2002 Plan’’) (incorporated herein by reference to Exhibit 10(y)(i) to Registrant’s Quarterly Report on Form 10-Q for the period ended June 29, 2002 [the ‘‘2nd Quarter 2002 10-Q’’]). 10(f)(i)+ — Amendment No. 1 to the 2002 Plan (incorporated herein by reference to Exhibit 10(y)(iii) to the 2nd Quarter 2002 10-Q). 10(f)(ii)+ — Amendment No. 2 to the 2002 Plan (incorporated herein by reference to Exhibit 10(i)(ii) to the 2003 Annual Report). 10(f)(iii)+ — Amendment No. 3 to the 2002 Plan (incorporated herein by reference to Exhibit 10(i)(iii) to the 2003 Annual Report). 10(f)(iv)+ — Form of Option Grant Certificate under the 2002 Plan (incorporated herein by reference to Exhibit 10(y)(ii) to the 2nd Quarter 2002 10-Q). 10(f)(v)+ — Form of Restricted Share Agreement for Registrant’s ‘‘Growth Shares’’ program under the 2002 Plan (incorporated herein by reference to Exhibit 10(i)(v) to the 2003 Annual Report). 10(g)+ — Description of Supplemental Life Insurance Plans (incorporated herein by reference to Exhibit 10(q) to the 2000 Annual Report). 10(h)+ — Liz Claiborne, Inc. Supplemental Executive Retirement Plan effective as of January 1, 2002, constituting an amendment, restatement and consolidation of the Liz Claiborne, Inc. Supplemental Executive Retirement Plan and the Liz Claiborne, Inc. Bonus Deferral Plan (incorporated herein by reference to Exhibit 10(t)(i) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 29, 2001). 10(h)(i)+ — Liz Claiborne, Inc. 2005 Supplemental Executive Retirement Plan effective as of January 1, 2005, including amendments through December 31, 2008 (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 31, 2008). 10(h)(ii)+ — Trust Agreement, dated as of January 1, 2002, between Registrant and Wilmington Trust Company (incorporated herein by reference to Exhibit 10(t)(i) to the 2002 Annual Report). 10(i)+ — Liz Claiborne Inc. 2005 Stock Incentive Plan (the ‘‘2005 Plan’’) (incorporated herein by reference to Exhibit 10.1(b) to Registrant’s Current Report on Form 8-K dated May 26, 2005). 10(j)+ — Amendment No. 1 to the 2005 Plan (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated July 12, 2005).

75 Exhibit No. Description 10(k)+ — Form of Restricted Stock Grant Certificate under the 2005 Plan (incorporated herein by reference to Exhibit 10(a) to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2005). 10(l)+ — Form of Option Grant Confirmation under the 2005 Plan (incorporated herein by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K dated December 4, 2008). 10(m)+ — Liz Claiborne Inc. 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated May 23, 2011). 10(m)(i) — Form of Restricted Stock Unit Grant Certificate under the 2011 Plan (incorporated herein by reference to Exhibit 10.47 to Registrant’s Form S-4 dated January 18, 2013). 10(m)(ii) — Form of Option Grant Certificate under the 2011 Plan (incorporated herein by reference to Exhibit 10.46 to Registrant’s Form S-4 dated January 18, 2013). 10(m)(iii)* — Form of Performance Share Award Notice and Grant under the 2011 Plan. 10(n)+ — Liz Claiborne, Inc. Section 162(m) Long Term Performance Plan (incorporated herein by reference to Exhibit 10.1(a) to Registrant’s Current Report on Form 8-K dated May 26, 2005). 10(n)(i)+ — Form of Section 162(m) Long Term Performance Plan Selective Performance Award (incorporated herein by reference to Exhibit 10 to Registrant’s Quarterly Report on Form 10-Q for the period ended October 1, 2005). 10(n)(ii)+ — 2010 Section 162(m) Long Term Performance Plan (incorporated herein by reference to Exhibit D to Definitive Proxy Statement filed April 3, 2010 (the 2010 162(m) Plan). 10(n)(iii) — Form of Award for Liz Claiborne, Inc. 2010 Profitability Incentive Awards (incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the period ended October 2, 2010). 10(o)+ — Form of Executive Severance Agreement (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated April 3, 2012). 10(p)+ — Employment Agreement, by and between Registrant and William L. McComb, dated October 13, 2006 (incorporated herein by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K dated October 18, 2006). 10(p)(i)+ — Amended and Restated Employment Agreement, by and between Registrant and William L. McComb, dated December 24, 2008 (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 24, 2008). 10(p)(ii) — Severance Benefit Agreement, by and between Registrant and William L. McComb, dated July 14, 2009 (incorporated herein by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated July 15, 2009). 10(q)+ — Executive Terminations Benefits Agreement, by and between Registrant and William L. McComb, dated as of October 13, 2006 (incorporated herein by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated October 18, 2006). 10(q)(i)+ — Amended and Restated Executive Termination Benefits Agreement, by and between Registrant and William L. McComb, dated as of December 24, 2008 (incorporated herein by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 24, 2008). 10(q)(ii) — Executive Termination Benefits Agreement, by and between Registrant and William L. McComb, dated as of July 14, 2009 (incorporated herein by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated July 15, 2009).

76 Exhibit No. Description 10(r) — Purchase Agreement, dated June 18, 2009, for Registrant’s 6.0% Convertible Senior Notes due June 2014, by and among Registrant and J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Representatives of Several Initial Purchasers (incorporated herein by reference to Exhibit 10.5 to Registrant’s Quarterly Report on Form 10-Q for the period ended July 4, 2009). 10(r)(i) — Purchase Agreement, dated April 1, 2011, for Registrant’s 10.50% Senior Secured Notes due 2019, by and among Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated to Registrant’s issuance and sale of $205.0 million of Notes (incorporated herein by reference to Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2011). 10(r)(ii) — Purchase Agreement, dated April 5, 2011, for Registrant’s 10.50% Senior Secured Notes due 2019, by and among Registrant, the Guarantors and the Initial Purchasers relating to Registrant’s issuance and sale of $15.0 million of additional Notes. (incorporated herein by reference to Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2011). 10(r)(iii) — Purchase Agreement, dated June 6, 2012, by and among Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Representative of the several Initial Purchasers (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed for the period ended June 30, 2012). 10(s) Dealer Management Agreement, dated March 8, 2011, for Registrant’s 5.0% Notes due 2013, by and among Registrant, Merrill Lynch International and J.P. Morgan Securities Ltd. relating to Registrant’s offer to purchase up to A155.0 million of its outstanding A350.00 million 5.0% Notes for cash (incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2011). 10(t)ǵ — License Agreement, dated as of October 7, 2009, between Registrant, J.C. Penney Corporation, Inc. and J.C. Penney Company, Inc. (incorporated herein by reference to Exhibit 10(y) to Registrant’s Annual Report on Form 10-K/A for the fiscal year ended January 2, 2010). 10(u) — Purchase Agreement, dated October 12, 2011, between Registrant, J.C. Penney Corporation, Inc. and J.C. Penney Company, Inc. (incorporated herein by reference to Exhibit 10(y) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012). 10(v) — Amended and Restated Credit Agreement, dated January 12, 2009, among the Company, Mexx Europe B.V., and Liz Claiborne Canada Inc., as Borrowers, the several subsidiary guarantors party thereto, the several lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and U.S. Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, Bank of America, N.A. and Suntrust Bank, as Syndication Agents, Wachovia Bank, National Association as Documentation Agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers, and J.P. Morgan Securities Inc., Banc of America Securities LLC, and Wachovia Capital Markets, LLC, as Joint Bookrunners (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated January 14, 2009).

77 Exhibit No. Description 10(v)(i) — Second Amended and Restated Credit Agreement, dated May 6, 2010, among the Company, Mexx Europe B.V., Juicy Couture Europe Limited, and Liz Claiborne Canada Inc., as Borrowers, the several subsidiary guarantors party thereto, the several lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and U.S. Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, Bank of America, N.A., as Syndication Agent, General Electric Capital Corporation, as Documentation Agent, and J.P. Morgan Securities Inc., Banc of America Securities LLC, Wells Fargo Capital Finance, LLC and SunTrust Robinson Humphrey, Inc., as Joint Lead Arrangers and Joint Bookrunners (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated May 6, 2010). 10(v)(ii) — The First Amendment and Consent to the Second Amended and Restated Credit Agreement and Second Amendment to the US Pledge and Security Agreement, dated as of March 25, 2011, among Registrant, Liz Claiborne Canada, Inc., Mexx Europe B.V. and Juicy Couture Europe Limited, as Borrowers, the several lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and U.S. Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent (incorporated herein by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2011). 10(v)(iii) — Third Amendment and Consent, dated as of September 21, 2011, to the Second Amendment and Restated Credit Agreement, among Registrant, Mexx Europe B.V., Liz Claiborne Canada Inc., Juicy Couture Europe Limited, the several lenders thereto, JPMorgan Chase bank N.A., as Administrative Agent and US Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, JPMorgan Chase bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent. (incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the period ended October 1, 2011). 10(v)(iv) — Fourth Amendment to the Second Amended and Restated Credit Agreement, dated May 6, 2010, among the Company, the guarantors party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and U.S. Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, Bank of America, N.A., as Syndication Agent, General Electric Capital Corporation, as Documentation Agent, and J.P. Morgan Securities Inc., Banc of America Securities LLC, Wells Fargo Capital Finance, LLC and SunTrust Bank, as Documentation Agents (incorporated herein by reference to Exhibit 10(z)(iv) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011). 10(v)(v) — Fifth Amendment and Consent to the Second Amended and Restated Credit Agreement and Second Amendment to the US Pledge and Security Agreement, dated as of June 5, 2012, among Registrant, the Guarantors party thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and US Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, Bank of America, N.A., as Syndication Agent, and Wells Fargo Capital Finance, LLC, SunTrust Bank and General Electric Capital Corporation, as Documentation Agents (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended June 30, 2012).

78 Exhibit No. Description 12* — Statement Regarding Computation of Ratio of Earnings to Fixed Charges. 21* — List of Registrant’s Subsidiaries. 23* — Consent of Independent Registered Public Accounting Firm. 31(a)* — Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 31(b)* — Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 32(a)*# — Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. 32(b)*# — Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. 99* — Undertakings. 101.INS** XBRL Instance Document. 101.SCH** XBRL Taxonomy Extension Schema Document. 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB** XBRL Taxonomy Extension Label Linkbase Document. 101.PRE** Taxonomy Extension Presentation Linkbase Document.

+ Compensation plan or arrangement required to be noted as provided in Item 14(a)(3). * Filed herewith. ǵ Certain portions of this exhibit have been omitted in connection with the grant of confidential treatment therefore. # A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. ** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing, are deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under those sections.

79 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on February 21, 2013.

FIFTH & PACIFIC COMPANIES, INC. FIFTH & PACIFIC COMPANIES, INC

By: /s/ George M. Carrara By: /s/ Michael Rinaldo George M. Carrara, Michael Rinaldo, Chief Financial Officer Vice President — Corporate Controller (principal financial officer) and Chief Accounting Officer (principal accounting officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on February 21, 2013.

Signature Title

/s/ William L. McComb Chief Executive Officer and Director William L. McComb (principal executive officer)

/s/ Bernard W. Aronson Director Bernard W. Aronson

/s/ Lawrence Benjamin Director Lawrence Benjamin

/s/ Raul J. Fernandez Director Raul J. Fernandez

/s/ Kenneth B. Gilman Director Kenneth B. Gilman

/s/ Nancy J. Karch Director Nancy J. Karch

/s/ Kenneth P. Kopelman Director Kenneth P. Kopelman

/s/ Kay Koplovitz Director and Chairman of the Board Kay Koplovitz

/s/ Arthur C. Martinez Director Arthur C. Martinez

/s/ Doreen A. Toben Director Doreen A. Toben

80 FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Page Number MANAGEMENT’S REPORTS AND REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...... F-2 to F-5 FINANCIAL STATEMENTS Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011 ..... F-6 Consolidated Statements of Operations for the Three Fiscal Years Ended December 29, 2012 ...... F-7 Consolidated Statements of Comprehensive Loss for the Three Fiscal Years Ended December 29, 2012 ...... F-8 Consolidated Statements of Retained Earnings, Accumulated Comprehensive Loss and Changes in Capital Accounts for the Three Fiscal Years Ended December 29, 2012 ...... F-9 Consolidated Statements of Cash Flows for the Three Fiscal Years Ended December 29, 2012 ...... F-10 Notes to Consolidated Financial Statements ...... F-11 to F-66 SCHEDULE II — Valuation and Qualifying Accounts ...... F-67

F-1 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a — 15(f) under the Securities and Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Management has evaluated the effectiveness of the Company’s internal control over financial reporting as of December 29, 2012 based upon criteria for effective internal control over financial reporting described in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘‘COSO’’). Management has excluded from its assessment the internal control over financial reporting at Kate Spade Japan Co., Ltd., which was acquired on October 31, 2012 and whose financial statements constitute 4.7% of Total assets and 1.0% of Net sales as of and for the year ended December 29, 2012. Based on our evaluation, management determined that the Company’s internal control over financial reporting was effective as of December 29, 2012 based on the criteria in Internal Control — Integrated Framework issued by COSO. The Company’s internal control over financial reporting as of December 29, 2012 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report which appears herein.

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Fifth & Pacific Companies, Inc. is responsible for the preparation, objectivity and integrity of the consolidated financial statements and other information contained in this Annual Report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include some amounts that are based on management’s informed judgments and best estimates. Deloitte & Touche LLP, an independent registered public accounting firm, has audited these consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and has expressed herein their unqualified opinion on those financial statements. The Audit Committee of the Board of Directors, which oversees all of the Company’s financial reporting process on behalf of the Board of Directors, consists solely of independent directors, meets with the independent registered public accounting firm, internal auditors and management periodically to review their respective activities and the discharge of their respective responsibilities. Both the independent registered public accounting firm and the internal auditors have unrestricted access to the Audit Committee, with or without management, to discuss the scope and results of their audits and any recommendations regarding the system of internal controls. February 21, 2013

/s/ William L. McComb /s/ George M. Carrara William L. McComb George M. Carrara Chief Executive Officer Chief Financial Officer

F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Fifth & Pacific Companies, Inc. We have audited the internal control over financial reporting of Fifth & Pacific Companies, Inc. and subsidiaries (the ‘‘Company’’) as of December 29, 2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Kate Spade Japan Co., Ltd (‘‘KSJ’’), which was acquired on October 31, 2012 and whose financial statements constitute 5% of total assets and less than 1% of revenues of the consolidated financial statement amounts as of and for the year ended December 29, 2012. Accordingly, our audit did not include the internal control over financial reporting at KSJ. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2012, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

F-3 We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 29, 2012 of the Company and our report dated February 21, 2013 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

New York, New York February 21, 2013

F-4 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Fifth & Pacific Companies, Inc. We have audited the accompanying consolidated balance sheets of Fifth & Pacific Companies, Inc. and subsidiaries (the ‘‘Company’’) as of December 29, 2012 and December 31, 2011, and the related consolidated statements of operations, statements of comprehensive loss, statements of retained earnings, accumulated comprehensive loss and changes in capital accounts, and cash flows for each of the three years in the period ended December 29, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of Fifth & Pacific Companies, Inc. and subsidiaries as of December 29, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 29, 2012, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 29, 2012, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2013 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

New York, New York February 21, 2013

F-5 Fifth & Pacific Companies, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS

In thousands, except share data December 29, 2012 December 31, 2011 Assets Current Assets: Cash and cash equivalents ...... $ 59,402 $ 179,936 Accounts receivable — trade, net ...... 121,591 119,551 Inventories, net ...... 220,538 193,343 Deferred income taxes ...... 1,259 165 Other current assets ...... 49,466 58,750 Total current assets ...... 452,256 551,745 Property and Equipment, Net ...... 219,963 238,664 Goodwill ...... 60,223 1,519 Intangibles, Net ...... 131,350 117,354 Deferred Income Taxes ...... 65 — Other Assets ...... 38,666 40,722 Total Assets ...... $ 902,523 $ 950,004 Liabilities and Stockholders’ Deficit Current Liabilities: Short-term borrowings ...... $ 4,345 $ 4,476 Convertible Senior Notes ...... 18,287 60,270 Accounts payable ...... 174,705 144,060 Accrued expenses ...... 217,464 217,346 Income taxes payable ...... 932 805 Deferred income taxes ...... 116 16 Total current liabilities ...... 415,849 426,973 Long-Term Debt ...... 383,662 381,569 Other Non-Current Liabilities ...... 208,916 236,696 Deferred Income Taxes ...... 21,026 13,752 Commitments and Contingencies (Note 9) Stockholders’ Deficit: Preferred stock, $0.01 par value, authorized shares — 50,000,000, issued shares — none ...... —— Common stock, $1.00 par value, authorized shares — 250,000,000, issued shares — 176,437,234 ...... 176,437 176,437 Capital in excess of par value ...... 147,018 302,330 Retained earnings ...... 1,071,551 1,246,063 Accumulated other comprehensive loss ...... (10,074) (5,924) 1,384,932 1,718,906 Common stock in treasury, at cost — 59,851,190 and 75,592,899 shares ...... (1,511,862) (1,827,892) Total stockholders’ deficit ...... (126,930) (108,986) Total Liabilities and Stockholders’ Deficit ...... $ 902,523 $ 950,004

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-6 Fifth & Pacific Companies, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended December 29, 2012 December 31, 2011 January 1, 2011 In thousands, except per common share data Net Sales ...... $1,505,094 $1,518,721 $1,623,235 Cost of goods sold ...... 662,119 709,330 831,939 Gross Profit ...... 842,975 809,391 791,296 Selling, general & administrative expenses ...... 877,426 904,619 849,968 Impairment of intangible assets ...... — 1,024 2,594 Operating Loss ...... (34,451) (96,252) (61,266) Other (expense) income, net ...... (168) 282 26,689 Gain on acquisition of subsidiary ...... 40,065 —— Gain on sales of trademarks, net ...... — 286,979 — (Loss) gain on extinguishment of debt, net ...... (9,754) 5,157 — Interest expense, net ...... (51,684) (57,188) (55,741) (Loss) Income Before Provision (Benefit) for Income Taxes ...... (55,992) 138,978 (90,318) Provision (benefit) for income taxes ...... 3,464 (5,770) 9,044 (Loss) Income from Continuing Operations ...... (59,456) 144,748 (99,362) Discontinued operations, net of income taxes ...... (15,049) (316,435) (152,947) Net Loss ...... (74,505) (171,687) (252,309) Net loss attributable to the noncontrolling interest . . . ——(842) Net Loss Attributable to Fifth & Pacific Companies, Inc. . . $ (74,505) $ (171,687) $ (251,467) Earnings per Share, Basic: (Loss) Income from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. . . $ (0.54) $ 1.53 $ (1.05) Net Loss Attributable to Fifth & Pacific Companies, Inc...... $ (0.68) $ (1.81) $ (2.67) Earnings per Share, Diluted: (Loss) Income from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. . . $ (0.54) $ 1.28 $ (1.05) Net Loss Attributable to Fifth & Pacific Companies, Inc...... $ (0.68) $ (1.35) $ (2.67) Weighted Average Shares, Basic ...... 109,292 94,664 94,243 Weighted Average Shares, Diluted ...... 109,292 120,692 94,243

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-7 Fifth & Pacific Companies, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Fiscal Years Ended December 29, 2012 December 31, 2011 January 1, 2011 In thousands Net Loss ...... $(74,505) $(171,687) $(252,309) Other Comprehensive (Loss) Income, Net of Income Taxes: Translation adjustment, including Euro Notes in 2011 and 2010 and other instruments, net of income taxes of $0, $905 and $8,034, respectively ...... (3,990) (4,279) 177 Write-off of translation adjustment in connection with liquidation of foreign subsidiaries ...... — 62,166 — Unrealized losses on available-for-sale securities, net of income taxes of $0 ...... (160) (126) (55) Change in fair value of cash flow hedging derivatives, net of income taxes of $0, $(491) and $1,342, respectively ...... — 2,617 2,947 Comprehensive Loss ...... (78,655) (111,309) (249,240) Comprehensive loss attributable to the noncontrolling interest ...... ——842 Comprehensive Loss Attributable to Fifth & Pacific Companies, Inc...... $(78,655) $(111,309) $(248,398)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-8 — (95) (325) (263) 7,779 5,811 6,939 3,069 (1,367) (4,150) 60,378 (74,505) (108,986) (171,687) $(126,930) — — 304 — 24 (842) (252,309) (2,489) ——— ——— ——— (5,000) 42 Treasury Shares Treasury (75,120) (280) (61,375) 515 408,403 (5,434) — 980 (6,163,221) 54,821 — 18,309 — (14,197,106) 293,635 — 48,094 — (204,278) 2,619 — — (1,340,325) 19,776 — 6,205 ———— — 26 950 — ———— — 202 654 — ——— 3,069 (4,150) 60,378 Accumulated —— — —— —— — — —— —— — —— —— —— —— — —— —— —— (74,505) (171,687) (251,467) (18) 185 (853) (64) (211) 7,779 2,489 5,811 6,939 6,414 (3,791) (195) (1,240) (35) (10,642) (2,929) (36,512) (148,658) (96,883) Capital in Other —— —— —— —— — —— —— —— — — —— —— —— —— —— — —— — — —— —— —— —— —— — — —— —— — Common Stock Shares Amount Value Par Earnings Loss Shares Amount Interest Total Number of Excess of Retained Comprehensive Number of Noncontrolling 176,437,234 $176,437 $ 147,018 $1,071,551 $(10,074) 59,851,190 $(1,511,862) $ — 176,437,234 176,437 302,330 1,246,063 (5,924) 75,592,899 (1,827,892) — 176,437,234 176,437 331,808 1,417,785 (66,302) 81,892,589 (1,883,898) 2,489 (21,681) 176,437,234 $176,437 $ 319,326 $1,669,316 $(69,371) 81,488,984 $(1,879,160) $ 3,331 $ 219,879 CHANGES IN CAPITAL ACCOUNTS CHANGES IN CAPITAL Fifth & Pacific Companies, Inc. and Subsidiaries Inc. and Companies, Fifth & Pacific ...... The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. The accompanying Notes to Consolidated ...... share-based compensation share-based compensation share-based compensation CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, ACCUMULATED COMPREHENSIVE LOSS COMPREHENSIVE EARNINGS, ACCUMULATED AND OF RETAINED STATEMENTS CONSOLIDATED ...... withheld for taxes withheld for taxes withheld for taxes BALANCE, DECEMBER 29, 2012 Exchanges of Convertible Senior Notes, net Restricted shares issued, net of cancellations and shares shares issued, net Restricted Amortization — BALANCE, DECEMBER 31, 2011 Net loss Tendered subsidiary shares for noncontrolling interest subsidiary Tendered Exercise of stock options Other comprehensive loss, net of income taxes Exchange of Convertible Senior Notes, net Dividend equivalent units vested Amortization — Net loss Restricted shares issued, net of cancellations and shares shares issued, net Restricted BALANCE, JANUARY 1, 2011 BALANCE, JANUARY Other comprehensive income, net of income taxes Other comprehensive income, net of income Exercise of stock options Dividend equivalent units vested Amortization — Restricted shares issued, net of cancellations and shares shares issued, net of cancellations and Restricted Exercise of stock options Net loss Other comprehensive income, net of income taxes Other comprehensive In thousands, except share data In thousands, except share BALANCE, JANUARY 2, 2010 BALANCE, JANUARY

F-9 Fifth & Pacific Companies, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended In thousands December 29, 2012 December 31, 2011 January 1, 2011 Cash Flows from Operating Activities: Net loss ...... $(74,505) $(171,687) $(252,309) Adjustments to arrive at (loss) income from continuing operations . 15,049 316,435 152,947 (Loss) income from continuing operations ...... (59,456) 144,748 (99,362) Adjustments to reconcile (loss) income from continuing operations to net cash provided by (used in) operating activities: Depreciation and amortization ...... 74,411 85,969 96,152 Impairment of intangible assets ...... — 1,024 2,594 Loss on asset disposals and impairments, including streamlining initiatives, net ...... 45,695 34,238 19,617 Deferred income taxes ...... 1,583 (6,171) 1,954 Share-based compensation ...... 7,779 5,756 6,342 Foreign currency losses (gains), net ...... 1,532 3,565 (24,636) Gain on acquisition of subsidiary ...... (40,065) —— Gain on sales of trademarks, net ...... — (286,979) — Loss (gain) on extinguishment of debt, net ...... 9,754 (5,157) — Other, net ...... 1,199 (1,563) (950) Changes in assets and liabilities: Decrease in accounts receivable — trade, net ...... 2,857 44,508 18,284 (Increase) decrease in inventories, net ...... (12,492) 25,538 (11,609) (Increase) decrease in other current and non-current assets .... (1,357) 2,840 (1,318) Increase in accounts payable ...... 31,306 8,159 33,919 (Decrease) increase in accrued expenses and other non-current liabilities ...... (38,951) 60,944 (40,043) Decrease in income taxes receivable ...... 801 1,769 169,771 Net cash used in operating activities of discontinued operations . . . (13,238) (136,216) (20,074) Net cash provided by (used in) operating activities ...... 11,358 (17,028) 150,641 Cash Flows from Investing Activities: Proceeds from sales of property and equipment ...... ——8,257 Purchases of property and equipment ...... (82,792) (73,653) (56,737) Net proceeds from dispositions ...... — 309,717 — Payments for purchases of businesses ...... (41,027) — (5,000) Payments for in-store merchandise shops ...... (3,041) (3,459) (2,992) Investments in and advances to equity investees ...... (5,000) (2,506) (4,033) Other, net ...... 765 435 (683) Net cash provided by (used in) investing activities of discontinued operations ...... — 77,419 (26,111) Net cash (used in) provided by investing activities ...... (131,095) 307,953 (87,299) Cash Flows from Financing Activities: Short-term borrowings, net ...... ——(1,572) Proceeds from borrowings under revolving credit agreement ..... 247,097 651,507 506,940 Repayment of borrowings under revolving credit agreement ..... (247,097) (671,907) (525,427) Proceeds from issuance of Senior Secured Notes ...... 164,540 220,094 — Repayment of Euro Notes ...... (158,027) (309,159) — Principal payments under capital lease obligations ...... (4,476) (4,216) (5,642) Proceeds from exercise of stock options ...... 6,205 304 24 Payment of deferred financing fees ...... (7,140) (11,168) (14,665) Other, net ...... — (805) — Net cash used in financing activities of discontinued operations . . . — (2,663) (23,305) Net cash provided by (used in) financing activities ...... 1,102 (128,013) (63,647)

Effect of Exchange Rate Changes on Cash and Cash Equivalents . . (1,899) (5,690) 2,647 Net Change in Cash and Cash Equivalents ...... (120,534) 157,222 2,342 Cash and Cash Equivalents at Beginning of Year ...... 179,936 22,714 20,372 Cash and Cash Equivalents at End of Year ...... $ 59,402 $ 179,936 $ 22,714

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-10 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS AND BASIS OF PRESENTATION Fifth & Pacific Companies, Inc. and its wholly-owned and majority-owned subsidiaries (the ‘‘Company’’) are engaged primarily in the design and marketing of a broad range of apparel and accessories. The Company’s segment reporting structure reflects a brand-focused approach, designed to optimize the operational coordination and resource allocation of the Company’s businesses across multiple functional areas including specialty retail, retail outlets, concessions, wholesale apparel, wholesale non-apparel, e-commerce and licensing. The four reportable segments described below represent the Company’s brand-based 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 considered economic characteristics, as well as products, customers, sales growth potential and long-term profitability. As such, the Company reports its operations in four reportable segments, as follows: • JUICY COUTURE segment — consists of the specialty retail, outlet, concession, wholesale apparel, wholesale non-apparel (including accessories, jewelry and handbags), e-commerce and licensing operations of the JUICY COUTURE brand. • KATE SPADE segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of the KATE SPADE, KATE SPADE SATURDAY and JACK SPADE brands. • LUCKY BRAND segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of LUCKY BRAND. • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the DANA BUCHMAN(*), LIZ CLAIBORNE and MONET brands; (ii) the wholesale non-apparel operations of the TRIFARI brand and licensed KENSIE brand; (iii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iv) the licensed LIZ CLAIBORNE NEW YORK brand.

(*) Our agreement to supply DANA BUCHMAN branded jewelry to Kohl’s Corporation (‘‘Kohl’s) expires on October 11, 2013. The operations of the Company’s AXCESS brand concluded with Kohl’s in Fall 2011 and the operations of its former licensed DKNY↧ Jeans family of brands concluded in January 2012. Each was included in the results of the Adelington Design Group segment. On November 2, 2011, the Company sold the global trademark rights for the LIZ CLAIBORNE family of brands and the trademark rights in the US and Puerto Rico for the MONET brand to J.C. Penney Corporation, Inc. (‘‘JCPenney’’) for $267.5 million. The transaction provided for the sale of domestic and international trademark rights for LIZ CLAIBORNE, CLAIBORNE, LIZ, LIZ & CO., CONCEPTS BY CLAIBORNE, LC, ELISABETH, LIZGOLF, LIZSPORT, LIZ CLAIBORNE NEW YORK and LIZWEAR and the sale of the trademark rights in the US and Puerto Rico for MONET. The LIZ CLAIBORNE NEW YORK and LIZWEAR trademarks are licensed back royalty-free to the Company until July 2020. Further, the Company serves as the exclusive supplier of jewelry to JCPenney for the LIZ CLAIBORNE and MONET brands. In connection with this transaction, the Company entered into an agreement with JCPenney to develop exclusive brands for JCPenney, pursuant to which JCPenney paid the Company a $20.0 million refundable advance. The agreement terminated by its terms on February 1, 2013 and the $20.0 million advance was refunded to JCPenney on February 8, 2013, pursuant to the terms of the agreement.

F-11 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On October 31, 2011, the Company completed a transaction (the ‘‘MEXX Transaction’’) with affiliates of The Gores Group, LLC (‘‘Gores’’), pursuant to which the Company sold its global MEXX business to a company (‘‘NewCo’’) in which the Company indirectly held an 18.75% interest and affiliates of Gores held an 81.25% interest, for cash consideration, subject to working capital adjustments, of $85.0 million, including revolving credit facility debt that was assumed by NewCo. The operating loss associated with the Company’s former International-Based Direct Brands segment included allocated corporate expenses that could not be reported as discontinued operations and therefore were reported in the Company’s segment results. On October 24, 2011, the Company sold its KENSIE, KENSIE GIRL and MAC & JAC trademarks to an affiliate of Bluestar Alliance LLC (‘‘Bluestar’’). On October 11, 2011, the Company sold its DANA BUCHMAN trademark to Kohl’s. The aggregate cash proceeds of these two transactions were $39.8 million. The Company will serve as the exclusive supplier of jewelry to Kohl’s for the DANA BUCHMAN brand through October 11, 2013. The Company also entered an exclusive license agreement to produce and sell jewelry under the KENSIE brand name. In December 2011, the Company substantially completed the exit of its 277 MONET concessions in Europe. During the first quarter of 2011, the Company completed the closure of 82 LIZ CLAIBORNE concessions in Europe, which included the exit and transfer of title to property and equipment of certain locations in exchange for a nominal fee. In January 2011, the Company completed the closure of 87 LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico. In January 2010, the Company entered into an agreement with Laura’s Shoppe (Canada) Ltd. and Laura’s Shoppe (P.V.) Inc. (collectively, ‘‘Laura Canada’’), which included the assignment of 38 LIZ CLAIBORNE Canada store leases and transfer of title to certain property and equipment to Laura Canada in exchange for a net fee of approximately $7.9 million. The activities of the Company’s global MEXX business, its KENSIE, KENSIE GIRL and MAC & JAC brands, its closed LIZ CLAIBORNE outlet stores in the US and Puerto Rico, closed LIZ CLAIBORNE concessions in Europe and closed MONET concessions in Europe have been segregated and reported as discontinued operations for all periods presented. Certain amounts have been reclassified to conform to the current year presentation. The Company continues activities with the LIZ CLAIBORNE family of brands, MONET brand and DANA BUCHMAN brand and therefore the activities of those brands have not been presented as discontinued operations. Summarized financial data for the aforementioned brands that are classified as discontinued operations are provided in Note 3 — Discontinued Operations. On October 31, 2012, the Company acquired the 51.0% interest (‘‘KSJ Buyout’’) held by Sanei International Co., Ltd (‘‘Sanei’’) in Kate Spade Japan Co., Ltd. (‘‘KSJ’’). KSJ was a joint venture that was formed between Sanei and KATE SPADE in August 2009. KSJ operated the KATE SPADE and JACK SPADE businesses in Japan, and KATE SPADE will continue to operate such businesses in Japan through its Japanese subsidiary. The purchase price for the KSJ Buyout was $41.0 million, net of $0.4 million of cash acquired. On June 8, 1999, the Company acquired 85.0% of the equity of Lucky Brand Dungarees, Inc. (‘‘Lucky Brand’’), whose core business consists of the Lucky Brand Dungarees line of women and men’s denim- based sportswear. The total purchase price consisted of aggregate cash payments of $126.2 million and

F-12 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) additional payments made from 2005 to 2010 totaling $70.0 million for 12.7% of the remaining equity of Lucky Brand. The aggregate purchase price for the remaining 2.3% of the original shares consisted of the following two installments: (i) a payment made in 2008 of $15.7 million that was based on a multiple of Lucky Brand’s 2007 earnings and (ii) a 2011 payment based on a multiple of Lucky Brand’s 2010 earnings, net of the 2008 payment. Based on Lucky Brand’s 2010 earnings, no final payment was required, and LUCKY BRAND became a wholly-owned subsidiary in January 2011.

PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of the Company. All inter-company balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Estimates by their nature are based on judgments and available information. Therefore, actual results could materially differ from those estimates under different assumptions and conditions. Critical accounting policies are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods.

Revenue Recognition The Company recognizes revenue from its wholesale, retail and licensing operations. Revenue within the Company’s wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. The Company reviews and refines these estimates on a monthly basis based on current experience, trends and retailer performance. The Company’s historical estimates of these costs have not differed materially from actual results. Retail store revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. The Company does not recognize revenue for estimated gift card breakage. Licensing revenues, which amounted to $43.1 million, $80.7 million and $61.2 million during 2012, 2011 and 2010, respectively, are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees.

F-13 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income Taxes Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. The Company also assesses the likelihood of the realization of deferred tax assets and adjusts the carrying amount of these deferred tax assets by a valuation allowance to the extent the Company believes it more likely than not that all or a portion of the deferred tax assets will not be realized. Many factors are considered when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in the Company’s effective tax rate in future periods for various reasons including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is the Company’s policy to recognize the impact of an uncertain income tax position on its income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense.

Accounts Receivable — Trade, Net In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on an evaluation of historical and anticipated trends, the financial condition of the Company’s customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with the Company’s customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. The Company’s historical estimates of these costs have not differed materially from actual results.

Inventories, Net Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. The Company continually evaluates the composition of its inventories by assessing slow-turning, ongoing product as well as prior seasons’ fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of the Company’s individual product lines, the impact of market trends and economic conditions and the value of

F-14 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. The Company’s historical estimates of these costs and its provisions have not differed materially from actual results. In the first quarter of 2009, the Company entered into a ten-year, buying/sourcing agency agreement with Li & Fung Limited (‘‘Li & Fung’’) (see Note 9 — Commitments and Contingencies). Pursuant to the agreement, the Company received a payment of $75.0 million at closing, which was recorded within Accrued expenses and Other non-current liabilities on the accompanying Consolidated Balance Sheets. Under the terms of the buying/sourcing agency agreement, the Company is subject to minimum purchase requirements based on the value of inventory purchased each year under the agreement. The 2009 licensing agreements with JCPenney and QVC, Inc. (‘‘QVC’’) (see Note 17 — Additional Financial Information) resulted in the removal of buying/sourcing for a number of LIZ CLAIBORNE branded products sold under these licenses from the Li & Fung buying/sourcing agreement. As a result, the Company refunded $24.3 million of the closing payment received from Li & Fung during the second quarter of 2010. The 2011 sales of the KENSIE, KENSIE GIRL and MAC & JAC trademarks resulted in the removal of buying/sourcing for such products sold from the Li & Fung buying/sourcing arrangement. As a result, under its agreement with Li & Fung, the Company refunded $1.8 million of the closing payment received from Li & Fung in the second quarter of 2012. The Company will reclassify up to $4.9 million per contract year of the $48.9 million net payment as a reduction of inventory cost as inventory is purchased using the buying/sourcing agent, up to the minimum requirement for the initial term of the agreement and subsequently reflect a reduction of Cost of goods sold as the inventory is sold.

Intangibles, Net Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. The Company’s annual impairment test is performed as of the first day of the third fiscal quarter. The fair values of purchased intangible assets with indefinite lives, primarily trademarks and tradenames, are estimated and compared to their carrying values. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset’s value may be impaired. Impairment testing is based on a review of forecasted operating cash flows. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the Consolidated Statement of Operations. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Intangible merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years.

F-15 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As a result of the impairment analysis performed in connection with the Company’s purchased trademarks with indefinite lives, no impairment charges were recorded during 2012, 2011 or 2010. During 2011, the Company recorded non-cash impairment charges of $1.0 million primarily within its Adelington Design Group segment principally related to merchandising rights of its MONET and former licensed DKNY↧ Jeans brands due to decreased use of such intangible assets. During 2010, the Company recorded non-cash impairment charges of $2.6 million primarily within its Adelington Design Group segment principally related to merchandising rights of its LIZ CLAIBORNE and former licensed DKNY↧ Jeans brands due to decreased use of such intangible assets.

Accrued Expenses Accrued expenses for employee insurance, workers’ compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted.

Share-Based Compensation The Company recognizes compensation expense based on the fair value of employee share-based awards, including stock options and restricted stock, net of estimated forfeitures. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share-based awards expected to be forfeited prior to vesting. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.

OTHER SIGNIFICANT ACCOUNTING POLICIES Fair Value Measurements The Company applies the relevant accounting guidance on fair value measurements to (i) all financial instruments that are being measured and reported on a fair value basis; (ii) non-financial assets and liabilities measured and reported at fair value on a non-recurring basis; and (iii) disclosures of fair value of certain financial assets and liabilities. The following fair value hierarchy is used in selecting inputs for those instruments measured at fair value that distinguishes between assumptions based on market data (observable) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels. Level 1 — Quoted market prices in active markets for identical assets or liabilities; Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. Fair value measurement for the Company’s assets assumes the highest and best use (the use that generates the highest returns individually or as a group) for the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. This applies even if the intended use of the asset by the Company is different.

F-16 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair value measurement for the Company’s liabilities assumes that the liability is transferred to a market participant at the measurement date and that the nonperformance risk relating to the liability is the same before and after the transaction. Nonperformance risk refers to the risk that the obligation will not be fulfilled and includes the Company’s own credit risk. The Company has chosen not to elect the fair value measurement option for any instruments not required to be measured at fair value on a recurring basis.

Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at the date of purchase are classified as cash equivalents.

Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation and amortization. Buildings and building improvements are depreciated using the straight-line method over their estimated useful lives of 20 to 39 years. Machinery and equipment and furniture and fixtures are depreciated using the straight-line method over their estimated useful lives of three to seven years. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful lives of the assets. Improvements are capitalized and depreciated in accordance with the Company’s policies; costs for maintenance and repairs are expensed as incurred. Leased property meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. Amortization of capitalized leased assets is recorded on the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The Company recognizes a liability for the fair value of an asset retirement obligation (‘‘ARO’’) if the fair value can be reasonably estimated. The Company’s ARO’s are primarily associated with the removal and disposal of leasehold improvements at the end of a lease term when the Company is contractually obligated to restore a facility to a condition specified in the lease agreement. Amortization of ARO’s is recorded on a straight-line basis over the lease term. The Company capitalizes the costs of software developed or obtained for internal use. Capitalization of software developed or obtained for internal use commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis over five years, when such software is substantially ready for use. The Company evaluates the recoverability of property and equipment if circumstances indicate an impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows to be generated from such assets, on an undiscounted basis. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of the impaired assets is reduced to fair value through a charge to the Company’s Consolidated Statement of Operations. The Company recorded pretax charges of $39.7 million in 2012, $26.5 million in 2011 and $10.5 million in 2010 to reduce the carrying values of certain property and equipment to their estimated fair values (see Note 11 — Fair Value Measurements).

Goodwill Goodwill is not amortized but rather tested for impairment at least annually. The Company’s annual impairment test is performed as of the first day of the third fiscal quarter.

F-17 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A two-step impairment test is performed on goodwill. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the market approach, as is typically used for companies providing products where the value of such a company is more dependent on the ability to generate earnings than the value of the assets used in the production process. Under this approach, the Company estimates fair value based on market multiples of revenues and earnings for comparable companies. The Company also uses discounted future cash flow analyses to corroborate these fair value estimates. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit’s goodwill based upon the residual of the summed identified tangible and intangible assets. As a result of the impairment analysis performed in connection with the Company’s goodwill, no impairment charges were recorded during 2012 or 2011. During 2012, the Company recorded additional goodwill as a result of the KSJ acquisition (see Note 2 — Acquisition).

Operating Leases The Company leases office space, retail stores and distribution facilities. Many of these operating leases provide for tenant improvement allowances, rent increases and/or contingent rent provisions. Rental expense is recognized on a straight-line basis commencing with the possession date of the property, which is the earlier of the lease commencement date or the date when the Company takes possession of the property. Certain store leases include contingent rents that are based on a percentage of retail sales over stated thresholds. Tenant allowances are amortized on a straight-line basis over the life of the lease as a reduction of rent expense and are included in Selling, general & administrative expenses (‘‘SG&A’’). The Company leases retail stores under leases with terms that are typically five or ten years. The Company amortizes rental abatements, construction allowances and other rental concessions classified as deferred rent on a straight-line basis over the initial term of the lease. The initial lease term can include one renewal under limited circumstances if the renewal is reasonably assured, based on consideration of all of the following factors: (i) a written renewal at the Company’s option or an automatic renewal; (ii) there is no minimum sales requirement that could impair the Company’s ability to renew; (iii) failure to renew would subject the Company to a substantial penalty; and (iv) there is an established history of renewals in the format or location.

Derivative Instruments The Company’s derivative instruments are recorded in the Consolidated Balance Sheets as either an asset or liability and measured at their fair value. The changes in a derivative’s fair value are recognized either currently in earnings or Accumulated other comprehensive loss, depending on whether the derivative qualifies for hedge accounting treatment. The Company tests each derivative for effectiveness at inception of each hedge and at the end of each reporting period. From time to time, the Company uses foreign currency forward contracts and options for the purpose of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory

F-18 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) purchases. These instruments are designated as cash flow hedges. To the extent the hedges are highly effective, the effective portion of the changes in fair value are included in Accumulated other comprehensive loss, net of income taxes, with the corresponding asset or liability recorded in the Consolidated Balance Sheet. The ineffective portion of the cash flow hedge is recognized primarily as a component of Cost of goods sold in current period earnings. Amounts recorded in Accumulated other comprehensive loss are reflected in current period earnings when the hedged transaction affects earnings. If fluctuations in the relative value of the currencies involved in the hedging activities were to move dramatically, such movement could impact the Company’s results of operations. Prior to the sale of the global MEXX business, the Company hedged its net investment position in certain euro-denominated functional currency subsidiaries by borrowing directly in foreign currency and designating a portion of foreign currency debt as a hedge of net investments. The foreign currency transaction gain or loss recognized for the effective portion of a foreign currency denominated debt instrument that was designated as the hedging instrument in a net investment hedge was recorded as a translation adjustment. Occasionally, the Company purchases short-term foreign currency contracts to neutralize balance sheet and other expected exposures. These derivative instruments do not qualify as cash flow hedges and are recorded at fair value with all gains or losses recognized as a component of SG&A or Other (expense) income, net in current period earnings (see Note 12 — Derivative Instruments).

Foreign Currency Translation Assets and liabilities of non-US subsidiaries are translated at period-end exchange rates. Revenues and expenses for each month are translated using that month’s average exchange rate and then are combined for the period totals. Resulting translation adjustments are included in Accumulated other comprehensive loss. Gains and losses on translation of intercompany loans with foreign subsidiaries of a long-term investment nature are also included in this component of Stockholders’ deficit.

Foreign Currency Transactions Outstanding balances in foreign currencies are translated at the end of period exchange rates. The resulting exchange differences are recorded in the Consolidated Statements of Operations or Accumulated other comprehensive loss, as appropriate.

Cost of Goods Sold Cost of goods sold for wholesale operations includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, import costs, third party inspection activities, buying/ sourcing agent commissions and provisions for shrinkage. For retail operations, in-bound freight from the Company’s warehouse to its own retail stores is also included. Warehousing activities including receiving, storing, picking, packing and general warehousing charges are included in SG&A and, as such, the Company’s gross profit may not be comparable to others who may include these expenses as a component of Cost of goods sold.

Advertising, Promotion and Marketing All costs associated with advertising, promoting and marketing of Company products are expensed during the periods when the activities take place. Costs associated with cooperative advertising programs involving agreements with customers, whereby customers are required to provide documentary evidence of specific performance and when the amount of consideration paid by the Company for these services is at or

F-19 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) below fair value, are charged to SG&A. Costs associated with customer cooperative advertising allowances without specific performance guidelines are recorded as a reduction of sales. The Company incurred expenses of $60.5 million, $49.3 million and $53.4 million for advertising, marketing & promotion for all brands in 2012, 2011 and 2010, respectively.

Shipping and Handling Costs Shipping and handling costs, which are mostly comprised of warehousing activities, are included as a component of SG&A in the Consolidated Statements of Operations. In fiscal years 2012, 2011 and 2010, shipping and handling costs were $32.4 million, $38.8 million and $46.3 million, respectively.

Investments in Unconsolidated Subsidiaries The Company uses the equity method of accounting for its investments in and its proportionate share in earnings of affiliates that it does not control, but over which it exerts significant influence (see Note 20 — Related Party Transactions). The Company considers whether the fair value of its equity method investments has declined below carrying value whenever adverse events or changes in circumstances indicate the recorded value may not be recoverable. The Company uses the cost method of accounting for its investment in an affiliate that it does not control and over which the Company does not exert significant influence (see Note 20 — Related Party Transactions). The Company evaluates such investment for other-than-temporary impairment due to changes in circumstances and if such changes are likely to have a significant adverse effect which may indicate an impairment of the investment. If an impairment indicator is present, the Company estimates the fair value of the cost method investment to determine whether the investment is actually impaired. If the investment is impaired, the Company determines whether the impairment is considered other-than-temporary.

Cash Dividends and Common Stock Repurchases On December 16, 2008, the Board of Directors announced the suspension of the Company’s quarterly cash dividend indefinitely. The Company’s amended and restated revolving credit agreement currently restricts its ability to pay dividends and repurchase stock (see Note 10 — Debt and Lines of Credit).

Fiscal Year The Company’s fiscal year ends on the Saturday closest to December 31. The 2012, 2011 and 2010 fiscal years, which ended on December 29, 2012, December 31, 2011 and January 1, 2011, respectively, reflected 52-week periods.

Subsequent Events The Company’s policy is to evaluate all events or transactions that occur from the balance sheet date through the date of the issuance of its financial statements. The Company has evaluated events or transactions that occurred from the balance sheet date through the date the Company issued these financial statements (see Note 25 — Subsequent Events).

F-20 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In May 2011, new accounting guidance on fair value measurements was issued, which requires updates to fair value measurement disclosures to conform US GAAP and International Financial Reporting Standards. This guidance includes additional disclosure requirements about Level 3 fair value measurements and is effective for interim and annual periods beginning after December 15, 2011. The adoption of the new guidance did not affect the Company’s financial position, results of operations or cash flows, but required additional disclosure (see Note 11 — Fair Value Measurements).

NOTE 2: ACQUISITION On October 31, 2012, a subsidiary of the Company acquired the remaining 51.0% interest in KSJ held by Sanei. KSJ was a joint venture that was formed between Sanei and KATE SPADE in August 2009. KSJ operated the KATE SPADE, KATE SPADE SATURDAY and JACK SPADE businesses in Japan, and the Company will continue to operate such businesses in Japan through its Japanese subsidiary. The purchase price for the KSJ, including post-closing adjustments was 3.308 billion yen or $41.4 million. As of December 29, 2012, KSJ distributes its products mainly through 54 points of sale, including owned retail stores, concessions and e-commerce. These direct-to-consumer channels made up over 90% of KSJ’s total net sales for the twelve months ending August 31, 2012. The Company intends to realize synergies from the KSJ Buyout by leveraging its global retail expertise with KSJ’s continued growth and its strategic marketing and sales positions in the rest of Asia. Prior to obtaining control on October 31, 2012, the Company accounted for the investment in KSJ under the equity method. Upon obtaining control, the transaction was accounted for as an ‘‘acquisition achieved in stages,’’ in accordance with US GAAP. Accordingly, the Company re-measured the previously held equity interest in KSJ and adjusted it to fair value utilizing an income approach based on expected future after tax cash flows of KSJ discounted to reflect risk associated with those cash flows and a market approach based on earnings and revenue multiples that other purchasers in the market would have paid for that business. The fair value of the Company’s equity interest at the acquisition date was $47.2 million. The difference between the fair value of the Company’s ownership in KSJ and the Company’s carrying value of its investment of $7.1 million resulted in the recognition of a gain of $40.1 million. The gain was included on the accompanying Consolidated Statement of Operations as Gain on acquisition of subsidiary for the year ended December 29, 2012. The results of operations for KSJ have been included in the Company’s consolidated results since October 31, 2012. KSJ generated $16.0 million of sales and $0.7 million of net income since the acquisition date. Transaction costs related to the acquisition were not significant. The allocation of the purchase price to the assets acquired and liabilities assumed is based upon the estimated fair values at the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets is reflected as goodwill. Accordingly, the Company recorded $63.4 million of goodwill, which is reflected in the KATE SPADE reporting segment. None of the recorded goodwill is deductible for income tax purposes.

F-21 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of the acquisition date:

In thousands Assets acquired: Current assets ...... $ 23,721 Property and equipment, net ...... 5,608 Goodwill and intangibles, net ...... 79,374 Other assets ...... 6,776 Total assets acquired ...... $115,479 Liabilities assumed: Current liabilities ...... $ 8,834 Non-current liabilities ...... 17,629 Total liabilities assumed ...... $ 26,463

The following table presents details of the acquired intangible assets:

In thousands Useful Life Estimated Fair Value Reacquired distribution rights ...... 3 years $14,900 Retail customer list ...... 3 years 1,100 The following unaudited pro forma financial information for the years ended December 29, 2012 and December 31, 2011 reflects the results of continuing operations of the Company as if the KSJ Buyout had been completed on January 1, 2012 and January 2, 2011, respectively. Pro forma adjustments have been made for changes in depreciation and amortization expenses related to the valuation of the acquired tangible and intangible assets at fair value, the elimination of non-recurring items and the addition of incremental costs related to debt used to finance the acquisition.

Fiscal Years Ended In thousands, except per share amounts December 29, 2012 December 31, 2011 Net sales ...... $1,577,463 $1,596,578 Gross profit ...... 891,233 862,285 Operating loss ...... (30,616) (87,707) (Loss) income before provision (benefit) for income taxes . (52,595) 147,369 (Loss) income from continuing operations ...... (57,605) 149,419 Diluted (loss) income per share from continuing operations attributable to Fifth & Pacific Companies, Inc.(a) ...... (0.53) 1.24

(a) Convertible Notes interest expense of $9.2 million was excluded from the computation of 2011 diluted income per share. The unaudited pro forma financial information is presented for information purposes only. It is not necessarily indicative of what the Company’s financial position or results of operations actually would have been if the Company completed the acquisition at the dates indicated, nor does it purport to project the Company’s future financial position or operating results.

NOTE 3: DISCONTINUED OPERATIONS The Company has completed various disposal transactions including: (i) the closure of the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico in January 2011; (ii) the closure of its LIZ CLAIBORNE concessions in Europe in the first quarter of 2011; (iii) the closure of its MONET

F-22 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) concessions in Europe in December 2011; (iv) the sale of an 81.25% interest in the global MEXX business in October 2011; and (v) the sale of the KENSIE, KENSIE GIRL and MAC & JAC trademarks in October 2011. The Company recorded pretax charges of $11.9 million, $236.1 million and $30.9 million ($11.9 million, $222.2 million and $27.5 million, after tax) in 2012, 2011 and 2010, respectively, to reflect the estimated difference between the carrying value of the net assets disposed and their estimated fair value, less costs to dispose, including transaction costs. Summarized results of discontinued operations are as follows: Fiscal Years Ended In thousands December 29, 2012 December 31, 2011 January 1, 2011 Net sales ...... $ 1,621 $ 692,258 $ 952,415 Loss before (benefit) provision for income taxes ...... $ (4,971) $ (90,772) $(127,245) (Benefit) provision for income taxes .... (1,852) 3,417 (1,786) Loss from discontinued operations, net of income taxes ...... $ (3,119) $ (94,189) $(125,459) Loss on disposal of discontinued operations, net of income taxes ...... $(11,930) $(222,246) $ (27,488)

For the years ended December 29, 2012, December 31, 2011 and January 1, 2011, the Company recorded charges of $5.2 million, $40.7 million and $31.1 million, respectively, related to its streamlining initiatives within Discontinued operations, net of income taxes.

NOTE 4: INVENTORIES, NET Inventories, net consisted of the following: In thousands December 29, 2012 December 31, 2011 Raw materials and work in process ...... $ 299 $ 230 Finished goods ...... 220,239 193,113 Total ...... $220,538 $193,343

NOTE 5: PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following: In thousands December 29, 2012 December 31, 2011 Land and buildings(a) ...... $ 45,988 $ 72,009 Machinery and equipment ...... 233,742 233,540 Furniture and fixtures ...... 131,181 127,913 Leasehold improvements ...... 258,527 249,734 669,438 683,196 Less: Accumulated depreciation and amortization ...... 449,475 444,532 Total property and equipment, net ...... $219,963 $238,664

(a) The decrease in the balance compared to December 31, 2011 primarily reflected aggregate non-cash impairment charges of $26.3 million related to the Company’s Ohio distribution center and New Jersey corporate office.

F-23 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Depreciation and amortization expense on property and equipment for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, was $58.7 million, $66.0 million and $65.6 million, respectively, which included depreciation for property and equipment under capital leases of $2.9 million, $3.8 million and $4.8 million, respectively. Machinery and equipment under capital leases was $22.6 million as of December 29, 2012 and December 31, 2011.

NOTE 6: GOODWILL AND INTANGIBLES, NET The following tables disclose the carrying value of all intangible assets:

Weighted Average Amortization In thousands Period December 29, 2012 December 31, 2011 Amortized intangible assets: Gross carrying amount: Owned trademarks ...... 3 years $ 1,479 $ 1,479 Customer relationships ...... 12 years 7,457 9,478 Merchandising rights ...... 4 years 19,174 17,742 Reacquired rights(a) ...... 3 years 13,797 — Other ...... 4 years 2,322 2,322 Subtotal ...... 5 years 44,229 31,021 Accumulated amortization: Owned trademarks ...... (1,356) (1,112) Customer relationships ...... (3,138) (5,426) Merchandising rights ...... (13,131) (12,837) Reacquired rights ...... (812) — Other ...... (1,942) (1,792) Subtotal ...... (20,379) (21,167) Net: Owned trademarks ...... 123 367 Customer relationships ...... 4,319 4,052 Merchandising rights ...... 6,043 4,905 Reacquired rights ...... 12,985 — Other ...... 380 530 Total amortized intangible assets, net .... 23,850 9,854 Unamortized intangible assets: Owned trademarks ...... 107,500 107,500 Total intangible assets ...... $131,350 $117,354 Goodwill(a) ...... $ 60,223 $ 1,519

(a) The increase in the balance compared to December 31, 2011 reflected the KSJ Buyout (see Note 2 — Acquisition). Amortization expense of intangible assets was $4.1 million, $4.4 million and $5.6 million for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively.

F-24 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The estimated amortization expense of intangible assets for the next five years is as follows:

Amortization Expense Fiscal Year (In millions) 2013 ...... $8.0 2014 ...... 7.4 2015 ...... 5.7 2016 ...... 1.0 2017 ...... 0.5 The changes in carrying amount of goodwill for the years ended December 29, 2012 and December 31, 2011 were as follows:

Adelington Design In thousands Group KATE SPADE Total Balance as of January 1, 2011 ...... $1,408 $ — $ 1,408 Additional purchase price — Mac & Jac . . 179 — 179 Translation adjustment ...... (68) — (68) Balance as of December 31, 2011 ...... 1,519 — 1,519 KSJ Buyout ...... — 63,371 63,371 Translation adjustment ...... 35 (4,702) (4,667) Balance as of December 29, 2012 ...... $1,554 $58,669 $60,223

In the second quarter of 2011, the Company paid $1.6 million of additional purchase price related to its contingent earn-out obligation to the former owners of MAC & JAC.

NOTE 7: ACCRUED EXPENSES Accrued expenses consisted of the following:

In thousands December 29, 2012 December 31, 2011 Lease obligations ...... $ 38,984 $ 35,065 Payroll, bonuses and other employment related obligations 31,481 28,221 Streamlining initiatives ...... 20,050 43,087 Refund to JCPenney ...... 20,000 — Taxes, other than taxes on income ...... 19,313 19,753 Advertising ...... 10,971 7,731 Interest ...... 10,242 9,238 Deferred income(a) ...... 9,970 10,949 Employee benefits ...... 9,617 11,314 Insurance related ...... 9,565 10,011 Other ...... 37,271 41,977 Total ...... $217,464 $217,346

(a) The long-term portion of deferred income of $74.5 million at December 31, 2011 is included within Other non-current liabilities on the accompanying Consolidated Balance Sheets.

F-25 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 8: INCOME TAXES (Loss) income before provision (benefit) for income taxes consisted of the following:

Fiscal Years Ended In thousands December 29, 2012 December 31, 2011 January 1, 2011 United States ...... $(50,907) $139,319 $(82,993) International ...... (5,085) (341) (7,325) Total ...... $(55,992) $138,978 $(90,318)

The provision (benefit) for income taxes was as follows:

Fiscal Years Ended In thousands December 29, 2012 December 31, 2011 January 1, 2011 Current: Federal ...... $ 3,462 $ 1,981 $ 4,687 Foreign ...... 1,255 1,497 873 State and local ...... (2,836) (3,077) (346) Total Current ...... 1,881 401 5,214 Deferred: Federal ...... 2,375 (4,107) 2,881 Foreign ...... (691) (1,634) 172 State and local ...... (101) (430) 777 Total Deferred ...... 1,583 (6,171) 3,830 $ 3,464 $ (5,770) $ 9,044

Fifth & Pacific Companies, Inc. and its US subsidiaries file a consolidated federal income tax return. Deferred income tax assets and liabilities represent the tax effects of revenues, costs and expenses, which are recognized for tax purposes in different periods from those used for financial statement purposes. The effective income tax rate differed from the statutory federal income tax rate as follows:

Fiscal Years Ended December 29, 2012 December 31, 2011 January 1, 2011 Federal tax at statutory rate ...... 35.0% 35.0% 35.0% State and local income taxes, net of federal benefit ...... 5.2 (2.4) (0.5) Impairments of intangible and other assets . — (42.2) — Sales of interest in subsidiaries and other assets ...... — (49.9) — Increase in valuation allowance ...... (52.3) 52.1 (39.7) Tax on unrecognized tax benefits ...... (5.9) 1.4 (2.2) Rate differential on foreign income ...... (5.3) 1.0 (4.0) Gain on acquisition of subsidiary ...... 25.0 —— Conversion of debt to equity ...... (2.9) —— Indefinite-lived intangibles ...... (4.2) — (3.9) Other, net ...... (0.8) 0.8 5.3 (6.2)% (4.2)% (10.0)%

F-26 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of net deferred taxes arising from temporary differences were as follows:

In thousands December 29, 2012 December 31, 2011 Deferred tax assets: Inventory valuation ...... $ 3,920 $ 4,313 Streamlining initiatives ...... 14,189 15,961 Deferred compensation ...... 11,183 2,274 Nondeductible accruals ...... 72,908 73,155 Share-based compensation ...... 7,235 15,603 Net operating loss carryforward ...... 266,774 222,239 Tax credit carryforward ...... 53,507 27,940 Goodwill ...... 46,935 54,519 Consolidated partnerships ...... — 5,250 Noncontrolling interest ...... 73,659 73,863 Other ...... 24,695 22,459 Total deferred tax assets ...... 575,005 517,576 Deferred tax liabilities: Unrealized gains ...... (1,667) (297) Trademarks and other intangibles ...... (24,141) (15,394) Property and equipment ...... (21,778) (20,743) Other ...... (1,672) — Total deferred tax liabilities ...... (49,258) (36,434) Less: Valuation allowance ...... (545,565) (494,745) Net deferred tax liability ...... $ (19,818) $ (13,603)

As of December 29, 2012, the Company and its domestic subsidiaries had net operating loss and foreign tax credit carryforwards of $554.8 million (federal tax effected amount of $194.2) and $53.5 million, respectively, for federal income tax purposes that may be used to reduce future federal taxable income. The net operating loss and foreign tax credit carryforwards for federal income tax purposes will begin to expire in 2029 and 2016, respectively. As of December 29, 2012, the Company and certain of its domestic subsidiaries recorded a $60.9 million deferred tax asset related to net operating loss carryforwards for state income tax purposes that may be used to reduce future state taxable income. The net operating loss carryforwards for state income tax purposes begin to expire in 2013. As of December 29, 2012, certain of the Company’s foreign subsidiaries recorded a $11.7 million deferred tax asset related to net operating loss carryforwards for foreign income tax purposes that may be used to reduce future foreign taxable income. The net operating loss carryforwards for foreign income tax purposes begin to expire in 2015. As of December 29, 2012, the Company had total deferred tax assets related to net operating loss carryforwards of $266.8 million, of which $194.2 million, $60.9 million and $11.7 million were attributable to federal, domestic state and local, and foreign subsidiaries, respectively. As of December 29, 2012, the Company and its subsidiaries recorded valuation allowances in the amount of $545.6 million against its net operating loss and other deferred tax assets due to of its history of pretax losses and inability to carry back tax losses or credits for refunds. This represents a total increase in the valuation allowance of $50.8 million compared to the balance at December 31, 2011.

F-27 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has not provided for deferred taxes on the outside basis difference in its investments in foreign subsidiaries that are essentially permanent in duration. As of December 29, 2012, there were no unremitted earnings. It is not practicable to determine the amount of income taxes that would be payable in the event such outside basis differences reverse or unremitted earnings are repatriated. Changes in the amounts of unrecognized tax benefits are summarized as follows:

Fiscal Years Ended December 29, 2012 December 31, 2011 January 1, 2011 In thousands Balance as of beginning of period ...... $103,982 $107,932 $ 83,574 Increases from prior period positions ..... 535 565 22,835 Decreases from prior period positions .... (630) (5,458) (979) Increases from current period positions . . . 37 973 3,212 Decreases relating to settlements with taxing authorities ...... (17,765) — (30) Reduction due to the lapse of the applicable statute of limitations ...... (160) (30) (680) Balance as of end of period(a) ...... $ 85,999 $103,982 $107,932

(a) As of December 29, 2012 and December 31, 2011, liabilities associated with the amounts are included within Income taxes payable and Other non-current liabilities on the accompanying Consolidated Balance Sheets. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. For the year ended December 29, 2012, the Company increased its accruals for interest and penalties by $3.3 million and $0.2 million, respectively. For the year ended December 31, 2011, the Company increased its accrual for interest by $1.2 million and decreased its accrual for penalties $0.1 million. For the year ended January 1, 2011, the Company increased its accruals for interest and penalties by $2.3 million and $1.5 million, respectively. At December 29, 2012 and December 31, 2011, the accrual for interest and penalties was $9.9 million and $6.6 million and $2.6 million and $2.4 million, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $86.0 million. The Company expects to reduce the liability for unrecognized tax benefits by an amount between $1.5 million and $3.2 million within the next 12 months due to either settlement or the expiration of the statute of limitations. The Company files tax returns in the US Federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which the Company has unrecognized tax benefits, is audited and finally resolved. While it is difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that the unrecognized tax benefits reflect the most likely outcome. These unrecognized tax benefits, as well as the related interest, are adjusted in light of changing facts and circumstances. Favorable resolution would be recognized as a reduction to the effective tax rate in the period of resolution. The number of years with open tax audits varies depending upon the tax jurisdiction. The major tax jurisdictions include the US, Japan, United Kingdom, Canada and Brazil. The Company is no longer subject to US Federal examination by the Internal Revenue Service (‘‘IRS’’) for the years before 2006 and, with a few exceptions, this applies to tax examinations by state authorities for the years before 2007. As a result of a US Federal tax law change extending the carryback period from two to five years and the Company’s carryback of its 2009 tax loss to 2004 and 2005, the IRS has the ability to re-open its past examinations of 2004 and 2005.

F-28 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9: COMMITMENTS AND CONTINGENCIES Leases The Company leases office, showroom, warehouse/distribution, retail space and computers and other equipment under various non-cancelable operating lease agreements, which extend through 2024. Rental expense for 2012, 2011 and 2010 was $132.2 million, $128.2 million and $127.4 million, respectively, excluding certain costs such as real estate taxes and common area maintenance. At December 29, 2012, minimum aggregate rental commitments under non-cancelable operating and capital leases were as follows:

Fiscal Year 2013 2014 2015 2016 2017 Thereafter Total In millions Operating leases ...... $104.2 $103.1 $97.5 $86.0 $73.5 $201.4 $665.7 Capital leases ...... 4.5 ———— — 4.5 Certain rental commitments have renewal options extending through the fiscal year 2024. Some of these renewals are subject to adjustments in future periods. Many of the leases call for additional charges, some of which are based upon various escalations, and, in the case of retail leases, the gross sales of the individual stores above base levels. Future rental commitments for leases have not been reduced by minimum non-cancelable sublease rentals aggregating $17.3 million. In connection with the disposition of the LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain MEXX Canada retail stores (see Note 3 — Discontinued Operations), an aggregate of 153 store leases were assigned to third parties, for which the Company remains secondarily liable for the remaining obligations on 130 such leases. As of December 29, 2012, the future aggregate payments under these leases amounted to $190.0 million and extended to various dates through 2025.

Buying/Sourcing During the first quarter of 2009, the Company entered into an agreement with Hong Kong-based, global consumer goods exporter Li & Fung, whereby Li & Fung was appointed as the Company’s buying/ sourcing agent for all of the Company’s brands and products (other than jewelry) and the Company received a payment of $75.0 million at closing and an additional payment of $8.0 million in the second quarter of 2009 to offset specific, incremental, identifiable expenses associated with the transaction. The Company’s agreement with Li & Fung provides for a refund of a portion of the closing payment in certain limited circumstances, including a change of control of the Company, the divestiture of any current brand, or certain termination events. The Company is also obligated to use Li & Fung as its buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. The 2009 licensing arrangements with JCPenney in the US and Puerto Rico and QVC resulted in the removal of buying/sourcing for a number of LIZ CLAIBORNE branded products sold under these licenses from the Li & Fung buying/sourcing arrangement. As a result, under its agreement with Li & Fung, the Company refunded $24.3 million of the closing payment received from Li & Fung in the second quarter of 2010. The 2011 sales of the KENSIE, KENSIE GIRL and MAC & JAC trademarks resulted in the removal of buying/sourcing for such products sold from the Li & Fung buying/sourcing arrangement. As a result, under its agreement with Li & Fung, the Company refunded $1.8 million of the closing payment received from Li & Fung in the second quarter of 2012. In addition, the Company’s agreement with Li & Fung is not exclusive; however, the Company is required to source a specified percentage of product purchases from Li & Fung.

F-29 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other No single customer accounted for 10.0% of net sales in 2012. As of December 29, 2012, Nordstrom’s Inc., and The TJX Companies Inc., each accounted for greater than 10.0% of total accounts receivable, with a combined total of 29.7%. In the second quarter of 2011, the Company initiated actions to close its Ohio distribution center, which was expected to result in the termination of all or a significant portion of its union employees (see Note 13 — Streamlining Initiatives and Note 25 — Subsequent Events). During the third quarter of 2011, the Company ceased contributing to a union-sponsored multi-employer defined benefit pension plan (the ‘‘Fund’’), which is regulated by the Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’). Under ERISA, cessation of employer contributions to a multi-employer defined benefit pension plan is likely to trigger an obligation by such employer for a ‘‘withdrawal liability’’ to such plan, with the amount of such withdrawal liability representing the portion of the plan’s underfunding allocable to the withdrawing employer. The Company incurred such a liability in the second quarter of 2011 and recorded a $17.6 million charge to SG&A related to its estimate of the withdrawal liability. Under applicable statutory rules, this withdrawal liability is payable over a period of time, and the Company previously estimated that it would pay such liability in equal quarterly installments over a period of eight to 12 years, with payments commencing in 2012. In February 2012, the Company was notified by the Fund that the Fund calculated the total withdrawal liability to be $19.1 million, a difference of approximately $1.5 million, and that 17 quarterly payments of $1.2 million would commence on March 1, 2012, and continue for four years, with a final payment of $1.0 million on June 1, 2016. As of December 29, 2012, the accrued withdrawal liability was $14.3 million, which was included in Accrued expenses and Other non-current liabilities on the accompanying Consolidated Balance Sheet. In June 2011, the Company entered into an agreement with Globalluxe Kate Spade HK Limited (‘‘Globalluxe’’) to, among other things, reacquire the existing KATE SPADE businesses in Southeast Asia from Globalluxe (see Note 20 — Related Party Transactions). On June 27, 2012, the Company received notification of Gores’ calculation of the working capital adjustments related to the MEXX Transaction, pursuant to the terms of the agreement. The Company has disputed such calculation and has notified Gores that the adjustment should result instead in a payment to the Company. The Company does not expect that any amount that may be payable to Gores related to such adjustments will have a material adverse effect on its financial position, results of operations, liquidity or cash flows. At December 29, 2012, the Company had entered into short-term commitments for the purchase of raw materials and for the production of finished goods totaling $205.1 million. The Company is a party to several pending legal proceedings and claims. Although the outcome of any such actions cannot be determined with certainty, management is of the opinion that the final outcome of any of these actions should not have a material adverse effect on the Company’s financial position, results of operations, liquidity or cash flows (see Note 22 — Legal Proceedings).

F-30 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 10: DEBT AND LINES OF CREDIT Long-term debt consisted of the following:

December 29, 2012 December 31, 2011 In thousands 5.0% Euro Notes, due July 2013(a) ...... $ — $157,139 6.0% Convertible Senior Notes, due June 2014(b) ...... 18,287 60,270 10.5% Senior Secured Notes, due April 2019(c) ...... 383,662 220,085 Capital lease obligations ...... 4,345 8,821 Total debt ...... 406,294 446,315 Less: Short-term borrowings(d) ...... 4,345 4,476 Convertible Notes(e) ...... 18,287 60,270 Long-term debt ...... $383,662 $381,569

(a) The change in the balance of these euro-denominated notes reflected the repurchase of the remaining Euro Notes since December 31, 2011. (b) The balance at December 29, 2012 and December 31, 2011 represented principal of $19.9 million and $69.2 million, respectively, and an unamortized debt discount of $1.6 million and $8.9 million, respectively. (c) The increase in the balance reflected the issuance of $152.0 million aggregate principal amount of Senior Secured Notes (the ‘‘Additional Notes’’) at 108.25% of par value on June 8, 2012. (d) At December 29, 2012 and December 31, 2011, the balance consisted of obligations under capital leases. (e) The Convertible Notes were reflected as a current liability since they were convertible at December 29, 2012 and December 31, 2011.

Euro Notes On July 6, 2006, the Company completed the issuance of the 350.0 million euro (or $446.9 million based on the exchange rate in effect on such date) Euro Notes. Prior to the sale of an 81.25% interest in the global MEXX business in October 2011 (See Note 1 — Basis of Presentation and Significant Accounting Policies), a portion of the Euro Notes was designated as a hedge of the Company’s net investment in certain of the Company’s euro-denominated functional currency subsidiaries (see Note 12 — Derivative Instruments). On April 8, 2011, the Company completed a tender offer (the ‘‘Tender Offer’’), whereby it repurchased 128.5 million euro aggregate principal amount of the Euro Notes for total early tender and consent consideration of 123.1 million euro, plus accrued interest. The Company recognized a $6.5 million pretax gain on the extinguishment of debt in the second quarter of 2011. On December 15, 2011, the Company repurchased 100.0 million euro aggregate principal amount of the Euro Notes in a privately- negotiated transaction for total consideration of 100.5 million euro, plus accrued interest and recognized a $0.8 million pretax loss on extinguishment of debt in the fourth quarter of 2011. In the first quarter of 2012, in a privately-negotiated transaction, the Company repurchased 40.0 million euro aggregate principal amount of the Euro Notes for total consideration of 40.6 million euro, plus accrued interest. The Company recognized a $0.8 million pretax loss on the extinguishment of debt in the first quarter of 2012.

F-31 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On June 6, 2012, in a privately-negotiated transaction, the Company repurchased 28.6 million euro aggregate principal amount of the Euro Notes for total consideration of 29.6 million euro, plus accrued interest. The Company recognized a $1.3 million pretax loss on the extinguishment of debt in the second quarter of 2012. On July 12, 2012, the Company completed the optional redemption of the remaining 52.9 million euro aggregate principal amount of Euro Notes for 55.4 million euro, plus accrued interest. The redemption was funded by a portion of the net proceeds from the Company’s issuance of Additional Notes in June 2012. The Company recognized a $3.0 million pretax loss on the extinguishment of debt in the third quarter of 2012.

Convertible Notes On June 24, 2009, the Company issued $90.0 million Convertible Senior Notes (the ‘‘Convertible Notes’’). The Convertible Notes bear interest at a rate of 6.0% per year and mature on June 15, 2014. The Company used the net proceeds from this offering to repay $86.6 million of outstanding borrowings under its amended and restated revolving credit facility (as amended to date, the ‘‘Amended Facility’’). The Convertible Notes are convertible at an initial conversion rate of 279.6421 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes (representing an initial conversion price of $3.576 per share of common stock), subject to adjustment in certain circumstances. If the Convertible Notes are surrendered for conversion, the Company may settle the conversion value of each of the Convertible Notes in the form of cash, stock or a combination of cash and stock, at its discretion. Holders may convert the Convertible Notes at their option prior to the close of business on the business day immediately preceding March 15, 2014 only under the following circumstances: (i) during any fiscal quarter commencing after October 3, 2009, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to $4.2912 (which is 120% of the applicable conversion price) on each applicable trading day; (ii) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such day; or (iii) upon the occurrence of specified corporate events. In addition, on or after March 15, 2014 until the close of business on the third scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances. As a result of stock price performance, the Convertible Notes were convertible during the fourth quarter of 2012 and are convertible during the first quarter of 2013. The Company separately accounts for the liability and equity components of the Convertible Notes in a manner that reflects the Company’s nonconvertible debt borrowing rate when interest is recognized in subsequent periods. The Company allocated $20.6 million of the $90.0 million principal amount of the Convertible Notes to the equity component and to debt discount. The debt discount is amortized into interest expense through June 2014 using the effective interest method. The Company’s effective interest rate on the Convertible Notes is 12.25%. The non-cash interest expense that will be recorded will increase as the Convertible Notes approach maturity and accrete to face value. Interest expense associated with the semi-annual interest payment and non-cash amortization of the debt discount was $4.7 million, $9.2 million and $8.8 million for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively.

F-32 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On December 21, 2011, a holder of $20.8 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 6,163,221 shares of the Company’s common stock. The Company paid accrued interest on the holder’s Convertible Notes through the settlement date in cash. The Company allocated $18.3 million of the consideration to the liability component and $5.2 million to the equity component. The Company recognized a $0.5 million pretax loss on the extinguishment of debt in the fourth quarter of 2011. On April 3, 2012, holders of $22.6 million aggregate principal amount of the Convertible Notes converted all such outstanding Convertible Notes into 6,493,144 shares of the Company’s common stock. The Company paid accrued interest on the holders’ Convertible Notes through the settlement date in cash. The Company allocated $21.7 million of the consideration to the liability component and $3.4 million to the equity component. The Company recognized a $2.1 million pretax loss on the extinguishment of debt in the first quarter of 2012. On June 25, 2012, a holder of $15.0 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 4,346,376 shares of the Company’s common stock. The Company paid accrued interest on the holder’s Convertible Notes through the settlement date in cash. The Company allocated $14.7 million of the consideration to the liability component and $1.9 million to the equity component. The Company recognized a $1.4 million pretax loss on the extinguishment of debt in the second quarter of 2012. On November 30, 2012, a holder of $8.0 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 2,287,765 shares of the Company’s common stock. The Company paid accrued interest on the holder’s Convertible Notes through the settlement date in cash. The Company allocated $8.0 million of the consideration to the liability component and $0.6 million to the equity component. The Company recognized a $0.7 million pretax loss on the extinguishment of debt in the fourth quarter of 2012. On December 21, 2012, a holder of $3.8 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 1,069,821 shares of the Company’s common stock. The Company paid accrued interest on the holder’s Convertible Notes through the settlement date in cash. The Company allocated $3.8 million of the consideration to the liability component and $0.3 million to the equity component. The Company recognized a $0.4 million pretax loss on the extinguishment of debt in the fourth quarter of 2012.

Senior Notes On April 7, 2011, the Company completed an offering of $220.0 million principal amount of 10.5% Senior Secured Notes (the ‘‘Original Notes,’’ together with the Additional Notes, the ‘‘Senior Notes’’). The Company used the net proceeds of $212.9 million from such issuance of the Original Notes primarily to fund the Tender Offer. The remaining proceeds were used for general corporate purposes. On June 8, 2012, the Company completed the offering of the Additional Notes, at 108.25% of par value. The Company used a portion of the net proceeds of $160.6 million from the offering of the Additional Notes to repay outstanding borrowings under its Amended Facility and to fund the redemption of 52.9 million euro aggregate principal of Euro Notes on July 12, 2012. The Company used the remaining proceeds to fund a portion of the KSJ Buyout. The Senior Notes mature on April 15, 2019 and are guaranteed on a senior secured basis by certain of the Company’s current and future domestic subsidiaries. The Senior Notes and the guarantees are secured on a first-priority basis by a lien on certain of the Company’s trademarks and on a second-priority basis by the other assets of the Company and of the guarantors that secure the Company’s Amended Facility.

F-33 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The indenture governing the Senior Notes contains provisions that may require the Company to offer to repurchase the Senior Notes at 101% of their aggregate principal amount upon certain defined ‘‘Change of Control’’ events. In addition, the indenture may require that the proceeds from sales of the Company’s assets (subject to various exceptions and the ability of the Company to apply the proceeds to repay indebtedness or reinvest in its business) be used to offer to repurchase the Senior Notes at 100% of their aggregate principal amount. The indenture also contains other standard high-yield debt covenants, which limit the Company’s ability to incur additional indebtedness, incur additional liens, make asset sales, make dividend payments and investments, make payments and other transfers between itself and its subsidiaries, enter into affiliate transactions and merge or consolidate with other entities. Pursuant to a registration rights agreement executed as part of the offering of Original Notes, the Company agreed, on or before April 7, 2012, (i) to use reasonable best efforts to consummate an offer to issue new Senior Notes (having terms substantially identical to those of the Original Notes) whose issuance is registered with the SEC in exchange for the Original Notes (the ‘‘Original Notes Exchange Offer’’); and (ii) if required, to have a shelf registration statement declared effective with respect to resales of the Original Notes. The Company filed and had declared effective a registration statement on Form S-4 (the ‘‘Form S-4 Registration Statement’’) registering the Original Notes Exchange Offer and on February 13, 2013 commenced the Original Notes Exchange Offer (which is scheduled to expire on March 15, 2013). Nevertheless, as a result of not having complied with the above-described registration requirements, pursuant to the terms of the registration rights agreement relating to the Original Notes, the Company is required to pay additional interest on the Original Notes until the Original Notes Exchange Offer is completed. Additional interest on the Original Notes began accruing on April 10, 2012 at a rate of 0.25% per annum and continued to accrue at that rate through (and including) July 8, 2012. On July 9, 2012, additional interest on the Original Notes began accruing at a rate of 0.50% per annum and continued to accrue at that rate through (and including) October 6, 2012. On October 7, 2012, additional interest on the Original Notes began accruing at a rate of 0.75% per annum and continued to accrue at that rate through (and including) January 4, 2013. On January 5, 2013, the rate of additional interest on the Original Notes increased to the maximum of 1.00% per annum. Accrued additional interest has been paid on the Original Notes through October 15, 2012. Accrued additional interest will next be paid on the Original Notes (or the corresponding Senior Notes issued in the Original Notes Exchange Offer, as the case may be) on April 15, 2013 to holders of record on April 1, 2013. Pursuant to a registration rights agreement executed as part of the offering of Additional Notes, the Company agreed, on or before October 15, 2012, (i) to use reasonable best efforts to consummate an offer to issue new Senior Notes (having terms substantially identical to those of the Additional Notes) whose issuance is registered with the SEC in exchange for the Additional Notes (the ‘‘Additional Notes Exchange Offer’’); (ii) if required, to have a shelf registration statement declared effective with respect to resales of the Additional Notes; and (iii) complete the Original Notes Exchange Offer. The Form S-4 Registration Statement also covers the Additional Notes Exchange Offer, which commenced on February 13, 2013 and is scheduled to expire on March 15, 2013. Nevertheless, as a result of not having complied with the above-described registration requirements, pursuant to the terms of the registration rights agreement relating to Additional Notes, the Company is required to pay additional interest on the Additional Notes until the Original Notes Exchange Offer and the Additional Notes Exchange Offer are completed. Additional interest on the Additional Notes began accruing on October 16, 2012 at a rate of 0.25% per annum and continued to accrue at that rate through (and including) January 13, 2013. On January 14, 2013, additional interest on the Additional Notes began to accrue at a rate of 0.50% per annum. The rate of additional interest will increase by 0.25% per annum for each

F-34 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

90 days elapsed after January 14, 2013 that the Original Notes Exchange Offer and the Additional Notes Exchange Offer are not completed, up to a maximum of 1.00% per annum. Additional interest will be paid to holders of the Additional Notes (or the corresponding Senior Notes issued in the Additional Notes Exchange Offer, as the case may be) on April 15, 2013 to holders of record on April 1, 2013.

Amended Facility In May 2010, the Company completed a second amendment to and restatement of its amended and restated revolving credit facility (as amended to date, the ‘‘Amended Facility’’), which was subsequently amended in March 2011, September 2011 and November 2011 to permit the various corporate, debt financing, disposal and other transactions that the Company completed. Availability under the Company’s Amended Facility is the lesser of $350.0 million or a borrowing base that is computed monthly and comprised primarily of the Company’s eligible accounts receivable and inventory. A portion of the funds available under the Amended Facility not in excess of $200.0 million is available for the issuance of letters of credit, whereby standby letters of credit may not exceed $65.0 million. The Amended Facility is secured by a first priority lien on substantially all of the Company’s assets and includes a $200.0 million multi- currency revolving credit line and a $150.0 million US Dollar credit line. The Amended 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 Amended Facility, with a spread based on the aggregate availability under the Amended Facility. The Amended Facility restricts the Company’s ability to, among other things, incur indebtedness, grant liens, repurchase stock, issue cash dividends, make investments and acquisitions and sell assets, in each case subject to certain designated exceptions. In addition, the Amended Facility (i) requires the Company to maintain minimum aggregate borrowing availability of not less than $45.0 million; (ii) requires the Company to apply substantially all cash collections to reduce outstanding borrowings under the Amended Facility when availability under the Amended Facility falls below the greater of $65.0 million and 17.5% of the then-applicable aggregate commitments; (iii) adjusts certain interest rate spreads based upon availability; (iv) provided for the inclusion of an intangible asset value of $30.0 million in the borrowing base which declined in value over two years; (v) permitted the incurrence of liens and sale of assets in connection with the grant and exercise of the purchase option under the 2009 license agreement with JCPenney; and (vi) permitted the acquisition of certain joint venture interests and the indebtedness and guarantees by certain parties arising in connection with such acquisition, subject to certain capped amounts and meeting certain borrowing availability tests. The funds available under the Amended Facility may be used to refinance or repurchase certain existing debt, provide for working capital and for general corporate purposes, and back both trade and standby letters of credit. The Amended Facility contains customary events of default clauses and cross- default provisions with respect to the Company’s other outstanding indebtedness, including the Convertible Notes and Senior Notes. The Amended Facility will expire in August 2014, provided that in the event that the remaining Convertible Notes are not refinanced, purchased or defeased prior to March 15, 2014, then the maturity date shall be March 15, 2014. If any such refinancing or extension provides for a maturity date that is earlier than 91 days following August 6, 2014, then the maturity date shall be the date that is 91 days prior to the maturity date of such notes. On June 5, 2012, the Company entered into a fifth amendment (the ‘‘Fifth Amendment’’) to the Amended Facility. The Fifth Amendment, among other things, permitted the Company (i) to issue the Additional Notes, (ii) to pay the consideration for the June 6, 2012 Euro Notes repurchase and the July 12, 2012 Euro Notes redemption and (iii) to fund all or a portion of the KSJ Buyout, subject to certain tests and conditions.

F-35 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company currently believes that the financial institutions under the Amended 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 December 29, 2012, availability under the Company’s Amended Facility was as follows:

Letters of Total Borrowing Outstanding Credit Available Excess Facility(a) Base(a) Borrowings Issued Capacity Capacity(b) In thousands Amended Facility(a) .... $350,000 $251,237 $ — $27,654 $223,583 $178,583

(a) Availability under the Amended Facility is the lesser of $350.0 million or a borrowing base comprised primarily of eligible accounts receivable and inventory. (b) Excess capacity represents available capacity reduced by the minimum required aggregate borrowing availability under the Amended Facility of $45.0 million.

NOTE 11: FAIR VALUE MEASUREMENTS As discussed in Note 1 — Basis of Presentation and Significant Accounting Policies, the Company utilizes a three level hierarchy that defines the assumptions used to measure certain assets and liabilities at fair value. The following table presents the financial assets and liabilities the Company measures at fair value on a recurring basis, based on such fair value hierarchy:

Level 2 December 29, 2012 In thousands Financial Assets: Derivatives ...... $1,037 Financial Liabilities: Derivatives ...... $ — The fair values of the Company’s Level 2 derivative instruments were primarily based on observable forward exchange rates. Unobservable quantitative inputs used in the valuation of the Company’s derivative instruments included volatilities, discount rates and estimated credit losses. The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2012, based on such fair value hierarchy:

Net Carrying Fair Value Measured and Recorded at Total Losses — Value as of Reporting Date Using: Year Ended December 29, 2012 Level 1 Level 2 Level 3 December 29, 2012 In thousands Property and equipment . . . $22,710 $ — $ — $22,710 $39,737 In connection with a change in the pattern of use and likely disposal of the Company’s New Jersey corporate office, an impairment analysis was performed on the associated property and equipment. As a result of a decline in the estimated fair value of the Company’s Ohio distribution center, as well as a decline in respective future anticipated cash flows of certain retail locations of JUICY COUTURE and LUCKY BRAND and the decisions to exit certain retail locations of JUICY COUTURE and LUCKY

F-36 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

BRAND, impairment analyses were performed on the associated property and equipment. The Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2011, based on such fair value hierarchy:

Net Carrying Fair Value Measured and Recorded at Total Losses — Value as of Reporting Date Using: Year Ended December 31, 2011 Level 1 Level 2 Level 3 December 31, 2011 In thousands Property and equipment . . . $21,240 $ — $ — $21,240 $26,480 Intangible assets ...... ————1,024 As a result of the decisions to close the Company’s Ohio distribution center and exit certain JUICY COUTURE and LUCKY BRAND retail locations, as well as a decline in respective future anticipated cash flows of certain retail locations of JUICY COUTURE and LUCKY BRAND, impairment analyses were performed on the associated property and equipment. The Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. During 2011, the Company recorded a pretax charge of $222.2 million in Discontinued operations, net of income taxes on the accompanying Consolidated Statement of Operations to reduce the net carrying value primarily of the MEXX, MAC & JAC and Adelington Design Group assets and liabilities to fair value, less costs to dispose. The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2010, based on such fair value hierarchy:

Net Carrying Fair Value Measured and Recorded at Total Losses — Value as of Reporting Date Using: Year Ended January 1, 2011 Level 1 Level 2 Level 3 January 1, 2011 In thousands Property and equipment $4,600 $ — $ — $4,600 $10,508 Intangible assets ..... ————2,594 Assets held for sale . . ————8,018 As a result of the decisions to exit the LIZ CLAIBORNE branded outlet stores in the United States and Puerto Rico and certain LUCKY BRAND retail locations, cease use of certain corporate assets and close a distribution center in 2010, impairment analyses were performed on the associated property and equipment. The Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. In the second quarter of 2010, the Company recorded non-cash pretax impairment charges of $2.6 million primarily within the Adelington Design Group segment principally related to merchandising rights of the LIZ CLAIBORNE and former licensed DKNY↧ Jeans brands.

F-37 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the third quarter of 2010, the Company determined that the carrying value of the assets held for sale related to its closed Mt. Pocono distribution center exceeded the estimated fair value and recorded a non-cash pretax impairment charge of $8.0 million. The fair values of the Company’s Level 3 Property and equipment, Intangible assets and Assets held for sale are based on either a market approach or an income approach using the Company’s forecasted cash flows over the estimated useful lives of such assets, as appropriate. The fair values and carrying values of the Company’s debt instruments are detailed as follows:

December 29, 2012 December 31, 2011 Fair Value Carrying Value Fair Value Carrying Value In thousands 5.0% Euro Notes, due July 2013(a) ...... $ — $ — $145,491 $157,139 6.0% Convertible Senior Notes, due June 2014(a) ...... 69,088 18,287 174,397 60,270 10.5% Senior Secured Notes due April 2019(a) ...... 410,828 383,662 234,850 220,085

(a) Carrying values include unamortized debt discount or premium. 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.

NOTE 12: DERIVATIVE INSTRUMENTS In order to reduce exposures related to changes in foreign currency exchange rates, the Company previously utilized foreign currency collars, forward contracts and swap contracts for purposes of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases mainly by the Company’s European, Asian and Canadian entities and mitigating exposure to intercompany loans. The Company may use foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated intercompany loans. In order to mitigate currency exposure related to such loans, the Company entered into forward contracts to sell 4.0 billion yen for $47.5 million. Transaction gains of $1.0 million related to these derivative instruments were reflected within Other (expense) income, net for the year ended December 29, 2012. The following table summarizes the fair value and presentation in the Consolidated Financial Statements for derivatives not designated as hedging instruments:

Foreign Currency Contracts Not Designated as Hedging Instruments Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value In thousands December 29, 2012 ...... Other current assets $47,486 $1,037 Accrued expenses $ — $ —

F-38 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the effect of foreign currency exchange contracts on the Consolidated Financial Statements:

Location of Gain or Amount of Gain or (Loss) Reclassified Amount of Gain or Amount of Gain or (Loss) Recognized in from Accumulated (Loss) Reclassified (Loss) Recognized in Accumulated OCI OCI into Operations from Accumulated Operations on on Derivative (Effective and OCI into Operations Derivative (Effective Portion) Ineffective Portion) (Effective Portion) (Ineffective Portion) In thousands Fiscal year ended December 31, 2011 . $(4,482) Discontinued $(7,590) $ — operations, net of income taxes Fiscal year ended January 1, 2011 .... 3,487 Discontinued (802) (282) operations, net of income taxes The Company hedged its net investment position in certain euro-denominated functional currency subsidiaries by designating a portion of the outstanding Euro Notes as the hedging instrument in a net investment hedge. To the extent the hedge was effective, related foreign currency translation gains and losses were recorded within Other comprehensive loss. Translation gains and losses related to the ineffective portion of the hedge were recognized in current operations within Other (expense) income, net. In connection with the sale of an 81.25% interest in the global MEXX business on October 31, 2011, the Company dedesignated the remaining amount of the Euro Notes that had been previously designated as a hedge of the Company’s net investment in certain euro-denominated functional currency subsidiaries. Accordingly, all foreign currency transaction gains or losses related to the remaining Euro Notes were recorded in earnings beginning on November 1, 2011 until the Euro Notes were fully repurchased by the Company in the third quarter of 2012. The Company recognized the following foreign currency translation (losses) gains related to the net investment hedge:

Fiscal Years Ended December 31, January 1, 2011 2011 In thousands Effective portion recognized within Accumulated OCI ...... $(10,216) $13,095 Ineffective portion recognized within Other (expense) income, net . . . 4,954 21,555 Also, as a result of the sale of an 81.25% interest in the global MEXX business, the Company’s net investment in certain euro-denominated functional currency subsidiaries was substantially liquidated, and the cumulative translation adjustment recognized on the Company’s Euro Notes through October 31, 2011 was written off and included within Loss on disposal of discontinued operations, net of income taxes on the accompanying Consolidated Statement of Operations (see Note 19 — Accumulated Other Comprehensive Loss). The Company occasionally uses short-term foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with certain expected transactions. In order to mitigate the exposure related to the Tender Offer, the Company entered into forward contracts to sell $182.0 million for 128.0 million euro, which settled in the second quarter of 2011. During the second quarter of 2011, the Company entered into forward contracts designated as non-hedging derivative instruments maturing in July 2011 to sell $15.7 million for 11.0 million euro. The transaction gains of

F-39 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$2.5 million related to these derivative instruments were reflected within Other (expense) income, net for the year ended December 31, 2011.

NOTE 13: STREAMLINING INITIATIVES 2012 Actions In the third quarter of 2012, the Company initiated actions to reduce staff at JUICY COUTURE. These actions resulted in charges related to severance and concluded in the fourth quarter of 2012.

2011 Actions In the fourth quarter of 2011, the Company commenced additional streamlining initiatives that impacted all of its reportable segments and included rationalization of office space, which are expected to be completed in the first quarter of 2013 and staff reductions, which were completed by the end of 2012. In connection with this initiative, in the second quarter of 2012, the Company commenced a reduction of the workforce in its corporate centers in New Jersey and New York, which was completed in the fourth quarter of 2012. In the second quarter of 2011, the Company initiated actions to close its Ohio distribution center, which was expected to be completed in the fourth quarter of 2012 (see Note 25 — Subsequent Events). In the first quarter of 2011, the Company initiated actions to reduce staff at JUICY COUTURE. These actions resulted in charges related to contract terminations, severance, asset impairments and other charges. In the fourth quarter of 2011, the company agreed to terminate its agreement with an affiliate of DKI, which ended the exclusive license agreement for the DKNY↧ Jeans and DKNY↧ Active brands. These actions included contract terminations and staff reductions and concluded in the first quarter of 2012.

2010 Actions During 2010, the Company continued to consolidate its warehouse operations, which included the closure of its Vernon, California distribution facility in September 2010, the closure of its leased Santa Fe Springs, California distribution facility in January 2010 and the closure of its Rhode Island distribution facility in May 2010. In April 2010, the Company completed an agreement with an affiliate of DKI to terminate its former licensed DKNY↧ Mens Sportswear operations and close, transfer or repurpose its DKNY↧ Jeans outlet stores (see Note 17 — Additional Financial Information). These actions included contract terminations, staff reductions and consolidation of office space and were substantially completed by the end of 2010. In connection with the license agreements with JCPenney and QVC executed in October of 2009, the Company consolidated office space and reduced staff in certain support functions. As a result, the Company incurred charges related to the reduction of leased space, impairments of property and equipment and other assets, severance and other restructuring costs. These actions were completed in the second quarter of 2010.

F-40 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company expects to pay approximately $12.4 million of accrued streamlining costs during 2013. A summary rollforward and components of the Company’s streamlining initiatives were as follows:

Contract Payroll and Termination Asset Related Costs Costs Write-Downs Other Costs Total In thousands Balance at January 2, 2010 ...... $21,598 $ 24,899 $ — $ 1,235 $ 47,732 2010 provision ...... 11,943 28,691 13,616 6,722 60,972 2010 asset write-downs ...... ——(13,616) — (13,616) Translation difference ...... 7 (104) — 22 (75) 2010 spending ...... (33,287) (26,558) — (6,285) (66,130) Balance at January 1, 2011 ...... 261 26,928 — 1,694 28,883 2011 provision ...... 19,981 9,110 19,652 41,358 90,101 2011 asset write-downs ...... ——(19,652) — (19,652) Translation difference ...... (1) (10) — (8) (19) 2011 spending ...... (12,825) (18,184) — (12,115) (43,124) Balance at December 31, 2011 ...... 7,416 17,844 — 30,929 56,189 2012 provision ...... 13,487 2,681 27,882 3,776 47,826 2012 asset write-downs ...... ——(27,882) — (27,882) Translation difference ...... 25 49 — 882 2012 spending ...... (15,460) (16,326) — (18,783) (50,569) Balance at December 29, 2012 ...... $ 5,468 $ 4,248 $ — $ 15,930 $ 25,646

Expenses associated with the Company’s streamlining actions were primarily recorded in SG&A in the Consolidated Statements of Operations and impacted reportable segments and Corporate as follows:

Fiscal Years Ended December 29, 2012 December 31, 2011 January 1, 2011 In thousands JUICY COUTURE ...... $ 7,049 $18,005 $11,748 LUCKY BRAND...... 2,797 10,385 6,461 KATE SPADE...... 2,519 4,834 1,289 Adelington Design Group ...... 3,112 46,842 28,628 Corporate ...... 32,349 10,035 12,846 Total ...... $47,826 $90,101 $60,972

NOTE 14: SHARE-BASED COMPENSATION The Company issues stock options, restricted shares, restricted share units and shares with performance features to employees under share-based compensation plans, which are described herein. The Company recognized share-based compensation expense of $7.8 million, $5.8 million and $6.3 million,

F-41 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) excluding amounts related to discontinued operations, for the fiscal years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively. Compensation expense for stock options and restricted stock awards is measured at fair value on the date of grant based on the number of shares granted. The fair value of stock options is estimated based on the Binomial lattice pricing model; the fair value of restricted shares is based on the quoted market price on the date of the grant. Stock option expense is recognized using the straight-line attribution basis over the entire vesting period of the award. Restricted share, restricted share unit and performance share expense is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. Expense is recognized net of estimated forfeitures. In March 2012, the Company’s Compensation Committee approved the accelerated vesting of a former executive officer’s unvested 2010 and 2011 semiannual option grants, as well as his sign-on restricted stock and special retention stock awards, upon his separation from the Company.

Stock Plans In March 1992, March 2000, March 2002, March 2005 and May 2011, the Company adopted the ‘‘1992 Plan,’’ the ‘‘2000 Plan,’’ the ‘‘2002 Plan,’’ the ‘‘2005 Plan’’ and the ‘‘2011 Plan,’’ respectively, under which options (both nonqualified options and incentive stock options) to acquire shares of common stock may be granted to officers, other key employees, consultants and outside directors, in each case as selected by the Company’s Compensation Committee (the ‘‘Committee’’). Payment by option holders upon exercise of an option may be made in cash or, with the consent of the Committee, by delivering previously acquired shares of Company common stock or any other method approved by the Committee. If previously acquired shares are tendered as payment, the shares are subject to a six-month holding period, as well as specific authorization by the Committee. To date, this type of exercise has not been approved or transacted. The Committee has the authority under all of the plans to allow for a cashless exercise option, commonly referred to as a ‘‘broker-assisted exercise.’’ Under this method of exercise, participating employees must make a valid exercise of their stock options through a designated broker. Based on the exercise and information provided by the Company, the broker sells the shares on the open market. The employees receive cash upon settlement, some of which is used to pay the purchase price. Neither the stock-for-stock nor broker-assisted cashless exercise option are generally available to executive officers or directors of the Company. Although there are none currently outstanding, stock appreciation rights may be granted in connection with all or any part of any option granted under the plans and may also be granted without a grant of a stock option. Vesting schedules will be accelerated upon a change of control of the Company. Options and stock appreciation rights generally may not be transferred during the lifetime of a holder. Awards under the 2002 and 2005 Plans may also be made in the form of dividend equivalent rights, restricted stock, unrestricted stock performance shares and restricted stock units. Exercise prices for awards under the 2000, 2002 and 2005 Plans are determined by the Committee; to date, all stock options have been granted at an exercise price not less than the closing market value of the underlying shares on the date of grant. Awards granted under plans no longer in use by the Company, including the 2000 and 1992 Plans, remain in effect in accordance with their terms. The 2002 Plan provided for the issuance of up to 9.0 million shares of common stock with respect to options, stock appreciation rights and other awards. The 2002 Plan expired in 2012. The 2005 Plan provides for the issuance of up to 5.0 million shares of common stock with respect to options, stock appreciation rights and other awards. The 2005 Plan expires in 2015. The 2011 Plan provides for the issuance of up to 3.0 million shares of common stock, of which no more than 1.5 million shares may be awarded pursuant to grants of restricted stock, restricted stock units,

F-42 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) unrestricted stock and performance shares. The 2011 Plan expires in 2021. As of December 29, 2012, 0.3 million shares were available for future grant under the 2002, 2005 and 2011 Plans. The Company delivers treasury shares upon the exercise of stock options and vesting of restricted shares. The difference between the cost of the treasury shares and the exercise price of the options has been reflected on a first-in, first-out basis.

Stock Options The Company grants stock options to certain domestic and international employees. These options are subject to transfer restrictions and risk of forfeiture until earned by continuing employment. Stock options are issued at the current market price and have a three-year vesting period and a contractual term of 7-10 years. The Company utilizes the Binomial lattice pricing model to estimate the fair value of options granted. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates and to allow for actual exercise behavior of option holders.

Fiscal Years Ended Valuation Assumptions: December 29, 2012 December 31, 2011 January 1, 2011 Weighted-average fair value of options granted . $6.04 $2.75 $3.05 Expected volatility ...... 63.3% 73.0% 56.9% to 58.8% Weighted-average volatility ...... 63.3% 65.7% 58.4% Expected term (in years) ...... 5.1 5.1 5.0 Dividend yield ...... ——— Risk-free rate ...... 0.2% to 3.8% 0.1% to 4.1% 0.3% to 5.3% Expected annual forfeiture ...... 13.5% 12.0% 12.6% Expected volatilities are based on a term structure of implied volatility, which assumes changes in volatility over the life of an option. The Company utilizes historical optionee behavioral data to estimate the option exercise and termination rates that are used in the valuation model. The expected term represents an estimate of the period of time options are expected to remain outstanding. The expected term provided in the above table represents an option weighted-average expected term based on the estimated behavior of distinct groups of employees who received options in 2012, 2011 and 2010. The range of risk-free rates is based on a forward curve of interest rates at the time of option grant. A summary of award activity under the Company’s stock option plans as of December 29, 2012 and changes therein during the fiscal year then ended are as follows:

Weighted Average Aggregate Weighted Average Remaining Intrinsic Value Shares Exercise Price Contractual Term (In thousands) Outstanding at December 31, 2011 ...... 7,002,238 $11.22 4.7 $19,206 Granted ...... 610,000 11.48 Exercised ...... (1,340,325) 4.63 10,001 Cancelled/expired ...... (424,938) 18.69 Outstanding at December 29, 2012 ...... 5,846,975 $12.21 4.0 $27,218 Vested or expected to vest at December 29, 2012 ...... 5,557,787 $12.44 3.9 $25,956 Exercisable at December 29, 2012 ...... 3,406,975 $15.95 3.0 $14,579

F-43 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total intrinsic value of options exercised was $7.46 for the fiscal year ended December 29, 2012 and was insignificant for the fiscal years ended December 31, 2011 and January 1, 2010. As of December 29, 2012, there were approximately 2.4 million nonvested stock options with a weighted average exercise price of $6.99 and there was $5.9 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 1.3 years. The total fair value of shares vested for the years ended December 29, 2012, December 31, 2011 and January 1, 2011 was $4.1 million, $5.9 million and $3.4 million, respectively.

Restricted Stock The Company grants restricted shares and restricted share units to certain domestic and international employees. These shares are subject to transfer restrictions and risk of forfeiture until earned by continued employment. These shares generally vest 50% on the second anniversary date from the date of grant and 50% on the third anniversary date from the date of grant. The Company grants performance shares to certain of its employees, including the Company’s executive officers. Performance shares are earned based on the achievement of certain profit return on capital targets aligned with the Company’s strategy. In 2010, the Committee granted 855,000 performance shares to a group of key executives. The performance criteria include certain earnings metrics for consecutive periods through July 2013 with the number of shares to be earned ranging from 0 to 100% of the target amount. In 2012, the Company granted 535,000 performance share units with a two year performance period and a three year service period, subject to a market condition adjustment, to a group of key executives. The performance criteria include certain earnings metrics for consecutive periods through December 2013 with the number of shares to be earned ranging from 0 to 150% of the target amount. At December 31, 2014, the total units earned, if any, will be adjusted by applying a modifier, ranging from 50%-150%. The amount of such modifier will be determined by comparing the Company’s total shareholder return (‘‘TSR’’) to the relative TSR of the S&P SmallCap 600 companies over the three year period, where the Company’s TSR is based on the change in its stock price. The fair value for the performance share units granted is calculated using the Monte Carlo simulation model for the TSR modifier market condition. For the year ended December 29, 2012, the following assumptions were used in determining fair value:

Fiscal Year Ended Valuation Assumptions: December 29, 2012 Weighted-average fair value ...... $12.18 Historic volatility ...... 76.4% Expected term (in years) ...... 2.86 Dividend yield ...... — Risk-free rate ...... 0.41% Expected annual forfeiture ...... 13.5% Each of the Company’s non-employee Directors receives an annual grant of shares of common stock with a value of $100,000 as part of an annual retainer for serving on the Board of Directors, with the exception of the Chairman of the Board, who receives an annual grant of shares of common stock with a value of $175,000. Retainer shares are non-transferable until the first anniversary of the grant, with 25% becoming transferable on each of the first and second anniversary of the grant and 50% becoming transferable on the third anniversary, subject to certain exceptions.

F-44 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of award activity under the Company’s restricted stock plans as of December 29, 2012 and changes therein during the fiscal year then ended are as follows:

Weighted Average Grant Date Fair Shares Value Nonvested stock at December 31, 2011(a) ...... 1,570,101 $ 6.23 Granted(b) ...... 716,100 11.91 Vested ...... (332,142) 7.01 Cancelled ...... (275,709) 6.83 Nonvested stock at December 29, 2012(a)(b) ...... 1,678,350 $ 8.40 Expected to vest as of December 29, 2012 ...... 440,916 $ 6.98

(a) Includes performance shares granted to a group of key executives with certain performance conditions measured through July 2013. (b) Includes performance shares granted to a group of key executives with certain performance conditions, measured through December 2013 and a market and service condition through December 2014. The weighted average grant date fair value of restricted shares granted in the years ended December 29, 2012, December 31, 2011 and January 1, 2011 was $11.91, $5.29 and $6.44, respectively. As of December 29, 2012, there was $1.2 million of total unrecognized compensation cost related to nonvested stock awards granted under the restricted stock plans. That expense is expected to be recognized over a weighted average period of 1.5 years. The total fair value of shares vested during the years ended December 29, 2012, December 31, 2011 and January 1, 2011 was $2.3 million, $4.8 million and $8.5 million, respectively.

NOTE 15: PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS The Company maintains a qualified defined contribution plan for its eligible employees. This plan allows deferred arrangements under section 401(k) of the Internal Revenue Code and provides for employer-matching contributions. The plan contains provisions for a discretionary profit sharing component, although such a contribution was not made for 2012, 2011 or 2010. The Company’s aggregate 401(k)/Profit Sharing Plan contribution expense, which is included in SG&A in the accompanying Consolidated Statements of Operations, was $2.5 million in 2012, $2.1 million in 2011 and was not significant in 2010. The Company has a non-qualified supplemental retirement plan for certain employees whose benefits under the 401(k)/Profit Sharing Plan are expected to be constrained by the operation of certain Internal Revenue Code limitations. The supplemental plan provides a benefit equal to the difference between the contribution that would be made for an employee under the tax-qualified plan absent such limitations and the actual contribution under that plan. The supplemental plan also allows certain employees to defer up to 50% of their base salary and up to 100% of their annual bonus. The Company established an irrevocable ‘‘rabbi’’ trust to which the Company makes periodic contributions to provide a source of funds to assist in meeting its obligations under the supplemental plan. The principal of the trust and earnings thereon, are to be used exclusively for the participants under the plan, subject to the claims of the Company’s general creditors.

F-45 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 16: EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted (loss) earnings per common share:

Fiscal Years Ended December 29, 2012 December 31, 2011 January 1, 2011 In thousands, except per share data (Loss) income from continuing operations ...... $(59,456) $144,748 $(99,362) Net loss attributable to the noncontrolling interest . . ——(842) (Loss) income from continuing operations attributable to Fifth & Pacific Companies, Inc., basic(a) ...... (59,456) 144,748 (98,520) Convertible Notes interest expense(b) ...... — 9,166 — (Loss) income from continuing operations attributable to Fifth & Pacific Companies, Inc., diluted(a) ...... $(59,456) $153,914 $(98,520) Basic weighted average shares outstanding ...... 109,292 94,664 94,243 Stock options and nonvested shares(c)(d) ...... — 1,020 — Convertible Notes(a)(b) ...... — 25,008 — Diluted weighted average shares outstanding ...... 109,292 120,692 94,243 (Loss) earnings per share: Basic (Loss) income from continuing operations attributable to Fifth & Pacific Companies, Inc. . $ (0.54) $ 1.53 $ (1.05) Loss from discontinued operations ...... (0.14) (3.34) (1.62) Net loss attributable to Fifth & Pacific Companies, Inc...... $ (0.68) $ (1.81) $ (2.67) Diluted (Loss) income from continuing operations attributable to Fifth & Pacific Companies, Inc. . $ (0.54) $ 1.28 $ (1.05) Loss from discontinued operations ...... (0.14) (2.63) (1.62) Net loss attributable to Fifth & Pacific Companies, Inc...... $ (0.68) $ (1.35) $ (2.67)

(a) Because the Company incurred a loss from continuing operations for the years ended December 29, 2012 and January 1, 2011, approximately 12.3 million and 10.4 million potentially dilutive shares issuable upon conversion of the Convertible Notes, respectively, were considered antidilutive for such periods, and were excluded from the computation of diluted loss per share. (b) Interest expense of $9.2 million and approximately 25.0 million shares issuable upon conversion of the Convertible Notes were reflected in the computation of dilutive loss per share for the fiscal year ended December 31, 2011. (c) Excludes approximately 1.2 million, 0.8 million and 1.0 million nonvested shares for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively, for which the performance criteria have not yet been achieved. (d) Because the Company incurred a loss from continuing operations for the years ended December 29, 2012 and January 1, 2011, outstanding stock options and nonvested shares are antidilutive. Accordingly, for the years ended December 29, 2012 and January 1, 2011, approximately 5.8 million and 6.9 million outstanding stock options, respectively, and approximately 0.5 million and 0.7 million outstanding nonvested shares, respectively, were excluded from the computation of diluted loss per share.

F-46 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 17: ADDITIONAL FINANCIAL INFORMATION Licensing-Related Transactions During the fourth quarter of 2011, the Company completed various disposal or sale transactions, including: (i) the sale of the global trademark rights for the LIZ CLAIBORNE family of brands and the trademark rights in the United States and Puerto Rico for the MONET brand to JCPenney for $267.5 million and (ii) the sale of the DANA BUCHMAN trademark to Kohl’s and the sale of the KENSIE, KENSIE GIRL and MAC & JAC trademarks to an affiliate of Bluestar, for aggregate consideration of $39.8 million. In connection with these transactions, the Company maintains: (i) an exclusive supplier arrangement to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry; (ii) a royalty free license through July 2020 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC through the 2009 previously existing license between the Company and QVC; (iii) a royalty-free license through July 2020 to use the LIZWEAR brand to design, manufacture and distribute LIZWEAR-branded products to the club store channel; (iv) an exclusive supplier arrangement to provide Kohl’s with DANA BUCHMAN-branded jewelry through October 11, 2013; and (v) an exclusive license to produce and sell jewelry under the KENSIE brand name. On August 11, 2011, the Company amended its long-term license agreement with Elizabeth Arden, Inc. (‘‘Elizabeth Arden’’), which included the sale of the trademarks for its former Curve brand and selected other smaller fragrance brands. The amendment also included; (i) a lower effective royalty rate associated with the fragrance brands that remain under license, including the JUICY COUTURE and LUCKY BRAND fragrances; (ii) a reduction in the future minimum guaranteed royalties for the term of the license; and (iii) a pre-payment of certain royalties. The Company received $58.4 million in connection with this transaction and recognized a pretax gain on the sale of the trademarks for its former Curve brand and selected other fragrance brands of $15.6 million for the year ended December 31, 2011. The Company had an exclusive license agreement with an affiliate of Donna Karan International, Inc. (‘‘DKI’’) to design, produce, market and sell men’s and women’s jeanswear and activewear and women’s sportswear products in the Western Hemisphere under the ‘‘DKNY↧ Jeans’’ and ‘‘DKNY↧ Active’’ marks and logos. On October 11, 2011, the Company agreed to an early termination of the DKNY↧ Jeans and DKNY↧ Active license with DKI in exchange for a fee of $8.5 million, including $3.7 million due to DKI in connection with the previously terminated DKNY↧ Mens Sportswear license. The DKNY↧ Jeans and DKNY↧ Active license terminated on January 3, 2012, one year ahead of the scheduled license maturity. In April 2010, the Company entered into an agreement with DKI, which included the termination of the DKNY↧ Mens Sportswear license and the transfer of certain outlet stores of its former licensed DKNY↧ Jeans brand to DKI. In connection with the termination of the DKNY↧ Mens Sportswear license, the Company recorded a pretax charge of $9.9 million in the year ended January 1, 2011.

Other (Expense) Income, Net Other (expense) income, net primarily consisted of (i) foreign currency transaction gains (losses) of $1.2 million, $(1.4) million and $25.4 million for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively, including the impact of the dedesignation of the hedge of the Company’s investment in certain euro-denominated functional currency subsidiaries, which resulted in the recognition of foreign currency translation gains and losses on the Company’s Euro Notes within earnings for the years ended December 31, 2011 and January 1, 2011; and (ii) equity in earnings of investments in equity investees.

F-47 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Consolidated Statements of Cash Flows Supplementary Disclosures During the year ended December 29, 2012, the Company made net income tax payments of $1.1 million. During the years ended December 31, 2011 and January 1, 2011, the Company received net income tax refunds of $1.3 million and $166.2 million, respectively. During the years ended December 29, 2012, December 31, 2011 and January 1, 2011, the Company made interest payments of $38.7 million, $49.3 million and $33.2 million, respectively. As of December 29, 2012, December 31, 2011 and January 1, 2011, the Company accrued capital expenditures totaling $7.7 million, $6.4 million and $7.6 million, respectively. Depreciation and amortization expense in 2012, 2011 and 2010 includes $10.3 million, $11.6 million and $21.2 million, respectively, related to amortization of deferred financing costs. During 2012, the Company entered into agreements with holders of $49.4 million aggregate principal amount of the Convertible Notes, pursuant to which the holders converted all of such outstanding Convertible Notes into 14,197,106 shares of the Company’s common stock. During 2011, the Company entered into an agreement with a holder of $20.8 million aggregate principal amount of the Convertible Notes, pursuant to which the holder converted all of such outstanding Convertible Notes into 6,163,221 shares of the Company’s common stock. During 2011, the Company received net proceeds of $309.7 million in connection with the sales of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands and the trademark rights in the US and Puerto Rico for the MONET brand; (ii) the DANA BUCHMAN trademark; and (iii) the sale of the trademarks for the Company’s former Curve fragrance brands and selected other smaller fragrance brands, which are reflected as Proceeds from dispositions on the accompanying Consolidated Statement of Cash Flows. During 2010, the Company paid $24.3 million to Li & Fung related to a buying/sourcing agreement, which is included within (Decrease) increase in accrued expenses and other non-current liabilities on the accompanying Consolidated Statement of Cash Flows. During 2012 and 2010, the Company made business acquisition payments of $41.0 million and $5.0 million related to the KSJ Buyout and the LUCKY BRAND acquisition, respectively.

NOTE 18: SEGMENT REPORTING The Company’s segment reporting structure reflects a brand-focused approach, designed to optimize the operational coordination and resource allocation of the Company’s businesses across multiple functional areas including specialty retail, retail outlets, concessions, wholesale apparel, wholesale non-apparel, e-commerce and licensing. The four reportable segments described below represent the Company’s brand-based 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 economic characteristics, as well as products, customers, sales growth potential and long-term profitability. As such, the Company configured its operations into the following four reportable segments, each reflecting the different financial missions, cultural profiles and focal points appropriate for these four reportable segments: • JUICY COUTURE segment — consists of the specialty retail, outlet, concession, wholesale apparel, wholesale non-apparel (including accessories, jewelry and handbags), e-commerce and licensing operations of the JUICY COUTURE brand.

F-48 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• KATE SPADE segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of the KATE SPADE, KATE SPADE SATURDAY and JACK SPADE brands. • LUCKY BRAND segment — consists of the specialty retail, outlet, wholesale apparel, wholesale non-apparel, e-commerce and licensing operations of LUCKY BRAND. • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the DANA BUCHMAN, LIZ CLAIBORNE and MONET brands; (ii) the wholesale non-apparel operations of the TRIFARI brand and licensed KENSIE brand; (iii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; (iv) the licensed LIZ CLAIBORE NEW YORK brand. The Company’s Chief Executive Officer has been identified as the CODM. During the fourth quarter of 2012, the Company determined that its 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 is also a key metric utilized in the Company’s annual bonus and long-term incentive plans. Segment Adjusted EBITDA excludes: (i) depreciation and amortization; (ii) charges due to streamlining initiatives and brand-exiting activities; and (iii) losses on asset disposals and impairments. Unallocated Corporate costs also exclude non-cash share-based compensation expense. In addition, Segment Adjusted EBITDA does not include Corporate expenses associated with the following functions: corporate finance, investor relations, communications, legal, human resources and information technology shared services and costs of executive offices and corporate facilities, which are included in Unallocated Corporate costs. The Company does not allocate amounts reported below Operating loss to its reportable segments, other than equity income (loss) in equity method investees. The Company’s definition of Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The accounting policies of the Company’s reportable segments are the same as those described in Note 1 — Basis of Presentation and Significant Accounting Policies. There are no inter-segment sales or transfers. The Company also presents its results on a geographic basis based on selling location, between Domestic (wholesale customers, Company-owned specialty retail and outlet stores located in the United States and e-commerce sites) and International (wholesale customers and Company-owned specialty retail, outlet and concession stores located outside of the United States). The Company, as licensor, also licenses

F-49 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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.

Depreciation and Expenditures Amortization Adjusted Segment for Long- Net Sales % to Total Expense(a) EBITDA % of Sales Assets Lived Assets Dollars in thousands Fiscal Year Ended December 29, 2012 Reportable Segments: JUICY COUTURE ..... $ 498,637 33.1% $23,822 $ 24,554 4.9% $187,898 $ 16,642 LUCKY BRAND...... 461,691 30.7% 15,810 34,676 7.5% 200,673 21,387 KATE SPADE...... 461,926 30.7% 14,168 94,994 20.6% 387,640 84,408 Adelington Design Group . 82,840 5.5% 958 21,009 25.4% 13,796 392 Corporate ...... ——19,653 (70,744) — 112,516 4,031 Totals ...... $1,505,094 100.0% $74,411 $126,860 Fiscal Year Ended December 31, 2011 Reportable Segments: JUICY COUTURE ..... $ 530,688 35.0% $26,988 $ 64,237 12.1% $201,236 $ 14,404 LUCKY BRAND...... 418,213 27.5% 16,783 25,389 6.1% 186,578 12,828 KATE SPADE...... 312,944 20.6% 10,190 57,370 18.3% 232,828 16,123 Adelington Design Group . 256,876 16.9% 3,927 38,868 15.1% 42,862 1,435 Corporate ...... ——28,081 (90,158) — 286,500 32,322 Totals ...... $1,518,721 100.0% $85,969 $ 77,112 Fiscal Year Ended January 1, 2011 Reportable Segments: JUICY COUTURE ..... $ 566,762 34.9% $26,210 $106,869 18.9% $ 23,793 LUCKY BRAND...... 386,935 23.8% 17,976 13,350 3.5% 17,676 KATE SPADE...... 184,263 11.4% 8,014 25,419 13.8% 10,326 Adelington Design Group . 485,275 29.9% 5,810 39,964 8.2% 4,066 Corporate ...... ——38,142 (84,338) — 8,868 Totals ...... $1,623,235 100.0% $96,152 $ 64,729

(a) For the years ended December 29, 2012, December 31, 2011 and January 1, 2011, $9.7 million, $13.6 million and $19.6 million, respectively, of Corporate depreciation and amortization was recorded within Interest expense, net on the accompanying Consolidated Statements of Operations.

F-50 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables provide a reconciliation to (Loss) income from continuing operations:

Fiscal Years Ended In thousands December 29, 2012 December 31, 2011 January 1, 2011 Reportable Segments Adjusted EBITDA: JUICY COUTURE ...... $ 24,554 $ 64,237 $106,869 LUCKY BRAND...... 34,676 25,389 13,350 KATE SPADE(a) ...... 94,994 57,370 25,419 Adelington Design Group ...... 21,009 38,868 39,964 Total Reportable Segments Adjusted EBITDA ..... 175,233 185,864 185,602 Unallocated Corporate Costs ...... (70,744) (90,158) (84,338) Depreciation and amortization, net(b) ...... (64,681) (72,322) (76,516) Charges due to streamlining initiatives and brand- exiting activities, impairment of intangible assets and loss on asset disposals and impairments, net(c) (67,725) (112,228) (78,703) Share-based compensation ...... (7,779) (5,756) (6,342) Equity loss (income) included in Reportable Segments Adjusted EBITDA...... 1,245 (1,652) (969) Operating Loss ...... (34,451) (96,252) (61,266) Other (expense) income, net(a) ...... (168) 282 26,689 Gain on acquisition of subsidiary ...... 40,065 —— Gain on sales of trademarks, net ...... — 286,979 — (Loss) gain on extinguishment of debt, net ...... (9,754) 5,157 — Interest expense, net ...... (51,684) (57,188) (55,741) Provision (benefit) for income taxes ...... 3,464 (5,770) 9,044 (Loss) Income from Continuing Operations ...... $(59,456) $ 144,748 $(99,362)

(a) Amounts include equity in the (losses) earnings of equity method investees of $(1.2) million, $1.7 million and $1.0 million in 2012, 2011 and 2010, respectively. (b) Excludes amortization included in Interest expense, net. (c) See Note 13 — Streamlining Initiatives for a discussion of streamlining charges.

F-51 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GEOGRAPHIC DATA

Long-Lived Net Sales % to Total Assets Dollars in thousands Fiscal Year Ended December 29, 2012 Domestic ...... $1,421,769 94.5% $310,286 International ...... 83,325 5.5% 101,250 Total ...... $1,505,094 100.0% Fiscal Year Ended December 31, 2011 Domestic ...... $1,455,407 95.8% $336,396 International ...... 63,314 4.2% 21,141 Total ...... $1,518,721 100.0% Fiscal Year Ended January 1, 2011 Domestic ...... $1,562,572 96.3% International ...... 60,663 3.7% Total ...... $1,623,235 100.0%

NOTE 19: ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss is comprised of the effects of foreign currency translation, losses on cash flow hedging derivatives (prior to December 31, 2011) and changes in unrealized gains on securities, as detailed below:

In thousands December 29, 2012 December 31, 2011 Cumulative translation adjustment, net of income taxes of $0 ..... $(10,074) $(6,084) Unrealized gains on securities, net of income taxes of $0 ...... — 160 Accumulated other comprehensive loss, net of income taxes ...... $(10,074) $(5,924)

As discussed in Note 12 — Derivative Instruments, prior to the substantial liquidation of certain euro-denominated functional currency subsidiaries, the Company hedged its net investment position in such subsidiaries by designating a portion of the then-outstanding Euro Notes as the hedging instrument in a net investment hedge. As discussed in Note 1 — Basis of Presentation and Significant Accounting Policies, the Company sold an 81.25% interest in the global MEXX business on October 31, 2011. That transaction resulted in the liquidation of certain of the Company’s former euro-denominated functional currency subsidiaries and other non-US dollar denominated functional currency subsidiaries. As a result, the Company recorded a charge of $62.2 million within Loss on disposal of discontinued operations on the accompanying Consolidated Statement of Operations for the fiscal year ended December 31, 2011, to write off the cumulative translation adjustment related to the liquidated subsidiaries, the Euro Notes and other instruments.

F-52 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 20: RELATED PARTY TRANSACTIONS In June 2011, the Company established a joint venture in China with E-Land Fashion China Holdings, Limited. The joint venture is a Hong Kong limited liability company and its purpose is to market and distribute small leather goods and other fashion products and accessories in China under the KATE SPADE brand. The joint venture operates under the name of KS China Co., Limited (‘‘KSC’’) for an initial 10 year period and commenced operations in the fourth quarter of 2011. The Company accounts for its 40.0% interest in KSC under the equity method of accounting. The Company made a $2.5 million capital contribution to KSC in the fourth quarter of 2011 and $5.0 million in 2012. The Company is required to make capital contributions to KSC of $5.5 million in 2013. During the fourth quarter of 2011, KSC reacquired the existing KATE SPADE business in China from Globalluxe. Additionally, the Company agreed that it or one of its affiliates will reacquire existing KATE SPADE businesses in Southeast Asia in 2014 from Globalluxe, with the purchase price based upon a multiple of Globalluxe’s earnings, subject to a cap of $30.0 million. On November 20, 2009, the Company and Sanei established a joint venture under the name of KSJ. During the fourth quarter of 2012, the Company acquired the remaining 51.0% interest in KSJ (see Note 2 — Acquisition). Subsequent to the MEXX Transaction (see Note 1 — Basis of Presentation and Significant Accounting Policies), the Company retains a noncontrolling ownership interest in NewCo and accounts for such investment at cost. The Company is required to provide certain transition services to NewCo for a period of up to 24 months and recognized $4.6 million and $0.7 million of fees related to such services in 2012 and 2011, respectively. The Company’s cost investment was valued at $10.0 million as of December 29, 2012 and December 31, 2011 and was included in Other assets on the accompanying Consolidated Balance Sheets. Kenneth P. Kopelman (a Director of the Company) is a partner in the law firm Kramer, Levin, Naftalis & Frankel LLP, which provided legal services to the Company in 2012, 2011 and 2010. The fees for such services were not significant in 2012 or 2011 and amounted to $1.2 million in 2010. The 2012 amount represents less than one percent of such firm’s 2012 fee revenue. The foregoing transactions between the Company and this entity were effected on an arm’s-length basis, with services provided at fair market value. The Company believes that each of the transactions described above was effected on terms no less favorable to the Company than those that would have been realized in transactions with unaffiliated entities or individuals.

NOTE 21: RECENT ACCOUNTING PRONOUNCEMENTS In July 2012, new accounting guidance on testing indefinite-lived intangible assets for impairment was issued, which provides an entity the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The new accounting guidance is effective at the start of the Company’s 2013 fiscal year beginning on December 30, 2012 and will not affect the Company’s financial position, results of operations or cash flows.

F-53 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In February 2013, new accounting guidance on comprehensive income was issued, which requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under US GAAP to be reclassified to net income in its entirety in the same reporting period. The new accounting guidance is effective at the start of the Company’s 2013 fiscal year beginning on December 30, 2012 and will not affect the Company’s financial position, results of operations or cash flows.

NOTE 22: LEGAL PROCEEDINGS A lawsuit captioned LC Footwear, L.L.C., et al. v. L.C. Licensing, Inc., et al., was filed on November 2, 2010 in the Supreme Court of the State of New York, County of New York. The complaint asserted that the Company had, among other things, allegedly breached a license by and among the Company, L.C. Licensing, Inc. and L.C. Footwear, L.L.C. (the ‘‘Footwear License Agreement’’). The Company sent plaintiffs a notice of default under the Footwear License Agreement on October 11, 2010. On December 22, 2010, the Company moved to dismiss the complaint in its entirety. In response, plaintiffs filed an amended complaint on January 14, 2011. The amended complaint asserted claims for breach of the Footwear License Agreement and the implied covenant of good faith and fair dealing therein, fraud and brand dilution. Plaintiffs sought both declaratory and injunctive relief, as well as damages of not less than $125.0 million. On February 17, 2011, the Company moved to dismiss the amended complaint in its entirety. On November 16, 2011, the Court granted in part and denied in part the Company’s motion to dismiss. Additionally, on November 4, 2010, plaintiffs moved for a preliminary injunction to enjoin the Company from: (i) interfering with plaintiffs’ purported right to sell merchandise bearing the LIZ CLAIBORNE family of trademarks; (ii) selling (or permitting any third party from selling) merchandise under the LIZ & CO. trademark; and (iii) terminating the Footwear License Agreement. On November 16, 2011, the Court granted in part and denied in part plaintiffs’ motion for a preliminary injunction. On December 2, 2011, plaintiffs again moved for a temporary restraining order and a preliminary injunction to prevent the termination of the Footwear License Agreement. On December 16, 2011, the Court denied plaintiffs’ motion for a temporary restraining order. On December 15, 2011, the Company appealed the Court’s November 16, 2011 ruling. On January 5, 2012, plaintiffs appealed the Court’s November 16, 2011 ruling. On March 21, 2012, the parties entered into a settlement agreement disposing of all disputes in connection with the lawsuit. On April 2, 2012, the parties filed with the Court a stipulation of discontinuance of the lawsuit with prejudice. Both parties have withdrawn their respective appeals. On January 25, 2013, Gores Malibu Holdings (Luxembourg) S.a.r.l. filed a complaint in the United States District Court for the Southern District of New York against Fifth and Pacific Companies, Inc. and Fifth & Pacific Companies Foreign Holdings, Inc. (amended on February 5, 2013). The complaint claims $15.0 million in damages for alleged breaches of the Merger Agreement related to the sale of the global MEXX business, including breaches of tax and tax-related covenants, breaches of interim operating covenants and breaches of reimbursement obligations related to employee bonuses. In addition, as previously disclosed, the Company and Gores Malibu are currently in dispute resolution proceedings with respect to working capital adjustments that are required to be made under the Merger Agreement. The Company cannot currently predict the outcomes of these proceedings, although management does not believe any such outcome will be material to its financial position, results of operations, liquidity or cash flows.

F-54 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company is a party to several other pending legal proceedings and claims. Although the outcome of such actions cannot be determined with certainty, management is of the opinion that the final outcome of these actions should not have a material adverse effect on the Company’s financial position, results of operations, liquidity or cash flows.

NOTE 23: UNAUDITED QUARTERLY RESULTS Unaudited quarterly financial information for 2012 and 2011 is set forth in the table below.

March June September December In thousands, except per 2012 2011 2012 2011 2012 2011 2012 2011 share data Net sales ...... $317,147 $ 330,682 $ 336,858 $ 360,283 $ 364,556 $ 380,693 $486,533 $447,063 Gross profit ...... 179,107 176,395 190,717 185,668 203,117 206,837 270,034 240,491 (Loss) income from continuing operations . . . (51,730)(c) (53,057)(d) (49,551)(e) (53,824)(f) (19,393)(g) 7,003(h) 61,218(i) 244,626(j) (Loss) income from discontinued operations, net of income taxes .... (8,910) (43,288) (2,547) (36,072) 592 (221,637) (4,184) (15,438) Net (loss) income ...... $(60,640) $ (96,345) $ (52,098) $ (89,896) $ (18,801) $(214,634) $ 57,034 $229,188 Basic earnings per share:(a) (Loss) income from continuing operations . $ (0.51) $ (0.56) $ (0.46) $ (0.57) $ (0.17) $ 0.07 $ 0.54 $ 2.57 (Loss) income from discontinued operations . (0.09) (0.46) (0.02) (0.38) — (2.34) (0.04) (0.17) Net (loss) income ..... $ (0.60) $ (1.02) $ (0.48) $ (0.95) $ (0.17) $ (2.27) $ 0.50 $ 2.40 Diluted earnings per share:(a)(b) (Loss) income from continuing operations . $ (0.51) $ (0.56) $ (0.46) $ (0.57) $ (0.17) $ 0.07 $ 0.50 $ 2.04 Loss from discontinued operations ...... (0.09) (0.46) (0.02) (0.38) — (2.34) (0.03) (0.13) Net (loss) income ..... $ (0.60) $ (1.02) $ (0.48) $ (0.95) $ (0.17) $ (2.27) $ 0.47 $ 1.91

(a) Because the Company incurred a loss from continuing operations in the first three quarters of 2012 and the first two quarters of 2011, outstanding stock options, nonvested shares and potentially dilutive shares issuable upon conversion of the Convertible Notes are antidilutive for such periods. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods. (b) Interest expense of $0.8 million and approximately 8.0 million shares issuable upon conversion of the Convertible Notes for the fourth quarter of 2012 and $2.3 million and approximately 24.5 million shares issuable upon conversion of the Convertible Notes for the fourth quarter of 2011 were reflected in the computation of dilutive income (loss) per share. Interest expense of $2.3 million and 25.2 million shares issuable upon conversion of the Convertible Notes in the third quarter of 2011 were considered antidilutive and were excluded from the computation of dilutive income (loss) per share. (c) Included pretax expenses related to streamlining initiatives of $10.3 million. (d) Included pretax expenses related to streamlining initiatives of $3.7 million. (e) Included pretax expenses related to streamlining initiatives of $27.0 million. (f) Included pretax expenses related to streamlining initiatives of $34.2 million. (g) Included pretax expenses related to streamlining initiatives of $5.8 million. (h) Included (i) a pretax gain of $15.6 million on the sale of the former Curve fragrance brand and selected other smaller fragrance brands and (ii) pretax expense related to streamlining initiatives of $11.7 million. (i) Included pretax expenses related to streamlining initiatives of $4.7 million. (j) Included (i) a pretax gain of $271.4 million on the sales of the global trademark rights for the LIZ CLAIBORNE family of brands, the trademark rights in the US and Puerto Rico for MONET and the DANA BUCHMAN trademark and (ii) pretax expenses related to streamlining initiatives of $40.0 million (excluding a non-cash impairment charge of $0.6 million related to former licensed DKNY↧ Jeans merchandising rights).

F-55 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 24: SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION On April 7, 2011 and June 8, 2012, the Company completed its offerings of Senior Notes. The Senior Notes are jointly and severally, fully and unconditionally guaranteed on a senior secured basis by certain of the Company’s current and future domestic subsidiaries, each of which is 100% owned by Fifth & Pacific Companies, Inc. (the ‘‘Parent Company Issuer’’). The Senior Notes and the guarantees are secured on a first-priority basis by a lien on certain of the Company’s trademarks and on a second-priority basis by the other assets of the Company and of the guarantors, which secure the Company’s Amended Facility on a first-priority basis. The following tables present the Condensed Consolidating Balance Sheets, the Condensed Consolidating Statements of Operations, the Condensed Consolidating Statements of Comprehensive Loss and the Condensed Consolidating Statements of Cash Flows, in each instance for the Parent Company Issuer, its guarantor subsidiaries and its non-guarantor subsidiaries. The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10 and Article 10. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Parent Company Issuer, guarantor or non-guarantor subsidiaries operated as independent entities.

F-56 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Balance Sheets December 29, 2012 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Assets Current Assets: Cash and cash equivalents . . . $ 30,840 $ 4,827 $ 26,074 $ (2,339) $ 59,402 Accounts receivable — trade, net...... 3,155 110,584 13,605 (5,753) 121,591 Inventories, net ...... 340 188,853 31,345 — 220,538 Deferred income taxes ..... 180 — 1,079 — 1,259 Intercompany receivable .... — 3,889 — (3,889) — Other current assets ...... 15,903 28,986 4,577 — 49,466 Total current assets ...... 50,418 337,139 76,680 (11,981) 452,256 Property and Equipment, Net . . 7,331 186,694 25,938 — 219,963 Goodwill ...... ——60,223 — 60,223 Intangibles, Net ...... 217 116,044 15,089 — 131,350 Deferred Income Taxes ...... ——65 — 65 Investments in Consolidated Subsidiaries ...... 357,656 122,568 — (480,224) — Intercompany Receivable ..... 2,084 46,348 — (48,432) — Other Assets ...... 10,552 939 27,175 — 38,666 Total Assets ...... $428,258 $809,732 $205,170 $(540,637) $ 902,523

Liabilities and Stockholders’ (Deficit) Equity Current Liabilities: Short-term borrowings ...... $ 4,345 $ — $ — $ — $ 4,345 Convertible Senior Notes .... 18,287 —— —18,287 Accounts payable ...... 16,734 146,707 19,420 (8,156) 174,705 Intercompany payable ...... 7,643 — 52,603 (60,246) — Accrued expenses ...... 77,273 124,918 15,273 — 217,464 Income taxes payable ...... ——932 — 932 Deferred income taxes ..... ——116 — 116 Total current liabilities .... 124,282 271,625 88,344 (68,402) 415,849 Long-Term Debt ...... 383,662 —— —383,662 Intercompany Payable ...... ——63,386 (63,386) — Other Non-Current Liabilities . . 47,244 148,091 13,581 — 208,916 Deferred Income Taxes ...... — 15,664 5,362 — 21,026 Commitments and Contingencies Total Stockholders’ (Deficit) Equity ...... (126,930) 374,352 34,497 (408,849) (126,930) Total Liabilities and Stockholders’ (Deficit) Equity ...... $428,258 $809,732 $205,170 $(540,637) $ 902,523

F-57 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Balance Sheets December 31, 2011 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Assets Current Assets: Cash and cash equivalents . . . $ 144,783 $ 20,302 $ 15,016 $ (165) $ 179,936 Accounts receivable — trade, net...... 118 106,253 13,180 — 119,551 Inventories, net ...... — 184,109 9,234 — 193,343 Deferred income taxes ..... ——165 — 165 Other current assets ...... 25,353 27,347 6,050 — 58,750 Total current assets ...... 170,254 338,011 43,645 (165) 551,745 Property and Equipment, Net . . 43,123 176,967 18,574 — 238,664 Goodwill ...... ——1,519 — 1,519 Intangibles, Net ...... — 116,306 1,048 — 117.354 Investments in Consolidated Subsidiaries ...... 315,151 60,482 — (375,633) — Intercompany Receivable ..... — 2,290 — (2,290) — Other Assets ...... 8,645 18,106 13,971 — 40,722 Total Assets ...... $537,173 $712,162 $ 78,757 $(378,088) $ 950,004

Liabilities and Stockholders’ (Deficit) Equity Current Liabilities: Short-term borrowings ...... $ 4,476 $ — $ — $ — $ 4,476 Convertible Senior Notes .... 60,270 —— —60,270 Accounts payable ...... 18,213 112,583 13,429 (165) 144,060 Intercompany payable ...... 25,117 1,668 72,819 (99,604) — Accrued expenses ...... 78,502 125,810 13,034 — 217,346 Income taxes payable ...... — 195 610 — 805 Deferred income taxes ..... ——16 — 16 Total current liabilities .... 186,578 240,256 99,908 (99,769) 426,973 Long-Term Debt ...... 381,569 —— —381,569 Intercompany Payable ...... ——16,912 (16,912) — Other Non-Current Liabilities . . 78,012 145,607 13,077 — 236,696 Deferred Income Taxes ...... — 13,300 452 — 13,752 Commitments and Contingencies Total Stockholders’ (Deficit) Equity ...... (108,986) 312,999 (51,592) (261,407) (108,986) Total Liabilities and Stockholders’ (Deficit) Equity ...... $537,173 $712,162 $ 78,757 $(378,088) $ 950,004

F-58 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Operations Fiscal Year Ended December 29, 2012 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net Sales ...... $25,918 $1,395,852 $ 83,324 $ — $1,505,094 Cost of goods sold ...... 17,816 610,104 34,199 — 662,119 Gross Profit ...... 8,102 785,748 49,125 — 842,975 Selling, general & administrative expenses ...... 4,462 818,490 54,474 — 877,426 Operating Income (Loss) ...... 3,640 (32,742) (5,349) — (34,451) Other income (expense), net ..... 638 (786) (20) — (168) Gain on acquisition of subsidiary . . — 38,285 1,780 — 40,065 Equity in (losses) earnings of consolidated subsidiaries — continuing operations ...... (3,707) (9,478) — 13,185 — Loss on extinguishment of debt . . . (9,754) —— —(9,754) Interest (expense) income, net .... (50,192) 133 (1,625) — (51,684) (Loss) Income Before Provision for Income Taxes ...... (59,375) (4,588) (5,214) 13,185 (55,992) Provision for income taxes ...... 81 2,819 564 — 3,464 (Loss) Income from Continuing Operations ...... (59,456) (7,407) (5,778) 13,185 (59,456) Discontinued operations, net of income taxes ...... (1,461) (2,238) (11,350) — (15,049) Equity in (losses) earnings of consolidated subsidiaries — discontinued operations, net of income taxes ...... (13,588) (4,812) — 18,400 — Net (Loss) Income ...... $(74,505) $ (14,457) $(17,128) $31,585 $ (74,505)

Condensed Consolidating Statements of Comprehensive Loss Fiscal Year Ended December 29, 2012 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net (Loss) Income ...... $(74,505) $(14,457) $(17,128) $31,585 $(74,505) Other Comprehensive (Loss) Income, Net of Income Taxes ...... (4,150) (4,809) (4,273) 9,082 (4,150) Comprehensive (Loss) Income ...... $(78,655) $(19,266) $(21,401) $40,667 $(78,655)

F-59 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Operations Fiscal Year Ended December 31, 2011 (In thousands)

Parent Company Guarantor£ Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net Sales ...... $ 63,871 $1,391,244 $ 63,606 $ — $1,518,721 Cost of goods sold ...... 53,995 629,201 26,134 — 709,330 Gross Profit ...... 9,876 762,043 37,472 — 809,391 Selling, general & administrative expenses ...... 235,800 807,559 (19,698) (119,042) 904,619 Impairment of intangible assets . . . — 859 165 — 1,024 Operating (Loss) Income ...... (225,924) (46,375) 57,005 119,042 (96,252) Other income (expense), net ..... 3,323 (5,672) 2,631 — 282 Equity in earnings (losses) of consolidated subsidiaries — continuing operations ...... 421,441 39,392 — (460,833) — (Loss) gain on sales of trademarks, net...... (62) 287,041 ——286,979 Gain on extinguishment of debt, net...... 5,157 —— —5,157 Interest (expense) income, net .... (58,346) 4,001 (2,843) — (57,188) Income (Loss) Before Provision (Benefit) for Income Taxes ...... 145,589 278,387 56,793 (341,791) 138,978 Provision (benefit) for income taxes 841 (5,893) (718) — (5,770) Income (Loss) from Continuing Operations ...... 144,748 284,280 57,511 (341,791) 144,748 Discontinued operations, net of income taxes ...... (261,214) 135,066 (190,287) — (316,435) Equity in (losses) earnings of consolidated subsidiaries — discontinued operations, net of income taxes ...... (55,221) (164,448) — 219,669 — Net (Loss) Income ...... $(171,687) $ 254,898 $(132,776) $(122,122) $ (171,687)

Condensed Consolidating Statements of Comprehensive Loss Fiscal Year Ended December 31, 2011 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net (Loss) Income ...... $(171,687) $ 254,898 $(132,776) $(122,122) $(171,687) Other Comprehensive Income (Loss), Net of Income Taxes ...... 60,378 (343,394) (61,636) 405,030 60,378 Comprehensive (Loss) Income ...... $(111,309) $ (88,496) $(194,412) $ 282,908 $(111,309)

F-60 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Operations Fiscal Year Ended January 1, 2011 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net Sales ...... $148,628 $1,411,195 $ 63,412 $ — $1,623,235 Cost of goods sold ...... 117,929 686,630 27,380 — 831,939 Gross Profit ...... 30,699 724,565 36,032 — 791,296 Selling, general & administrative expenses . . 90,094 728,946 31,035 (107) 849,968 Impairment of intangible assets ...... — 2,331 263 — 2,594 Operating (Loss) Income .... (59,395) (6,712) 4,734 107 (61,266) Other income (expense), net 22,370 9,368 (5,049) — 26,689 Equity in (losses) earnings of consolidated subsidiaries — continuing operations ...... (6,026) (9,843) — 15,869 — Interest (expense) income, net...... (56,120) 21,168 (20,789) — (55,741) (Loss) Income Before Provision (Benefit) for Income Taxes ...... (99,171) 13,981 (21,104) 15,976 (90,318) Provision for income taxes . . 191 6,312 2,541 — 9,044 (Loss) Income from Continuing Operations .... (99,362) 7,669 (23,645) 15,976 (99,362) Discontinued operations, net of income taxes ...... (5,477) (22,668) (124,802) — (152,947) Equity in (losses) earnings of consolidated subsidiaries — discontinued operations, net of income taxes ..... (147,470) (130,753) — 278,223 — Net (Loss) Income ...... (252,309) (145,752) (148,447) 294,199 (252,309) Net (loss) income attributable to the noncontrolling interest . . . (842) (842) — 842 (842) Net (Loss) Income Attributable to Fifth & Pacific Companies, Inc. . . . $(251,467) $ (144,910) $(148,447) $293,357 $ (251,467)

F-61 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Comprehensive Loss Fiscal Year Ended January 1, 2011 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net (Loss) Income ...... $(252,309) $(145,752) $(148,447) $294,199 $(252,309) Other Comprehensive Income (Loss), Net of Income Taxes . 3,069 69,664 (13,340) (56,324) 3,069 Comprehensive (Loss) Income . (249,240) (76,088) (161,787) 237,875 (249,240) Comprehensive loss (income) attributable to the noncontrolling interest . . . 842 842 — (842) 842 Comprehensive (Loss) Income Attributable to Fifth & Pacific Companies, Inc. .... $(248,398) $ (75,246) $(161,787) $237,033 $(248,398)

F-62 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Cash Flows Fiscal Year Ended December 29, 2012 (In thousands)

Parent Company Guarantor Non-Guarantor Fifth & Pacific Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net cash (used in) provided by operating activities ...... $(22,221) $ 50,699 $(14,946) $(2,174) $ 11,358 Cash Flows from Investing Activities: Purchases of property and equipment . . (4,841) (67,031) (10,920) — (82,792) Payments for purchases of businesses . ——(41,027) — (41,027) Payments for in-store merchandise shops . (231) (2,437) (373) — (3,041) Investments in and advances to equity investees ...... ——(5,000) — (5,000) (Increase) decrease in investments in and advances to consolidated subsidiaries ...... (61,526) 59,181 2,345 —— Other, net ...... (28) 733 60 — 765 Net cash used in investing activities . . (66,626) (9,554) (54,915) — (131,095) Cash Flows from Financing Activities: Proceeds from borrowings under revolving credit agreement ...... 247,097 ———247,097 Repayment of borrowings under revolving credit agreement ...... (247,097) ———(247,097) Proceeds from issuance of Senior Secured Notes ...... 164,540 ———164,540 (Decrease) increase in intercompany loans ...... (19,558) (49,615) 69,173 —— Repayment of Euro Notes ...... (158,027) ———(158,027) Principal payments under capital lease obligations ...... (4,476) ———(4,476) Proceeds from exercise of stock options . 6,205 ———6,205 Payment of deferred financing fees . . . (7,140) ———(7,140) Net cash (used in) provided by financing activities ...... (18,456) (49,615) 69,173 — 1,102 Effect of Exchange Rate Changes on Cash and Cash Equivalents ...... (6,640) (7,005) 11,746 — (1,899) Net Change in Cash and Cash Equivalents ...... (113,943) (15,475) 11,058 (2,174) (120,534) Cash and Cash Equivalents at Beginning of Period ...... 144,783 20,302 15,016 (165) 179,936 Cash and Cash Equivalents at End of Period ...... $ 30,840 $ 4,827 $ 26,074 $(2,339) $ 59,402

F-63 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Cash Flows Fiscal Year Ended December 31, 2011 (In thousands)

Parent Guarantor Non-Guarantor Fifth & Pacific Company Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net cash provided by (used in) operating activities ...... $230,480 $(249,842) $ (6,021) $ 8,355 $ (17,028) Cash Flows from Investing Activities: Purchases of property and equipment . (32,962) (32,557) (8,134) — (73,653) Net proceeds from dispositions ...... — 309,717 ——309,717 Payments for in-store merchandise shops . — (2,942) (517) — (3,459) Investments in and advances to equity investees ...... — (2,506) ——(2,506) Decrease (increase) in investments in and advances to consolidated subsidiaries ...... 108,477 (86,954) (21,523) —— Other, net ...... 60 (251) 626 — 435 Net cash provided by investing activities of discontinued operations . — 2,341 75,078 — 77,419 Net cash provided by investing activities ...... 75,575 186,848 45,530 — 307,953 Cash Flows from Financing Activities: Proceeds from borrowings under revolving credit agreement ...... 651,507 ———651,507 Repayment of borrowings under revolving credit agreement ...... (671,907) ———(671,907) Proceeds from issuance of Senior Secured Notes ...... 220,094 ———220,094 (Decrease) increase in intercompany loans ...... (99,119) 129,104 (29,985) —— Repayment of Euro Notes ...... (309,159) ———(309,159) Principal payments under capital lease obligations ...... (4,216) ———(4,216) Proceeds from exercise of stock options . . 304 ——— 304 Payment of deferred financing fees . . . (11,000) — (168) — (11,168) Other, net ...... (805) ———(805) Net cash used in financing activities of discontinued activities ...... ——(2,663) — (2,663) Net cash (used in) provided by financing activities ...... (224,301) 129,104 (32,816) — (128,013) Effect of Exchange Rate Changes on Cash and Cash Equivalents ...... 59,607 (50,014) (15,283) — (5,690) Net Change in Cash and Cash Equivalents ...... 141,361 16,096 (8,590) 8,355 157,222 Cash and Cash Equivalents at Beginning of Period ...... 3,422 4,206 23,606 (8,520) 22,714 Cash and Cash Equivalents at End of Period ...... $144,783 $ 20,302 $ 15,016 $ (165) $ 179,936

F-64 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Cash Flows Fiscal Year Ended January 1, 2011 (In thousands)

Parent Guarantor Non-Guarantor Fifth & Pacific Company Issuer Subsidiaries Subsidiaries Eliminations Companies, Inc. Net cash provided by (used in) operating activities ...... $ 85,866 $ 80,177 $(26,072) $ 10,670 $ 150,641 Cash Flows from Investing Activities: Proceeds from sales of property and equipment ...... 1,119 7,138 — 8,257 Purchases of property and equipment . (9,844) (40,921) (5,972) — (56,737) Payments for purchases of businesses . . (5,000) —— —(5,000) Payments for in-store merchandise shops . — (2,502) (490) — (2,992) Investments in and advances to equity investees ...... — (4,033) ——(4,033) Decrease (increase) in investments in and advances to consolidated subsidiaries ...... 52,878 (137,586) 84,708 —— Dividends received (paid) ...... 70 (70) —— Other, net ...... (779) 793 (697) — (683) Net cash provided by (used in) investing activities of discontinued operations ...... — 2,456 (28,567) — (26,111) Net cash provided by (used in) investing activities ...... 38,444 (174,725) 48,982 — (87,299) Cash Flows from Financing Activities: Short-term borrowings, net ...... (1,572) —— —(1,572) Proceeds from borrowings under revolving credit agreement ...... 506,940 —— —506,940 Repayment of borrowings under revolving credit agreement ...... (525,427) —— —(525,427) (Decrease) increase in intercompany loans ...... (89,705) 87,900 1,805 —— Principal payments under capital lease obligations ...... (5,642) —— —(5,642) Proceeds from exercise of stock options . . 24 —— — 24 Payment of deferred financing fees . . . (14,665) —— —(14,665) Net cash used in financing activities of discontinued activities ...... ——(23,305) — (23,305) Net cash (used in) provided by financing activities ...... (130,047) 87,900 (21,500) — (63,647) Effect of Exchange Rate Changes on Cash and Cash Equivalents ...... 5,319 5,573 (8,245) — 2,647 Net Change in Cash and Cash Equivalents ...... (418) (1,075) (6,835) 10,670 2,342 Cash and Cash Equivalents at Beginning of Period ...... 3,840 5,281 30,441 (19,190) 20,372 Cash and Cash Equivalents at End of Period ...... $ 3,422 $ 4,206 $ 23,606 $ (8,520) $ 22,714

F-65 Fifth & Pacific Companies, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 25: SUBSEQUENT EVENTS On January 22, 2013, a holder of $11.2 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 3,171,670 shares of the Company’s common stock. The Company paid accrued interest on the holder’s Convertible Notes through the settlement date in cash. In connection with the January 31, 2013 expiration of an agreement with Li & Fung to provide distribution services in the US, the Company has discontinued the migration of its distribution function to Li & Fung and has decided to continue to utilize the Ohio Facility for such function. On February 5, 2013, the Company, which operated its Ohio Facility with an extended collective bargaining agreement, entered into a contract with a third-party facility operations management company to provide distribution operations services at the Ohio Facility with a variable cost structure. The third-party facility operations management company has informed the Company that it intends to employ the Company’s prior employees at the facility. The Company has notified the employees covered by the CBA of the completion of layoffs on March 31, 2013, at which time the Agreement and CBA terminate.

F-66 Fifth & Pacific Companies, Inc. and Subsidiaries SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Additions Balance at Charged Beginning to Costs and Charged to Balance at In thousands of Period Expenses Other Accounts Deductions End of Period YEAR ENDED DECEMBER 29, 2012 Accounts receivable — allowance for doubtful accounts ...... $ 340 $ 1,555 $ — $ 270(a) $ 1,625 Allowance for returns ...... 8,053 109,493 — 109,045 8,501 Allowance for discounts ...... 569 3,626 — 3,662 533 Deferred tax valuation allowance ...... 494,745 50,820 ——545,565 YEAR ENDED DECEMBER 31, 2011 Accounts receivable — allowance for doubtful accounts ...... $ 16,567 $ 581 $ — $ 16,808(a)(b) $ 340 Allowance for returns ...... 17,218 114,979 — 124,144 8,053 Allowance for discounts ...... 919 7,071 — 7,421 569 Deferred tax valuation allowance ...... 452,855 41,890 ——494,745 YEAR ENDED JANUARY 1, 2011 Accounts receivable — allowance for doubtful accounts ...... $ 25,575 $ 8,046 $ — $ 17,054(a) $ 16,567 Allowance for returns ...... 23,773 123,914 — 130,469 17,218 Allowance for discounts ...... 2,668 12,746 — 14,495 919 Deferred tax valuation allowance ...... 351,730 101,125 ——452,855

(a) Uncollectible accounts written off, less recoveries. (b) Deductions for the year ended December 31, 2011 reflect the sale of an 81.25% interest in the global MEXX business.

F-67 EXHIBIT 31(a) SECTION 302 CERTIFICATION I, William L. McComb, certify that: 1. I have reviewed this Annual Report on Form 10-K of Fifth & Pacific Companies, Inc. (the ‘‘registrant’’); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 21, 2013 By: /s/ William L. McComb William L. McComb Chief Executive Officer EXHIBIT 31(b) SECTION 302 CERTIFICATION I, George M. Carrara, certify that: 1. I have reviewed this Annual Report on Form 10-K of Fifth & Pacific Companies, Inc. (the ‘‘registrant’’); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 21, 2013 By: /s/ George M. Carrara George M. Carrara Chief Financial Officer EXHIBIT 32(a) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Fifth & Pacific Companies, Inc. (the ‘‘Company’’) on Form 10-K for the period ending December 29, 2012 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, William L. McComb, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William L. McComb William L. McComb Chief Executive Officer

Date: February 21, 2013 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-K or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to Fifth & Pacific Companies, Inc. and will be retained by Fifth & Pacific Companies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EXHIBIT 32(b) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Fifth & Pacific Companies, Inc. (the ‘‘Company’’) on Form 10-K for the period ending December 29, 2012 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, George M. Carrara, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ George M. Carrara George M. Carrara Chief Financial Officer

Date: February 21, 2013 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-K or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to Fifth & Pacific Companies, Inc. and will be retained by Fifth & Pacific Companies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. PRINCIPAL EXECUTIVES BOARD OF DIRECTORS REGISTRAR & TRANSFER AGENT Computershare William L. McComb Bernard W. Aronson 3, 4 P.O. Box 43006 Chief Executive Ocer Managing Partner Providence, RI 02940-3006 ACON Investments LLC or George M. Carrara 480 Washington Boulevard Executive Vice President Lawrence S. Benjamin 2, 3 Jersey City, NJ 07310-1900 Chief Financial Ocer and Managing Director 1-866-828-8170 - U.S./Canada Chief Operating Ocer Capwell Partners LLC 1-201-680-6578 - Outside the U.S./Canada 1-800-231-5469 - (Hearing Impaired – TDD Phone) William Higley Raul J. Fernandez 2, 4 Website: www.computershare.com/investor Senior Vice President Chairman of the Board Human Resources ObjectVideo, Inc. Send Certificates for Transfer and Address Changes to: Jane Randel Kenneth B. Gilman 1, 4 Computershare Senior Vice President Retired Chief Executive Ocer P.O. Box 43006 Corporate Communications Asbury Automotive Group Providence, RI 02940-3006 and Brand Services Nancy J. Karch 1, 3 INDEPENDENT REGISTERED PUBLIC Nicholas Rubino Director Emeritus ACCOUNTING FIRM Senior Vice President McKinsey & Co. Deloitte & Touche LLP Chief Legal Ocer, 2 World Financial Center General Counsel and Secretary Kenneth P. Kopelman 4 New York, NY 10281 Partner in the New York City law firm of Robert J. Vill Kramer, Levin, Naftalis & Frankel LLP FORM 10-K Senior Vice President A copy of the Company’s Annual Report on Form Finance and Treasurer Kay Koplovitz 3 10-K, as filed with the United States Securities Chairman and Exchange Commission (SEC), is available to Linda Yanussi Fifth & Pacific Companies, Inc. stockholders without charge upon written Senior Vice President Principal request to: Fifth & Pacific Companies, Inc., Information Technology Koplovitz & Co. LLC Investor Relations Department, 5901 West Side and Global Operations Avenue, North Bergen, New Jersey 07047, or by Arthur C. Martinez 1, 2 visiting www.fifthandpacific.com. Timothy Gunn Retired Chairman, President Fashion Dean and Chief Executive Ocer CERTIFICATIONS Sears, Roebuck and Company Fifth & Pacific Companies, Inc. has filed with the Michael Rinaldo SEC all required certifications of the Chief Vice President William L. McComb Executive Ocer and Chief Financial Ocer Corporate Controller Chief Executive Ocer regarding the quality of Fifth & Pacific Companies, and Chief Accounting Ocer Inc.’s public disclosure for the period ended Doreen A. Toben 1, 2 December 29, 2012. In addition, the Company’s Retired Chief Financial Ocer Chief Executive Ocer provided to the New York and Executive Vice President Stock Exchange (NYSE) the annual certification Verizon Communications, Inc. of the Chief Executive Ocer regarding Fifth & Pacific Companies, Inc.’s compliance with the NYSE’s corporate governance listing standards. 1 Member, Audit Committee 2 Member, Compensation Committee 3 Member, Nominating and Governance ANNUAL MEETING Committee The Annual Meeting of Stockholders will be held at 4 Member, Finance Committee 10:00 a.m., local time, on Tuesday, May 14, 2013 at 1440 Broadway, New York, New York.

Please recycle this document and help to preserve our environment. 1441 BROADWAY, NEW YORK, NY 10018 FIFTHANDPACIFIC.COM ©2013 FIFTH & PACIFIC COMPANIES, INC. Exhibit 210

Annual Report 2014

Global Flagship: Ginza, Japan

Shop-in-Shop: Macy’s Herald Square CONSOLIDATED FINANCIAL HIGHLIGHTS: KATE SPADE & COMPANY

Kate Spade & Company (NYSE: KATE) designs and markets accessories and apparel principally under two global, multichannel lifestyle brands: kate spade new york and Jack Spade. With collections spanning demographics, genders and geographies, the brands are intended to accent customers’ interesting lives and inspire adventure at each turn. The Company also owns the Adelington Design Group, a private brand jewelry design and development group that markets brands through department stores and serves jcpenney via exclusive supplier agreements for the Liz Claiborne and Monet jewelry lines. The Company also has a license for the Liz Claiborne New York brand, available at QVC, and Lizwear, which is distributed through the club store channel.

(Amounts in thousands, except per common share data) 2014 2013 2012

NET SALES $ 1,138,603 $ 803,371 $ 544,765 GROSS PROFIT 680,271 496,590 339,932 OPERATING INCOME (LOSS) 33,472 20,215 (36,022) INCOME (LOSS) FROM CONTINUING OPERATIONS (1)(2) 76,726 (32,165) (52,687) NET INCOME (LOSS)(2) 159,160 72,995 (74,505) PER COMMON SHARE DATA: BASIC INCOME (LOSS) FROM CONTINUING OPERATIONS 0.61 (0.27) (0.48) NET INCOME (LOSS) 1.26 0.60 (0.68) DILUTED INCOME (LOSS) FROM CONTINUING OPERATIONS 0.60 (0.27) (0.48) NET INCOME (LOSS) 1.25 0.60 (0.68) WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC 126,264 121,057 109,292 WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED (3) 127,019 121,057 109,292 WORKING CAPITAL 221,705 206,473 36,407 NET DEBT (4) 226,699 263,979 346,892

NET SALES ($ MILLIONS)

2014 $1,139

2013 $803

2012 $545

WORKING CAPITAL ($ MILLIONS)

2014 $222

2013 $206

2012 $36

NET DEBT ($ MILLIONS) (4)

2014 $227

2013 $264

2012 $347

For further information, see Item 6 – Selected Financial Data and the Consolidated Financial Statements and notes thereto, which are included within the body of the accompanying report.

For further information on Adjusted EBITDA and Comparable Adjusted EBITDA, please refer to the Company’s fourth quarter 2014 earnings release posted to the Investor Relations section of the Company website at www.katespadeandcompany.com.

(1) During 2014, 2013 and 2012, we recorded pretax charges of $42.0 million, $10.6 million and $43.2 million, respectively, related to our streamlining initiatives, which are discussed in Note 13 of Notes to Consolidated Financial Statements.

During 2013, we recorded a pretax non-cash impairment charge of $6.1 million related to our former investment in the Mexx business.

During 2014 and 2013, we recorded pretax non-cash impairment charges of $1.5 million and $3.3 million, respectively, in our Adelington Design Group segment related to the TRIFARI trademark.

During 2012, we recorded a pretax gain of $40.1 million related to the KSJ Buyout (see Note 2 of Notes to Consolidated Financial Statements).

(2) During 2014, we recorded a net beneit of $87.4 million resulting from the reversal of reserves for uncertain tax positions due to the expiration of the related statutes of limitations.

(3) Because we incurred losses from continuing operations in 2013 and 2012, outstanding stock options, nonvested shares and potentially dilutive shares issuable upon conversion of the Convertible Notes are antidilutive. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods.

(4) Total debt less cash and cash equivalents and marketable securities. Dear Fellow Stockholders:

Just over a year ago, we began a new chapter and became Kate Spade & Company. We have delivered industry-leading sales results and made decisions through the lens of building brand equity, generating signiicant awareness and expanding margins as we focus on our two key axes of growth – geographic expansion and product category expansion. Our achievements in 2014 paint a picture of Kate Spade & Company’s strong momentum and speak to our progress as we work towards our long-term goal of becoming a four billion dollar business at retail.

Maximizing proitability so that ours is a long-term growth story

We are, irst and foremost, a growth story. In 2014, Kate Spade & Company continued topline expansion, with net sales for the full year of $1.139 billion, a 42% increase compared to 2013 and an increase in comparable direct-to-consumer sales of 24%, relecting outperformance across all regions. In addition, full year Adjusted EBITDA increased 67% on a comparable basis to $147 million. We also completed the Juicy Couture wind down and the sale of Lucky Brand, and successfully recapitalized our balance sheet. Our aggressive growth path is balanced as we work to enhance quality of sale and manage our points of distribution to foster aspiration and continue to drive demand, protecting the brand so that ours is a long-term growth story.

Continuing to advance along our two axes of growth

In 2014, we made signiicant progress along our two key axes of growth – geographic expansion and product category expansion. We continue to apply the right resources to targeted initiatives to maximize proitability. And in early 2015, we took actions with our Kate Spade Saturday and Jack Spade businesses that will help accelerate our lifestyle brand vision and better position us to deliver on kate spade new york’s full potential.

On the geographic axis, we continued to see increased demand in North America, with a full year net sales increase of 49% to $892 million and growth across all product categories. Internationally, our full year net sales increased 47% to $214 million, driven primarily by performance in Japan and Southeast Asia. We launched our UK eCommerce site, an important step as we strengthen our foothold in Europe and establish our brand in key European fashion capitals. And, in January 2015, we announced an important partnership with Walton Brown, a subsidiary of The Lane Crawford Joyce Group, Asia’s premier fashion retail and brand management group, to scale our brand presence in Greater China.

On the product category axis, we established our four category pillars, women’s, men’s children’s and home. Our women’s business continues to thrive and we recently introduced our swimwear collection. We remain focused on our elastic categories, and our recently announced global licensing agreement for watches with Fossil Group relects our commitment to drive licensing revenue and expand our margin through a partnered approach. In addition, we now have a better understanding of our customers’ weekend style through our work on Kate Spade Saturday. Our decision in early 2015 to absorb key elements of its success into kate spade new york will allow us to concentrate on the explosive growth of the kate spade new york brand.

We are committed to our men’s heritage and Jack Spade’s evolved business model will enable the brand to leverage the distribution network of our retail partners and expand our eCommerce platform, providing a path to grow the brand and expand our customer base. The collection will evolve to include tailored clothing and dress furnishings, in addition to sportswear and bags.

In early 2015, we continued our expansion, launching a childrenswear collection, which provides us the opportunity to share the world of kate spade new york with an entirely new demographic. We also announced four new home décor licensing agreements with best-in-class partners that are expected to fuel our growth in that category, as we progress toward becoming a more complete lifestyle brand.

Looking ahead – becoming a powerful, global, multichannel lifestyle brand

In the year ahead, we will continue to focus our resources on targeted initiatives designed to generate strong results, maximize proitability and deliver stockholder value. We are uniquely positioned to fulill our lifestyle brand vision and remain focused on reaching our customers in all facets of their lives.

Our goals are ambitious, but passion and drive are deeply rooted in our heritage. We are still early in our journey as Kate Spade & Company; thank you for your continued support.

Sincerely,

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

FORM 10-K (Mark One) ፼ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 3, 2015 or អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 1-10689 KATE SPADE & COMPANY (Exact name of registrant as specified in its charter)

Delaware 13-2842791 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 2 Park Avenue, New York, New York 10016 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 212-354-4900 Securities registered pursuant to Section 12(b) of the Act: Title of class Name of each exchange on which registered Common Stock, par value $1.00 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ፼ No អ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the ‘‘Act’’). Yes អ No ፼ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ፼ No អ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ፼ No អ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ፼ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer ፼ Accelerated filer អ Non-accelerated filer អ Smaller reporting company អ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes អ No ፼ Based upon the closing sale price on the New York Stock Exchange on July 3, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, which quarter ended July 5, 2014, the aggregate market value of the registrant’s Common Stock, par value $1.00 per share, held by non-affiliates of the registrant on such date was approximately $4,760,642,000. For purposes of this calculation, only executive officers and directors are deemed to be the affiliates of the registrant. Number of shares of the registrant’s Common Stock, par value $1.00 per share, outstanding as of February 20, 2015: 127,416,971 shares. Documents Incorporated by Reference: Registrant’s Proxy Statement relating to its Annual Meeting of Stockholders to be held on May 19, 2015-Part III. TABLE OF CONTENTS

Page PART I Item 1 Business ...... 6 Item 1A Risk Factors ...... 17 Item 1B Unresolved Staff Comments ...... 31 Item 2 Properties ...... 32 Item 3 Legal Proceedings ...... 32 Item 4 Mine Safety Disclosures ...... 33

PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...... 34 Item 6 Selected Financial Data ...... 37 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 38 Item 7A Quantitative and Qualitative Disclosures About Market Risk ...... 62 Item 8 Financial Statements and Supplementary Data ...... 63 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...... 63 Item 9A Controls and Procedures ...... 63 Item 9B Other Information ...... 63

PART III Item 10 Directors, Executive Officers and Corporate Governance ...... 64 Item 11 Executive Compensation ...... 64 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...... 64 Item 13 Certain Relationships and Related Transactions, and Director Independence ...... 65 Item 14 Principal Accounting Fees and Services ...... 65

PART IV Item 15 Exhibits and Financial Statement Schedules ...... 65 Signatures ...... 71 Index to Consolidated Financial Statements and Schedule ...... F-1

2 STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Statements contained in, or incorporated by reference into, this Annual Report on Form 10-K, future filings by us with the Securities and Exchange Commission (‘‘SEC’’), our press releases, and oral statements made by, or with the approval of, our authorized personnel, that relate to our future performance or future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements are indicated by words or phrases such as ‘‘intend,’’ ‘‘anticipate,’’ ‘‘plan,’’ ‘‘estimate,’’ ‘‘target,’’ ‘‘aim,’’ ‘‘forecast,’’ ‘‘project,’’ ‘‘expect,’’ ‘‘believe,’’ ‘‘we are optimistic that we can,’’ ‘‘current visibility indicates that we forecast,’’ ‘‘contemplation’’ or ‘‘currently envisions’’ and similar phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control, that could cause actual results to differ materially from those suggested by the forward-looking statements, including, without limitation: • our ability to successfully implement our long-term strategic plans; • general economic conditions in the United States, Asia, Europe and other parts of the world; • our exposure to currency fluctuations; • levels of consumer confidence, consumer spending and purchases of discretionary items, including fashion apparel and related products, such as ours; • changes in the cost of raw materials, occupancy, labor, advertising and transportation which could impact prices of our products; • our ability to expand into markets outside of the US, including our ability to promote brand awareness in our international markets, find suitable partners in certain of those markets and hire and retain key employees for those markets; • our ability to maintain targeted profit margins and levels of promotional activity; • our ability to anticipate and respond to constantly changing consumer demands and tastes and fashion trends, across multiple brands, product lines, shopping channels and geographies; • the impact of the highly competitive nature of the markets within which we operate, both within the US and abroad; • issues related to our current level of debt, including an inability to pursue certain business strategies because of the restrictive covenants in the agreements governing our debt and our potential inability to obtain the capital resources needed to operate and grow our business; • restrictions in the credit and capital markets, which would impair our ability to access additional sources of liquidity, if needed; • our ability to expand our retail footprint with profitable store locations; • our ability to implement operational improvements and realize economies of scale in finished product and raw material costs in connection with growth in our business; • our ability to expand into new product categories; • our ability to successfully implement our marketing initiatives; • our ability to complete the wind-down of our KATE SPADE SATURDAY business and JACK SPADE retail store operations in a satisfactory manner and to manage the associated costs,

3 including the impact on our relationships with our employees, vendors, distributors and landlords and unanticipated expenses and charges that may occur, such as litigation risk, including litigation regarding employment and workers’ compensation; • risks associated with the various businesses we have disposed, including collection of the full amount of principal and interest due and owing pursuant to a three year note issued by Lucky Brand Dungarees, LLC, an affiliate of Leonard Green & Partners, L.P., to us as partial consideration for the purchase of the Lucky Brand business and compliance with our transition service requirements; • our dependence on a limited number of large US department store customers, and the risk of consolidations, restructurings, bankruptcies and other ownership changes in the retail industry and financial difficulties at our larger department store customers; • whether we will be successful operating the KATE SPADE businesses in Japan and the risks associated with such operations; • risks associated with decreased diversification of our business as a result of the reduction of our brand portfolio to the KATE SPADE and Adelington Design Group businesses; • risks associated with material disruptions in our information technology systems, both owned and licensed, and with our third party e-commerce platforms and operations; • risks associated with data security, including privacy breaches; • risks associated with credit card fraud and identity theft; • our ability to attract and retain talented, highly qualified executives, and maintain satisfactory relationships with our employees; • our ability to adequately establish, defend and protect our trademarks and other proprietary rights; • risks associated with the dependence of our Adelington Design Group business on third party arrangements and partners; • our reliance on independent foreign manufacturers, including the risk of their failure to comply with safety standards or our policies regarding labor practices; • risks associated with our buying/sourcing agreement with Li & Fung Limited, which results in a single third party foreign buying/sourcing agent for a significant portion of our products; • risks associated with our arrangement to operate our leased Ohio distribution facility with a third party operations and labor management company that provides distribution operations services, including risks related to increased operating expenses, systems capabilities and operating under a third party arrangement; • risks associated with severe weather, natural disasters, public health crises, war, terrorism or other catastrophic events; • a variety of legal, regulatory, political, labor and economic risks, including risks related to the importation and exportation of product, tariffs and other trade barriers; • our ability to adapt to and compete effectively in the current quota environment in which general quota has expired on apparel products, but political activity seeking to re-impose quota has been initiated or threatened; • risks associated with third party service providers, both domestic and overseas, including service providers in the area of e-commerce;

4 • limitations on our ability to utilize all or a portion of our US deferred tax assets if we experience an ‘‘ownership change’’; and • the outcome of current and future litigation and other proceedings in which we are involved. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All subsequent written and oral forward-looking statements concerning the matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are qualified by these cautionary statements. Forward-looking statements are based on current expectations only and are not guarantees of future performance, and are subject to certain risks, uncertainties and assumptions, including those described in this Annual Report on Form 10-K in ‘‘Item 1A — Risk Factors.’’ We may change our intentions, beliefs or expectations at any time and without notice, based upon any change in our assumptions or otherwise. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. In addition, some factors are beyond our control. We undertake no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise.

WEBSITE ACCESS TO COMPANY REPORTS Our investor website can currently be accessed at www.katespadeandcompany.com under ‘‘Investor Relations.’’ Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Registration Reports on Form S-3, Current Reports on Form 8-K, Specialized Disclosure Report on Form SD and amendments to those reports filed or furnished to the SEC pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our investor website under the caption ‘‘Financial Reports — SEC Filings’’ promptly after we electronically file such materials with, or furnish such materials to, the SEC. No information contained on any of our websites is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. Information relating to corporate governance at our Company, including our Corporate Governance Guidelines, our Code of Ethics and Business Practices for all directors, officers, and employees, and information concerning our directors, Committees of the Board, including Committee charters, and transactions in Company securities by directors and executive officers, is available at our investor website under the captions ‘‘Corporate Governance’’ and ‘‘Financial Reports — SEC Filings.’’ Paper copies of these filings and corporate governance documents are available to stockholders free of charge by written request to Investor Relations, Kate Spade & Company, 2 Park Avenue, New York, New York 10016. Documents filed with the SEC are also available on the SEC’s website at www.sec.gov. We were incorporated in January 1976 under the laws of the State of Delaware. In this Annual Report on Form 10-K, unless the context requires otherwise, references to ‘‘our,’’ ‘‘us,’’ ‘‘we’’ and ‘‘the Company’’ mean Kate Spade & Company and its consolidated subsidiaries. Our fiscal year ends on the Saturday closest to January 1. All references to ‘‘2014’’ represent the 53 week fiscal year ended January 3, 2015. All references to ‘‘2013’’ represent the 52 week fiscal year ended December 28, 2013. All references to ‘‘2012’’ represent the 52 week fiscal year ended December 29, 2012.

5 PART I Item 1. Business. OVERVIEW AND NARRATIVE DESCRIPTION OF BUSINESS General Kate Spade & Company designs and markets accessories and apparel under three global, multichannel lifestyle brands: kate spade new york, KATE SPADE SATURDAY and JACK SPADE. In addition, the Adelington Design Group, a private brand jewelry design and development group, markets brands through department stores and serves J.C. Penney Corporation, Inc. (‘‘JCPenney’’) via exclusive supplier agreements for the LIZ CLAIBORNE and MONET jewelry lines.

Recent Initiatives and Business Strategy We have pursued transactions and initiatives with a focus on the long-term growth of the kate spade new york brand. In 2014, we sold 100.0% of the capital stock of Lucky Brand Dungarees, Inc. to LBD Acquisition Company, LLC (‘‘LBD Acquisition’’), a Delaware limited liability company and affiliate of Leonard Green & Partners, L.P. (‘‘Leonard Green’’), for aggregate consideration of $225.0 million, comprised of $140.0 million cash consideration and a three-year $85.0 million note (the ‘‘Lucky Brand Note’’) issued by the successor of LBD Acquisition, Lucky Brand Dungarees, LLC (‘‘Lucky Brand LLC’’), to the Company at closing, subject to working capital and other adjustments. In 2014, we completed the wind-down of the Juicy Couture operations after selling the Juicy Couture brandname and related intellectual property assets (the ‘‘Juicy Couture IP’’) in 2013. During 2014 and early 2015, we also: • entered a global licensing agreement with Fossil Group, Inc. for the design, development and distribution of kate spade new york watches through 2025, with the first collection of watches designed, developed and distributed in collaboration with us to launch in 2016; • announced we will discontinue KATE SPADE SATURDAY as a standalone business and close our Company-owned JACK SPADE retail stores, which are expected to be completed in the first half of 2015; • launched the UK KATE SPADE e-commerce website; • completed the refinancing of $372.0 million aggregate principal amount of our former 10.5% Senior Secured Notes due April 2019 with the net proceeds from the issuance of $400.0 million aggregate principal amount of term loans maturing in April 2021; and • completed the fourth amendment to and restatement of our revolving credit facility (as amended to date, the ‘‘ABL Facility’’), which included: (i) a reduction in the size of the facility to $200.0 million; (ii) an extension of the maturity date to May 2019; and (iii) a decrease in fees and interest rates. In February 2014, we reacquired the existing KATE SPADE businesses in Southeast Asia from Globalluxe Kate Spade HK Limited (‘‘Globalluxe’’) for $32.3 million and we announced that in the first quarter of 2015 we expect to: • acquire the 60.0% interest in KS China Co., Limited (‘‘KSC’’) currently owned by E-Land Fashion China Holdings, Limited for $36.0 million, including a contract termination payment of approximately $26.0 million; and • convert the reacquired businesses in Hong Kong, Macau and Taiwan and the KATE SPADE business in China into 50.0% owned joint ventures with Walton Brown, a subsidiary of The Lane Crawford Joyce Group (‘‘LCJG’’), a leading luxury retail, brand management and distribution

6 company in Asia, and receive $21.0 million from LCJG for their interests in the joint ventures, subject to adjustments. We will concentrate our investments on initiatives to further develop kate spade new york into a global lifestyle brand. We have established the following operating and financial goals as we focus our efforts on two axes of growth — geographic expansion and product category expansion: • Continuing to drive top line growth by (i) expanding certain product categories with broad distribution opportunities and high branding relevance, including watches, jewelry, sunglasses and fragrance; (ii) opening new kate spade new york retail locations in North America, Japan and Europe and (iii) launching additional e-commerce platforms in Europe; • Accelerating growth in Greater China through newly formed joint ventures that are expected to leverage the expertise of our joint venture partner and the global demand for our products to establish a strategic network of stores in key cities supported by a robust organizational and marketing platform; • Maximizing licensing opportunities to expand product categories and grow margins through partners for home, watches and other categories; • Extending our use of capital efficient partnerships in selected geographies; • Driving quality of sale initiatives with continued moderation of promotions across channels and increased marketing to support those efforts; and • Increasing investments in marketing that leverage CRM capability and focus on acquiring new full price customers. Macroeconomic challenges and uncertainty continue to persist in the primary markets in which we operate. Therefore, we continue to focus on the careful execution of our strategic plans and seek opportunities to improve our productivity and profitability. We remain focused on driving operating cash flow generation, managing liquidity and the efficient use of working capital.

Business Segments In conjunction with the sale of Lucky Brand and the substantial completion of the Juicy Couture wind-down in the second quarter of 2014, we disaggregated our former KATE SPADE reportable segment into two reportable segments, KATE SPADE North America and KATE SPADE International. We operate our kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands through one operating segment in North America and four operating segments internationally: Japan, Southeast Asia, Europe and Latin America. Our Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent activities for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker to evaluate performance and allocate resources. In identifying our reportable segments, we considered our management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of our operating segments. As such, we configured our operations into the following three reportable segments: • KATE SPADE North America segment — consists of our kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in North America. • KATE SPADE International segment — consists of our kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in International markets (principally in Japan, Southeast Asia, Europe and Latin America). • Adelington Design Group segment — primarily consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands; (ii) the wholesale apparel and wholesale

7 non-apparel operations of the licensed LIZWEAR brand and other brands; and (iii) the licensed LIZ CLAIBORNE NEW YORK brand. We, as licensor, also license to third parties the right to produce and market products bearing certain Company-owned trademarks. See Notes 1 and 18 of Notes to Consolidated Financial Statements and ‘‘Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’

kate spade new york Our kate spade new york brand offers fashion products for women and children, as well as home products, under the kate spade new york trademark. The kate spade new york brand product line includes handbags, small leather goods, fashion accessories, jewelry, fragrances and apparel along with existing licensing agreements for footwear, swimwear, watches, optics, tabletop products, legwear, electronics cases, bedding and stationery. We will also absorb key elements of KATE SPADE SATURDAY into the kate spade new york brand, as a label. These products are sold primarily: (i) in the US and Canada through wholly-owned specialty retail and outlet stores and select specialty retail and upscale department stores; (ii) through our operations in Japan, the United Kingdom, France; (iii) through our operations in Hong Kong, Macau and Taiwan, which are expected to became a joint ventures with Walton Brown in the first quarter of 2015; (iv) through our kate spade new york e-commerce websites; (v) through a joint venture in China; and (vi) through a network of distributors in Mexico, Turkey, Singapore, Malaysia, Thailand, Australia and the Middle East.

JACK SPADE Our JACK SPADE brand offers fashion products for men, including briefcases, travel bags, small leather goods, fashion accessories and apparel under the JACK SPADE trademark. In our effort to evolve the brand and position it to grow with an expanded customer base, we plan to reimagine JACK SPADE as an e-commerce and retail partner focused brand. JACK SPADE products are sold primarily: (i) in the US and Canada in upscale department stores; (ii) through a network of distributors; and (iii) via our JACK SPADE e-commerce website.

ADELINGTON DESIGN GROUP The operations within our Adelington Design Group segment consist principally of: • Exclusive supplier arrangements to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry; • A royalty-free license through July 2020 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC, Inc. (‘‘QVC’’) through the 2009 previously existing license between the Company and QVC (as amended); and • LIZWEAR, women’s apparel available through the club store channel.

SALES AND MARKETING Domestic direct-to-consumer sales are made through our own retail and outlet stores and e-commerce websites. Our domestic wholesale sales are made primarily to department store chains and specialty retail store customers. Wholesale sales are also made to international customers, military exchanges and to other channels of distribution. In Japan, we distribute our products mainly through 85 points of sale, including department store concessions, retail stores and e-commerce. In Southeast Asia, we have wholesale distribution agreements

8 in Singapore, Malaysia and Thailand and a joint venture in China; in the first quarter of 2015, we expect to convert our owned and operated businesses in Hong Kong, Macau and Taiwan to a joint venture. In Europe, direct-to-consumer sales are made through our own specialty retail and outlet stores and concession stores within department store locations. In Canada, direct-to-consumer sales are made through our own specialty retail and outlet stores. In other international markets, including the remainder of Asia, the Middle East, Australia and Latin America, we operate principally through third party distributors, virtually all of which purchase products from us for re-sale at freestanding retail stores and dedicated department store shops they operate. We continually monitor retail sales in order to directly assess consumer response to our products. During 2014, we continued our domestic in-store sales, marketing and merchandising programs designed to encourage multiple item regular price sales, build one-on-one relationships with consumers and maintain our merchandise presentation standards. These programs train sales associates on suggested selling techniques, product, merchandise presentation and client development strategies. In addition, we completed the implementation of a new point of sale system to further enhance our omni-channel capabilities. Our kate spade new york retail stores reflect the distinct personality of the brand, offering a unique shopping experience and exclusive merchandise. We plan to use more targeted communication to customers and evolve the customer shopping experience via: (i) our improved CRM capabilities; (ii) the roll out of a ‘‘gold service’’ selling and service program to certain retail stores; and (iii) expansion of our e-commerce site to include customization and additional merchandise collections.

Specialty Retail Stores, Outlet Stores and Concessions: We operate specialty retail stores under various Company-owned and licensed trademarks, consisting of retail stores within the US and outside the US (primarily in Japan, Southeast Asia, Europe, Latin America and Canada). We also operate outlet stores under various Company-owned and licensed trademarks, consisting of outlet stores within the US and outside the US. Outside of North America (primarily in Japan and Europe), we operate concession stores in select retail stores, which are either owned or leased by a third party department store or specialty store retailer. The following tables set forth select information, as of January 3, 2015, with respect to our kate spade new york specialty retail stores, outlet stores and concessions:

Approximate Number of Average Store Stores Size (Square Feet) US Specialty Retail Stores ...... 93 2,200 Foreign Specialty Retail Stores ...... 32 1,400 US Outlet Stores ...... 57 2,500 Foreign Outlet Stores ...... 14 1,600 Concessions ...... 52 500 As discussed above, we expect to close 27 Company-owned KATE SPADE SATURDAY and JACK SPADE stores and one KATE SPADE SATURDAY concession during 2015.

9 E-commerce: Our products are sold on a number of branded websites. E-commerce continued to be an important business driver in 2014. The following table sets forth select information concerning our websites:

Information and Direct to Website Information Only Consumer Sales loja.katespade.com.br ...... ឡ surprise.katespade.com ...... ឡ www.jackspade.com ...... ឡ www.katespade.cn ...... ឡ www.katespade.co.uk ...... ឡ www.katespade.com ...... ឡ www.katespade.jp ...... ឡ www.katespadeandcompany.com(a) ...... ឡ www.katespadelookbook.com ...... ឡ www.saturday.com(b) ...... ឡ www.saturday.jp(b) ...... ឡ www.worldofkatespade.com ...... ឡ

(a) This website offers investors information concerning the Company.

(b) These websites will remain active during the wind-down phase until the label is incorporated and reintroduced into the kate spade new york brand. We are evolving our direct-to-consumer marketing and distribution activities by enhancing our omni-channel capabilities. Our goal is to create a seamless consumer buying experience across direct-to-consumer sub-channels by allowing fulfillment of e-commerce orders from substantially all retail stores and fulfillment of retail store sales with e-commerce inventory when the merchandise is not initially available in the respective sub-channel. Consumers will also have the ability to place e-commerce orders through point of sale kiosks located within our retail stores. During 2014, we also continued our partnership with eBay Enterprise and mobile-enabled webstores using the DemandWare platform.

Wholesale: No single customer accounted for more than 10.0% of net sales for 2014. Sales to our domestic department and specialty retail store customers are made primarily through our New York City showrooms. Internationally, sales to our department and specialty retail store customers are made through showrooms in the United Kingdom. Orders from our wholesale customers generally precede the related shipping periods by several months. Our largest customers discuss with us retail trends and their plans regarding their anticipated levels of total purchases of our products for future seasons. These discussions are intended to assist us in planning the production and timely delivery of our products. We utilize in-stock reorder programs to enable customers to reorder certain items through electronic means for quick delivery, as discussed below in the section entitled ‘‘Buying/Sourcing.’’ Many of our wholesale customers participate in our in-stock reorder programs through their own internal replenishment systems.

Licensing: We license many of our products to third parties with expertise in certain specialized products and/or market segments, thereby extending each licensed brand’s market presence. As of January 3, 2015, we had

10 17 license arrangements, pursuant to which third party licensees produce merchandise using Company- owned trademarks in accordance with designs furnished or approved by us, the present terms of which (not including renewal terms) expire at various dates through 2020. Our licenses cover a broad range of lifestyle product categories, including but not limited to, tech accessories, footwear, stationery and paper goods, hosiery, optics and sunglasses, tabletop products, children’s wear, swimwear, cold weather accessories, loungewear and sleepwear, furniture and bedding. Such licenses earn revenue based on a percentage of the licensee’s sales of the licensed products against a guaranteed minimum royalty, which generally increases over the term of the agreement. Income from our licensing operations is included in net sales for the segment under which the license resides. In November 2011, we sold the global trademark rights for the LIZ CLAIBORNE family of brands and the trademark rights in the US and Puerto Rico for the MONET brand to JCPenney. The LIZ CLAIBORNE NEW YORK and LIZWEAR trademarks are licensed back to us on a royalty-free basis through July 2020. In addition, certain other trademarks within the LIZ CLAIBORNE family of brands are licensed back to us on a royalty-free basis for sublicense to our pre-existing third party licensees of such trademarks. In October 2009, we also entered into a multi-year license agreement with QVC, granting rights (subject to pre-existing licenses) to certain trademarks and other intellectual property rights. QVC has the rights to use the LIZ CLAIBORNE NEW YORK brand with Isaac Mizrahi as creative director on any apparel, accessories, or home categories in the US and certain international markets. QVC merchandises and sources the product and we provide brand management oversight. The agreement provides for the payment to us of a royalty based on net sales of licensed products by QVC. Pursuant to the November 2011 sale transaction discussed above, we have a royalty-free license from JCPenney to continue to maintain the license with QVC for the LIZ CLAIBORNE NEW YORK trademark through July 2020.

Marketing: Marketing for our brands is focused on reinforcing brand relevance, increasing awareness, engaging consumers and guiding them to our retail stores and e-commerce sites. We use a variety of marketing strategies to enhance our brand equity and promote our brands. These initiatives include direct mail, in-store events and internet marketing, including the use of social media. We incurred expenses of $56.9 million, $42.8 million and $22.7 million for advertising, marketing and promotion for all brands in 2014, 2013 and 2012, respectively. In 2014, we continued our domestic in-store shop and fixture programs, which are designed to enhance the presentation of our products on department store selling floors generally through the use of proprietary fixturing, merchandise presentations and graphics. In-store shops operate under the kate spade new york and JACK SPADE brand names. In 2014, we installed an aggregate of 35 in-store shops. We plan to install an aggregate of approximately 30 additional in-store shops in 2015 under the kate spade new york and JACK SPADE brand names. For further information concerning our domestic and international sales, see Note 18 of Notes to Consolidated Financial Statements.

BUYING/SOURCING Pursuant to a buying/sourcing agency agreement, Li & Fung Limited (‘‘Li & Fung’’) acts as the primary global apparel and accessories buying/sourcing agent, with the exception of our jewelry product lines. We pay to Li & Fung an agency commission based on the cost of product purchases using Li & Fung as our buying/sourcing agent. We are obligated to use Li & Fung as our buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. Our agreement with Li & Fung is not exclusive; however, we are required to source a specified percentage of product purchases from Li & Fung.

11 Products produced in Asia represent a substantial majority of our purchases. We also source product in the US and other regions. During 2014, approximately 151 suppliers located in 15 countries manufactured our products, with the largest finished goods supplier accounting for approximately 12.0% of the total of finished goods we purchased. Purchases from our suppliers are processed utilizing individual purchase orders specifying the price and quantity of the items to be produced. Most of our products are purchased as completed product ‘‘packages’’ from our manufacturing contractors, where the contractor purchases all necessary raw materials and other product components, according to our specifications. When we do not purchase ‘‘packages,’’ we obtain fabrics, trimmings and other raw materials in bulk from various foreign and domestic suppliers, which are delivered to our manufacturing contractors for use in our products. We do not have any long-term, formal arrangements with any supplier of raw materials. To date, we have experienced little difficulty in satisfying our raw material requirements and consider our sources of supply adequate. We operate under substantial time constraints in producing each of our collections. In order to deliver, in a timely manner, merchandise which reflects current tastes, we attempt to schedule a substantial portion of our materials and manufacturing commitments relatively late in the production cycle, thereby favoring suppliers able to make quick adjustments in response to changing production needs and in time to take advantage of favorable (cost effective) shipping alternatives. However, in order to secure necessary materials and to schedule production time at manufacturing facilities, we must make substantial advance commitments prior to the receipt of firm orders from customers for the items to be produced. These advance commitments may have lead times in excess of five months. We continue to seek to reduce the time required to move products from design to the customer. If we misjudge our ability to sell our products, we could be faced with substantial outstanding fabric and/or manufacturing commitments, resulting in excess inventories. See ‘‘Item 1A — Risk Factors.’’ Our buying/sourcing arrangements with Li & Fung and with our foreign suppliers are subject to the risks of doing business abroad, including currency fluctuations and revaluations, restrictions on the transfer of funds, terrorist activities, pandemic disease and, in certain parts of the world, political, economic and currency instability. Our buying/sourcing arrangements with Li & Fung and with our foreign suppliers have not been materially affected by any such factors to date. However, due to the very substantial portion of our products that are produced abroad, any substantial disruption of our relationships with our foreign suppliers could adversely affect our operations. In addition, as Li & Fung is the buying/sourcing agent for a significant portion of our products, we are subject to the risk of having to rebuild such buying/sourcing capacity or find another agent or agents to replace Li & Fung in the event the agreement with Li & Fung terminates, or if Li & Fung is unable to fulfill its obligations under the agreement. In addition, as we rely on independent manufacturers, a manufacturer’s failure to ship product to us in a timely manner, or to meet quality or safety standards, could cause us to miss delivery dates to our retail stores or our wholesale customers. Failure to make deliveries on time could cause our retail customers to expect more promotions and our wholesale customers to seek reduced prices, cancel orders or refuse deliveries, all of which could have a material adverse effect on us. We maintain internal staff responsible for overseeing product safety compliance, irrespective of our agency agreement with Li & Fung. Additionally, we are a certified and validated member of the United States Customs and Border Protection’s Customs-Trade Partnership Against Terrorism (‘‘C-TPAT’’) program and expect all of our suppliers shipping to the United States to adhere to our C-TPAT requirements, including standards relating to facility security, procedural security, personnel security, cargo security and the overall protection of the supply chain. In the event a supplier does not comply with our C-TPAT requirements, or if we determine that the supplier will be unable to correct a deficiency, we may terminate our business relationship with the supplier.

12 IMPORTS AND IMPORT RESTRICTIONS Virtually all of our merchandise imported into the United States, Asia, Canada, Europe and Latin America is subject to duties. The United States may unilaterally impose additional duties in response to a particular product being imported (from China or other countries) in such increased quantities as to cause (or threaten) serious damage to the relevant domestic industry (generally known as ‘‘anti-dumping’’ actions). Furthermore, additional duties, generally known as countervailing duties, can also be imposed by the US Government to offset subsidies provided by a foreign government to foreign manufacturers if the importation of such subsidized merchandise injures or threatens to injure a US industry. Legislative proposals have been put forward which, if adopted, would treat a manipulation by China of the value of its currency as actionable under the anti-dumping or countervailing duty laws. We are also subject to other international trade agreements and regulations, such as the North American Free Trade Agreement, the Central American Free Trade Agreement and the Caribbean Basin Initiative and other ‘‘special trade programs.’’ Each of the countries in which our products are sold has laws and regulations covering imports. Because the US and the other countries into which our products are imported and sold may, from time to time, impose new duties, tariffs, surcharges or other import controls or restrictions, including the imposition of ‘‘safeguard provisions,’’ ‘‘safeguard duties,’’ or adjust presently prevailing duty or tariff rates or levels on products being imported from other countries, we monitor import restrictions and opportunities. The sourcing of imported merchandising is also potentially subject to political developments in the countries of production. We strive to reduce our potential exposure to import related risks through, among other things, adjustments in product design and fabrication and shifts of production among countries and manufacturers. In light of the substantial portion of our products that is manufactured by foreign suppliers, the enactment of new legislation or the administration of current international trade regulations, executive action affecting textile agreements, or changes in buying/sourcing patterns or quota provisions, could adversely affect our operations. The implementation of any ‘‘safeguard provisions,’’ ‘‘countervailing duties,’’ any ‘‘anti-dumping’’ actions or any other actions impacting international trade can result in cost increases for certain categories of products and in disruption of the supply chain for certain product categories. See ‘‘Item 1A — Risk Factors.’’ Apparel and other products sold by us are also subject to regulation in the US and other countries by other governmental agencies, including, in the US, the Federal Trade Commission, the US Fish and Wildlife Service and the Consumer Products Safety Commission. These regulations relate principally to product labeling, content and safety requirements, licensing requirements and flammability testing. We believe that we are in substantial compliance with those regulations, as well as applicable federal, state, local, and foreign regulations relating to the discharge of materials hazardous to the environment. We do not estimate any significant capital expenditures for environmental control matters either in the current year or in the near future. Our licensed products, licensing partners and buying/sourcing agents are also subject to regulation. Our agreements require our licensing partners and buying/sourcing agents to operate in compliance with all laws and regulations and we are not aware of any violations which could reasonably be expected to have a material adverse effect on our business or financial position, results of operations, liquidity or cash flows. Although we have not suffered any material inhibition from doing business in desirable markets in the past, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce trademarks to new markets.

DISTRIBUTION We distribute our products through leased facilities. On February 5, 2013, we entered into a contract with a third-party facility operations and labor management company to provide distribution operations services at our West Chester, OH distribution center (the ‘‘Ohio Facility’’) under a variable cost structure.

13 In July 2013, we completed a sale-leaseback agreement for the Ohio Facility. We received net proceeds of $20.3 million, and we entered into a sale-leaseback arrangement with the buyer for a 10-year term. The agreement does not affect our contract with the third-party facility operations and labor management company to provide distribution operations services at the Ohio Facility. See ‘‘Item 1A — Risk Factors.’’

BACKLOG On February 6, 2015, our order book reflected unfilled customer orders for approximately $98.8 million of merchandise, as compared to approximately $104.1 million at February 7, 2014. These orders represent our order backlog. The amounts indicated include both confirmed and unconfirmed orders, which we believe, based on industry practice and our past experience, will be confirmed. We expect that substantially all such orders will be filled within the 2015 fiscal year. We note that the amount of order backlog at any given date is materially affected by a number of factors, including, among others, seasonality, the mix of product, the timing of the receipt and processing of customer orders and scheduling of the manufacture and shipping of the product, which in some instances is dependent on the desires of the customer. Accordingly, order book data should not be taken as providing meaningful period-to-period comparisons.

TRADEMARKS The following table summarizes the principal trademarks we own and/or use in connection with our businesses and products:

Company Owned Trademarks

AXCESS KATE SPADE SATURDAY JACK SPADE MARVELLA KATE SPADE MONET(a) kate spade new york TRIFARI Third Party Owned Trademarks

LIZ CLAIBORNE(b) LIZWEAR(d) LIZ CLAIBORNE NEW YORK(c)(d) MONET(b)(e)

(a) International rights only. (b) The Company provides jewelry for these brands under exclusive supplier arrangements. (c) As discussed above, QVC is the exclusive specialty retailer for LIZ CLAIBORNE NEW YORK merchandise in the product categories covered by the QVC license agreement (which is subject to pre-existing license agreements) in the US. (d) Licensed to the Company by JCPenney on a royalty-free basis. (e) Domestic rights only. In addition, we own and/or use many other logos and secondary trademarks associated with the above mentioned trademarks. We have registered, or applied for registration of, a multitude of trademarks throughout the world, including those referenced above, for use on a variety of apparel and apparel-related products, including accessories, home furnishings, cosmetics and jewelry, as well as for retail services. We regard our trademarks and other proprietary rights as valuable assets and believe that they have significant value in the marketing of our products. We vigorously protect our trademarks and other intellectual property rights against infringement. In general, trademarks remain valid and enforceable as long as the marks are used in connection with the related products and services and the required registration renewals are filed. We regard the license to use

14 the trademarks and our other proprietary rights in and to the trademarks as valuable assets in marketing our products and, on a worldwide basis, vigorously seek to protect them against infringement. As a result of the appeal of our brands, our products have from time to time been the object of counterfeiting. We have an established and aggressive enforcement program, which we believe has been generally effective in controlling the sale of counterfeit products in the US and in major markets abroad. In markets outside of the US, our rights to some or all of our trademarks may not be clearly established. In the course of our international expansion, we have experienced conflicts with various third parties who have acquired ownership rights in certain trademarks, which would impede our use and registration of some of our principal trademarks. While such conflicts are common and may arise again from time to time as we continue our international expansion, we have generally successfully resolved such conflicts in the past through both legal action and negotiated settlements with third party owners of the conflicting marks. Although we have not in the past suffered any material restraints or restrictions on doing business in desirable markets or in new product categories, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce new and additional brands, both in the US and in other markets.

COMPETITION We are subject to intense competition as the apparel and accessories related product markets are highly competitive, both within the US and abroad. We compete with numerous retailers, designers and manufacturers of apparel and accessories, both domestic and foreign. We compete primarily on the basis of fashion, quality, customer service, price, brand prestige and recognition. Our ability to compete successfully depends upon a variety of factors, including, among other things, our ability to: • anticipate and respond to changing consumer demands in a timely manner; • develop quality and differentiated products that appeal to consumers; • appropriately price products; • establish and maintain favorable brand name and recognition; • maintain and grow market share; • establish and maintain acceptable relationships with our retail customers; • appropriately determine the size and identify the location of our retail stores and department store selling space; • provide appropriate service and support to retailers; • provide effective marketing support and brand promotion; • protect our intellectual property; and • optimize our retail and supply chain capabilities. See ‘‘Item 1A — Risk Factors.’’ Our principal competitors for kate spade new york include Burberry, Coach, Marc by Marc Jacobs, Michael Kors, Ralph Lauren and Tory Burch.

EMPLOYEES At January 3, 2015, we had approximately 3,500 full-time employees worldwide, as compared to approximately 6,800 full-time employees at December 28, 2013.

15 We no longer have any union agreements; however, we continue to have an obligation to the National Retirement Fund due to our cessation of contributions to a multi-employer defined benefit pension fund pursuant to a collective bargaining agreement covering former union employees, which is regulated by the Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’). See Note 13 of Notes to Consolidated Financial Statements. Our relations with our employees are satisfactory and to date we have not experienced any interruption of our operations due to employee issues.

CORPORATE SOCIAL RESPONSIBILITY We are committed to responsible corporate citizenship and giving back to our communities through a variety of avenues. We have several programs in place that support this commitment.

Monitoring Global Working Conditions We are committed to taking the actions we believe are necessary to ensure that our products are made in contracted factories with fair and decent working conditions. We continue this commitment as we operate under our buying/sourcing arrangement with Li & Fung, collaborating with Li & Fung to develop mutually acceptable audit documents and processes, training the Li & Fung audit staff on our compliance program and communicating our standards to Li & Fung suppliers and their workers. The major components of our compliance program are: (i) communicating our standards of engagement to workers, suppliers and associates; (ii) auditing and monitoring against those standards; (iii) providing workers with a confidential reporting channel; (iv) working with non-governmental organizations regarding issues impacting workers; and, (v) working closely with factory management to develop sustainable compliance programs. Suppliers are required to post our standards of engagement in the workers’ native language at all factories where our merchandise is being made. We have used various methods to educate workers regarding our standards and their rights, including development of booklets to better illustrate those standards and involving non-governmental organizations to train workers. The standards of engagement, along with detailed explanations of each standard, are included on our suppliers’ websites. All new suppliers must acknowledge our standards and agree to our monitoring requirements. We audit factories using both internal and independent monitors, provide capacity building for suppliers and look for ways to develop direct communication channels with workers to ensure that they are aware of their rights — built around the well-established Fair Labor Association best practices. More information about our monitoring program is available on our website. As of January 3, 2015, we had approximately 99 active factories on our roster, of which 92 were audited by our internal compliance team, Li & Fung auditors or third party auditors. Additionally, there were 103 follow-up audits. In many cases, we rely on our agents’ audit reports. As such, we continue to conduct shadow audits to confirm that audit protocols and findings are consistent between the two companies. We are aware that auditing only confirms compliance at the time of the audit, and we continue to look for ways to improve our monitoring program and work with suppliers to create sustainable compliance at their factories. Creating workers’ awareness and establishing a channel of communication for reporting issues of non-compliance are two important strategies. We encourage all factories to establish internal grievance procedures and give workers the opportunity to report their concerns directly to the Company. This year, with the help of Li & Fung, we have provided supplier training covering best practices in health and safety and human resources in China and in India.

Philanthropic Programs We have a number of philanthropic programs that support the nonprofit sector in our major operating communities.

16 • The Kate Spade & Company Foundation, established as the Liz Claiborne Foundation in 1981, is a separate nonprofit legal entity supporting nonprofit organizations working with women transforming communities. The Foundation supports programs in and around the New York City metropolitan area where our primary offices are located that offer training and increase access to tools that help women become economically empowered. Notwithstanding the Foundation’s name change in October 2014 to the Kate Spade & Company Foundation, the mission of the Foundation remains focused on women’s economic empowerment. • For more than ten years, we have been committed to creating opportunities for our associates to volunteer and give back to nonprofit organizations in our major operating communities. In 2014, we continued to support our associate volunteering program to create opportunities that reflected our charitable strategies. Furthermore, Kate Spade & Company continues to create Company-wide events that complement our philanthropy supporting women’s economic empowerment, including our On Purpose program. • On Purpose is our trade initiative through which we are teaching a group of women in Masoro, Rwanda to become an independent, sustainable and profitable supplier to Kate Spade & Company and other global fashion brands. • The Merchandise Donation Program provides direct charitable support to meet community needs and support the charitable interests of our associates. When available, we donate product to several types of organizations, including programs for women. In addition, every associate is afforded the opportunity of making one merchandise donation each year to the charitable organization of their choice. • The Matching Gift Program supports and encourages the charitable interests of our associates. Our flexible program matches associates’ gifts at a rate of one to one in the areas of arts, health and safety, education, human services and the environment. Contributions to organizations where associates serve as voluntary board members are matched at a rate of two to one.

Environmental Initiatives We are committed to a long-term sustainable approach to caring for and safeguarding the environment. As such, we endeavor to balance environmental considerations and social responsibility with our business goals by evolving and implementing our corporate environmental policy, in addition to complying with environmental laws and regulations. Our current sustainability policy focuses on three major components — reducing waste, reusing and recycling — to help minimize our impact on the environment.

Item 1A. Risk Factors. You should carefully consider the following risk factors, in addition to other information included in this Annual Report on Form 10-K and in other documents we file with the SEC, in evaluating us and our business. If any of the following risks occur, our business, financial condition, liquidity and results of operations could be materially adversely affected. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks emerge from time to time. Management cannot predict such new risk factors, nor can we assess the impact, if any, of such new risk factors on our business or the extent to which any factor or combination of factors may impact our business.

17 Our business strategy is centered on the kate spade new york brand. We cannot assure the successful implementation and results of our long-term strategic plans, including our ability to operate as a mono-brand company. Our ability to execute our long-term growth plan and achieve our projected results is subject to a variety of risks, including the following: • We are exposed to additional risk from lack of diversification that did not affect our prior multi- brand business strategy as significantly. Our business prospects and results of operations will depend substantially on our ability to successfully maintain and develop the brand image and brand equity of the kate spade new york brand. • The kate spade new york brand could be negatively affected by changes in consumer preferences, brand awareness and fashion trends, and any such changes or other adverse events could have a more significant impact on a single family of brands than a portfolio of multiple brands. • We may be unable to successfully acquire new full-price customers through our marketing and CRM initiatives. • We may not be able to maintain and improve our operating margins and control promotional activity. • We may not be able to successfully absorb the KATE SPADE SATURDAY business as a label under kate spade new york, and we may not be able to successfully transition JACK SPADE to its new business model. • We may not be able to achieve our revenue growth targets because of local, regional, national and worldwide macroeconomic factors that may reduce demand for our products. • We may be unable to grow our revenues through retail expansion because of risks associated with selecting suitable locations for stand-alone retail stores and appropriate department store locations. • We may not be able to expand internationally, including in Japan, China, Europe, Latin America and Southeast Asia, because of local and regional risks associated with those markets, including currency risks, political climate and other similar risks. The joint ventures we expect to form may not succeed in expanding our business in China, Hong Kong, Taiwan and Macau. • We may not be able to gain new customers by managing our price points and introducing new product categories, including watches, jewelry, sunglasses and fragrances. • Our e-commerce expansion is subject to risks associated with a material disruption in our information technology systems and e-commerce operations, and with the introduction of government regulations, including in markets outside of the United States, which could cause unfavorable changes or for which failure by us to comply could substantially harm our e-commerce business. We may not be successful in implementing our long-term growth plan, and our inability to successfully expand our retail business could have a material adverse effect on our business, financial condition, liquidity and results of operations.

General economic conditions in the US, Asia, Europe and other parts of the world, including a continued weakening or instability of such economies, restricted credit markets and lower levels of consumer spending, can affect consumer confidence and consumer purchases of discretionary items, including fashion apparel and related products, such as ours. Our results are dependent on a number of factors impacting consumer spending, both in the US and abroad, including, but not limited to: (i) general economic and business conditions; (ii) consumer confidence; (iii) wages and current and expected employment levels; (iv) the housing market; (v) consumer

18 debt levels; (vi) availability of consumer credit; (vii) credit and interest rates; (viii) fluctuations in foreign currency exchange rates; (ix) fuel and energy costs; (x) energy shortages; (xi) the performance of the financial, equity and credit markets; (xii) taxes; (xiii) general political conditions; and (xiv) the level of customer traffic within department stores, malls and other shopping and selling environments. Global economic conditions over the past few years have included significant recessionary pressures and declines or stagnation in employment levels, disposable income and actual and/or perceived wealth and declines in consumer confidence and economic growth. The current negative economic environment has been characterized by stagnation in consumer discretionary spending and has disproportionately affected retailers and sellers of consumer goods, particularly those whose goods represent discretionary purchases, including fashion apparel and related products such as ours. While the decline in consumer spending has recently moderated, these economic conditions could still lead to additional declines or stagnation in consumer spending over the foreseeable future and may have resulted in a resetting of consumer spending habits that makes it unlikely that such spending will return to prior levels for the foreseeable future. A number of our markets continue to suffer particularly severe downturns, and we have experienced significant declines in revenues. While we have seen intermittent signs of stabilization in North America, there continues to be volatility in the European markets and there are no assurances that the global economy will continue to recover. If the global economy continues to be weak or deteriorates further, there will likely be a negative effect on our revenues, operating margins and earnings across all of our segments. Economic conditions have also led to a highly promotional environment and strong discounting pressure from both our wholesale and retail customers, which have had a negative effect on our revenues and profitability. This promotional environment may likely continue even after economic growth returns, as we expect that consumer spending trends are likely to remain at historically depressed levels for the foreseeable future. The domestic and international political situation also affects consumer confidence. The threat, outbreak or escalation of terrorism, military conflicts or other hostilities could lead to further decreases in consumer spending. The uncertain outlook in the global economy will likely continue to have a material adverse impact on our business, financial condition, liquidity and results of operations. Fluctuations in the price, availability and quality of the fabrics or other raw materials used to manufacture our products, as well as the price for labor, marketing and transportation, could have a material adverse effect on our cost of sales or our ability to meet our customers’ demands. The prices for such fabrics depend largely on the market prices for the raw materials used to produce them. Such factors may be exacerbated by legislation and regulations associated with global climate change. The price and availability of such raw materials may fluctuate significantly, depending on many factors. In the future, we may not be able to pass all or a portion of such higher prices on to our customers.

Our business and balance sheets are exposed to domestic and foreign currency fluctuations. While we generally purchase our products in US dollars, we source most of our products overseas. As a result, the cost of these products may be affected by changes in the value of the relevant currencies, including currency devaluations. Changes in currency exchange rates may also affect the US dollar value of the foreign currency denominated prices at which our international businesses sell products. Our international sales, as well as our international businesses’ inventory and accounts receivable levels, could be affected by currency fluctuations. In addition, with expected international expansion, we may increase our exposure to such fluctuations. Although we from time to time hedge a portion of our exposures to changes in foreign currency exchange rates arising in the ordinary course of business, we cannot assure that foreign currency fluctuations will not have a material adverse impact on our business, financial condition, liquidity or results of operations.

19 The success of our business depends on our ability to anticipate and respond to constantly changing consumer demands and tastes and fashion trends, across multiple brands, product lines, shopping channels and geographies. The apparel and accessories industries have historically been subject to rapidly changing consumer demands and tastes and fashion trends and to levels of discretionary spending, especially for fashion apparel and related products, which levels are currently weak. These industries are also subject to the difficulties contracted when trying to expand business to growing markets worldwide. We believe that our success is largely dependent on our ability to effectively anticipate, gauge and respond to changing consumer demands and tastes across multiple product lines, shopping channels and geographies, in the design, pricing, styling and production of our products and in the merchandising and pricing of products in our retail stores, and in the business model employed, and partners we select to work with, in new and growing markets worldwide. Our brands and products must appeal to a broad range of consumers whose preferences cannot be predicted with certainty and are subject to constant change. Also, we must maintain and enhance favorable brand recognition, which may be affected by consumer attitudes towards the desirability of fashion products bearing a ‘‘mega brand’’ label and which are widely available at a broad range of retail stores. Our success is also dependent on our ability to successfully extend our businesses into new territories and markets, such as Europe, Asia and Latin America. We attempt to schedule a substantial portion of our materials and manufacturing commitments relatively late in the production cycle. However, in order to secure necessary materials and ensure availability of manufacturing facilities, we must make substantial advance commitments, which may be up to five months or longer, prior to the receipt of firm orders from customers for the items to be produced. We need to translate market trends into appropriate, saleable product offerings relatively far in advance, while minimizing excess inventory positions, and correctly balance the level of our fabric and/or merchandise commitments with actual customer orders. We cannot assure that we will be able to continue to develop appealing styles and brands or successfully meet changing customer and consumer demands in the future. In addition, we cannot assure that any new products or brands that we introduce will be successfully received and supported by our wholesale customers or consumers. Our failure to gauge consumer needs and fashion trends by brand and respond appropriately, or to appropriately forecast our ability to sell products, could adversely affect retail and consumer acceptance of our products and leave us with substantial outstanding fabric and/or manufacturing commitments, resulting in increases in unsold inventory or missed opportunities. If that occurs, we may need to employ markdowns or promotional sales to dispose of excess inventory, which may harm our business and results. At the same time, our focus on inventory management may result, from time to time, in our not having a sufficient supply of products to meet demand and cause us to lose potential sales.

The markets in which we operate are highly competitive, both within the US and abroad. We face intense competitive challenges from other domestic and foreign fashion apparel and accessories producers and retailers. Competition is based on a number of factors, including the following: • anticipating and responding to changing consumer demands in a timely manner; • establishing and maintaining favorable brand name and recognition; • product quality; • maintaining and growing market share; • exploiting markets outside of the US, including growth markets such as Europe, Asia and Latin America; • developing quality and differentiated products that appeal to consumers;

20 • establishing and maintaining acceptable relationships with our retail customers; • pricing products appropriately; • providing appropriate service and support to retailers; • optimizing our retail and supply chain capabilities; • size and location of our retail stores and department store selling space; and • protecting intellectual property. In addition, some of our competitors may be significantly larger and more diversified than us and may have significantly greater financial, technological, manufacturing, sales, marketing and distribution resources than we do. Their greater capabilities in these areas may enable them to better withstand periodic downturns in the accessories, footwear and apparel industries, compete more effectively on the basis of price and production and more quickly develop new products. The general availability of manufacturing contractors and agents also allows new entrants easy access to the markets in which we compete, which may increase the number of our competitors and adversely affect our competitive position and our business. Any increased competition, or our failure to adequately address these competitive factors, could result in reduced sales or prices, or both, which could have a material adverse effect on us. We also believe there is an increasing focus by the department stores to concentrate an increasing portion of their product assortments within their own private label products. These private label lines compete directly with our product lines and may receive prominent positioning on the retail floor by department stores. Finally, in the current economic environment, which is characterized by softening demand for discretionary items, such as apparel and related products, there has been a consistently increased level of promotional activity, both at our retail stores and at department stores, which has had an adverse effect on our revenues and profitability.

Our current level of debt could adversely affect our business, financial condition or results of operations and prevent us from fulfilling our debt-related obligations. As of January 3, 2015, the total principal amount of our term loan credit facility due April 2021 (the ‘‘Term Loan Credit Agreement’’) was $398.0 million. Our current level of debt could have important consequences for the holders of our common stock, including: (i) making it more difficult for us to satisfy our obligations with respect to our debt or to our trade or other creditors; (ii) increasing our vulnerability to adverse economic or industry conditions; (iii) limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is limited; (iv) requiring a substantial portion of our cash flows from operations and the proceeds of any capital markets offerings for the payment of interest on our debt and reducing our ability to use our cash flows to fund working capital, capital expenditures, acquisitions and general corporate requirements; (v) limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and (vi) placing us at a competitive disadvantage to less leveraged competitors. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us through capital markets financings or under our ABL Facility or otherwise in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, on or before its maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. In addition, we may incur additional indebtedness in order to finance our operations or to repay existing indebtedness. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional debt or equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would be advantageous to our stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.

21 Restrictive covenants in our ABL Facility and the Term Loan Credit Agreement may restrict our ability to pursue our business strategies. The agreement governing our ABL Facility and the Term Loan Credit Agreement limit our ability, and the terms of any future indebtedness may limit our ability, among other things, to: • incur or guarantee additional indebtedness; • make certain investments; • pay dividends or make distributions on our capital stock; • sell assets, including capital stock of restricted subsidiaries; • agree to restrictions on distributions, transfers or dividends affecting our restricted subsidiaries; • consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; • enter into transactions with our affiliates; • incur liens; and • designate any of our subsidiaries as unrestricted subsidiaries. In addition, the agreement governing our ABL Facility (i) provides for a decrease in fees and interest rates compared to our previous asset-based revolving loan facility (including eurocurrency spreads of 1.50% to 2.00% over LIBOR, depending on the level of aggregate availability); (ii) requires us to maintain pro forma compliance with a fixed charge coverage ratio of 1.0:1.0 on a trailing four-quarter basis if availability under the ABL Facility for three consecutive business days falls below the greater of $15.0 million and 10.0% of the lesser of the aggregate commitments and the borrowing base and (iii) 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 restrictions contained in the Term Loan Credit Agreement and the agreement governing our ABL Facility could also limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions or otherwise restrict our activities or business plans.

We may require additional capital in the future and may not be able to secure adequate funds on terms acceptable to us. Our primary ongoing cash requirements are to: (i) fund seasonal working capital needs (primarily accounts receivable and inventory); (ii) fund capital expenditures related to the opening and refurbishing of our specialty retail and outlet stores and normal maintenance activities; (iii) fund remaining efforts associated with our streamlining initiatives, including contract termination costs, employee-related costs and other costs associated with the exit of the KATE SPADE SATURDAY business, the closure of the JACK SPADE stores and the sales of the Juicy Couture IP and Lucky Brand as discussed above; (iv) invest in our information systems; (v) fund general operational and contractual obligations; and (vi) potentially repurchase or retire debt obligations. The expansion and development of our business may also require significant capital, which we may be unable to obtain, to fund our capital expenditures and operating expenses, including working capital needs. Our ABL Facility matures in May 2019. Availability under the ABL Facility is the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of our 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 facility provided under the ABL Facility of 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

22 the aggregate. The ABL Facility allows two borrowing options; one borrowing option with interest rates based on eurocurrency rates and a second borrowing option with interest rates based on the alternate base rate, as defined in the Credit Agreement, with a spread based on the aggregate availability under the Revolving Credit Agreement. During the next 12 months, we otherwise expect to meet our cash requirements with existing cash and cash equivalents, cash flow from operations and borrowings under our ABL Facility. We may fail to generate sufficient cash flow from such sources to meet our cash requirements. Further, our capital requirements may vary materially from those currently planned if, for example, our revenues do not reach expected levels or we have to incur unforeseen capital expenditures and make investments to maintain our competitive position. If this is the case, we may require additional financing sooner than anticipated or we may have to delay or abandon some or all of our development and expansion plans or otherwise forego market opportunities. To a large extent, our cash flow generation ability is subject to general economic, financial, competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs. As a result, we may need to refinance all or a portion of our indebtedness, on or before its maturity, or obtain additional equity or debt financing. We cannot assure you that we will be able to do so on commercially reasonable terms, if at all. Any inability to generate sufficient cash flow, refinance our indebtedness or incur additional indebtedness on commercially reasonable terms could adversely affect our financial condition and could cause us to be unable to service our debt and may delay or prevent the expansion of our business.

Our success will depend on our ability to successfully develop or acquire new product lines and enter new markets or product categories. We have in the past, and may, from time to time, acquire or develop new product lines, enter new markets or product categories, including through licensing arrangements, and/or implement new business models. Such activities are accompanied by a variety of risks inherent in any such new business venture, including the following: • our ability to identify appropriate business development opportunities, including new product lines and new markets, including important growth markets such as Europe, Asia and Latin America; • new businesses, business models, product lines or market activities may require methods of operations, investments and marketing and financial strategies different from those employed in our other businesses, and may also involve buyers, store customers and/or competitors different from our historical buyers, store customers and competitors; • consumer acceptance of the new products or lines, and the impact on existing businesses given the new products or lines, including the pricing of such lines; • we may not be able to generate projected or satisfactory levels of sales, profits and/or return on investment for a new business or product line, and may also encounter unanticipated events and unknown or uncertain liabilities that could materially impact our business; • we may experience possible difficulties, delays and/or unanticipated costs in integrating the business, operations, personnel and/or systems of an acquired business and may also not be able to retain and appropriately motivate key personnel of an acquired business; • risks related to complying with different laws and regulations in new markets; • we may not be able to maintain product licenses, which are subject to agreement with a variety of terms and conditions, or to enter into new licenses to enable us to launch new products and lines; and

23 • with respect to a business where we are not the brand owner, but instead act as an exclusive licensee or an exclusive supplier, such as the arrangements within our Adelington Design Group discussed above for the LIZ CLAIBORNE and MONET brands, there are a number of inherent risks, including, without limitation, compliance with terms set forth in the applicable agreements, the level of orders placed by our business partners and the public perception and/or acceptance of our business partners, the brands or other product lines, which are not within our control.

There are risks associated with the wind-down of our KATE SPADE SATURDAY business and the changes to the business model for JACK SPADE, including closure of our JACK SPADE retail store operations. On January 29, 2015, we announced strategic initiatives to further focus our business on the long-term growth of the kate spade new york brand, including closing down our KATE SPADE SATURDAY business and the transition to a new business model for the JACK SPADE brand. As part of these announcements, we are absorbing key elements of KATE SPADE SATURDAY into the kate spade new york business and discontinuing KATE SPADE SATURDAY as a standalone business. In connection with the KATE SPADE SATURDAY wind-down, retail store locations bearing the KATE SPADE SATURDAY tradename will be closed in a phased approach, as well as the operations of our KATE SPADE SATURDAY wholesale business, including with our international distributors, during the first half of 2015. The KATE SPADE SATURDAY e-commerce site, however, will remain active during this wind-down phase until the label is incorporated and reintroduced into the kate spade new york business. With respect to the JACK SPADE business, we will be closing the JACK SPADE retail stores, while seeking to expand our wholesale distribution of the brand, and our JACK SPADE e-commerce platform. In connection with the KATE SPADE SATURDAY and JACK SPADE actions, we estimate total restructuring charges of $32.0-$39.0 million (related to these actions, including: (i) estimated contract assignment and termination costs of $21.0-$25.0 million; (ii) employee-related costs (including severance) of $4.0-$5.0 million); and (iii) non-cash asset impairment charges of $7.0-$9.0 million. Such estimates do not reflect any other transactions with our contractual counterparties to mitigate the charges. Actual restructuring and transition charges and impairment charges may materially exceed our estimates due to various factors, many of which are outside of our control, including, without limitation, the actual outcomes of discussions and negotiations (a number of which are currently ongoing) with the counterparties to the contracts we intend to terminate or modify. Because of uncertainties with respect to our transition plan (including those described above), we may not be able to complete and implement our transition plan with respect to the KATE SPADE SATURDAY and JACK SPADE businesses as we expect or in a satisfactory manner, and the costs incurred in connection with such transition may exceed our estimates. If the actual restructuring and transition charges or impairment charges exceed our estimates or if our transition plan is not implemented as expected, our business, results of operations and financial condition could be materially and adversely affected. Furthermore, because of the wind-down of the KATE SPADE SATURDAY brand and because of other factors that ordinarily influence consumer acceptance of our products (many of which are outside our control), we may not be able to sell our KATE SPADE SATURDAY summer 2015 products at prices that will generate a profit. If we incur losses relating to the sales of such products, our business, financial condition and results of operations may be adversely affected. In addition, the announced activities involve numerous risks, including but not limited to: • the inability of the KATE SPADE SATURDAY business to retain qualified personnel necessary for the wind-down during the wind-down period; • potential disruption of the operations of the rest of our brands and businesses and diversion of management attention from such businesses and operations; • exposure to unknown, contingent or other liabilities, including litigation arising in connection with the KATE SPADE SATURDAY wind-down;

24 • negative impact on our business relationships, including relationships with our customers, suppliers, vendors, lessors, licensees and employees; • the inability to increase the customer base of our JACK SPADE brand; and • unintended negative consequences from changes to our business profile. If any of these or other factors impair our ability to successfully implement the wind-down, we may not be able to realize other business opportunities as we may be required to spend additional time and incur additional expense relating to the wind-down that otherwise would be used on the development and expansion of our other businesses.

There are risks associated with the various businesses we have disposed, including our ability to collect the full amount of principal and interest due and owing pursuant to a three year note issued by Lucky Brand Dungarees, LLC to us as partial consideration for the sale of the Lucky Brand business and our ability to comply with our transition service requirements with respect to the Lucky Brand business and other risks related to the transitions of those businesses. As part of the consideration for the sale of the Lucky Brand business, we have received the Lucky Brand Note due 2017 in an aggregate initial principal amount of $85.0 million issued by Lucky Brand LLC and guaranteed by substantially all of its subsidiaries. The Lucky Brand Note is secured by a second-priority lien on all accounts receivable and inventory of Lucky Brand LLC and the guarantor subsidiaries and a first-priority lien on all other collateral of Lucky Brand LLC and the guarantors. The accounts receivable and inventory secure Lucky Brand LLC’s asset-based revolving loan facility on a first-priority basis, and the other collateral secures that loan facility on a second-priority basis. The principal amount of the Lucky Brand Note increases by $5.0 million per year, in equal monthly increments, and bears cash interest of $8.0 million per year, payable semiannually in arrears. The Lucky Brand Note is prepayable at any time by Lucky Brand LLC without a prepayment premium, subject to certain restrictions as to the minimum amount that may be prepaid without our consent. To the extent that the business, financial condition and results of operations of Lucky Brand LLC are adversely affected, Lucky Brand LLC’s ability to service the Lucky Brand Note or to repay or refinance the Lucky Brand Note could be materially and adversely affected. As a result, our ability to receive payments on the Lucky Brand Note is dependent on such factors, and we may not receive timely payments or be paid the amounts due under the Lucky Brand Note at all. Under a transition services agreement with Lucky Brand LLC, we are required to provide Lucky Brand LLC with certain transitional services, such as IT support, accounting services, tax services and other services that were provided at the corporate level while Lucky Brand was owned by us. The services will be provided at cost for up to a maximum of two years from the closing date, subject to earlier termination of the various services by Lucky Brand LLC. The provision of these services may cause disruption of the operations of the rest of our brands and businesses and diversion of management attention from such businesses and operations. In addition, in connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to third parties, for which we or certain of our subsidiaries remain secondarily liable for the remaining obligations on 185 such leases. See ‘‘Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Position, Liquidity and Capital Resources — Commitments and Capital Expenditures,’’ and Note 9 of Notes to Consolidated Financial Statements for more information.

25 Our wholesale businesses are dependent to a significant degree on sales to a limited number of large US department store customers, and our business could suffer as a result of consolidations, restructurings, bankruptcies, other ownership changes in the retail industry or financial difficulties at our large department store customers. Many major department store groups make centralized buying decisions. Accordingly, any material change in our relationship with any such group could have a material adverse effect on our operations. We expect that our largest customers will continue to account for a significant percentage of our wholesale sales. Our continued partial dependence on sales to a limited number of large US department store customers is subject to our ability to respond effectively to, among other things: (i) these customers’ buying patterns, including their purchase and retail floor space commitments for apparel in general (compared with other product categories they sell) and our products specifically (compared with products offered by our competitors, including with respect to customer and consumer acceptance, pricing and new product introductions); (ii) these customers’ strategic and operational initiatives, including their continued focus on further development of their ‘‘private label’’ initiatives; (iii) these customers’ desire to have us provide them with exclusive and/or differentiated designs and product mixes; (iv) these customers’ requirements for vendor margin support; (v) any credit risks presented by these customers, especially given the significant proportion of our accounts receivable they represent; and (vi) the effect of any potential consolidation among these larger customers. We do not enter into long-term agreements with any of our wholesale customers. Instead, we enter into a number of purchase order commitments with our customers for each of our lines every season. A decision by the controlling owner of a group of stores or any other significant customer, whether motivated by competitive conditions, financial difficulties or otherwise, to decrease or eliminate the amount of merchandise purchased from us or to change their manner of doing business with us could have a material adverse effect on our business, financial condition, liquidity and results of operations. As a result of the recent unfavorable economic environment, we have experienced a softening of demand from a number of wholesale customers, such as large department stores, who have been highly promotional and have aggressively marked down all of their merchandise, including our products. Any promotional pricing or discounting in response to softening demand may also have a negative effect on brand image and prestige, which may be difficult to counteract once the economy improves. Furthermore, this promotional activity may lead to requests from those customers for increased markdown allowances at the end of the season. Promotional activity at our wholesale customers will also often result in promotional activity at our retail stores, further eroding revenues and profitability. We sell our wholesale merchandise primarily to major department stores across the US and extend credit based on an evaluation of each customer’s financial condition, usually without requiring collateral. However, the financial difficulties of a customer could cause us to curtail or eliminate business with that customer. We may also assume more credit risk relating to our receivables from that customer. Our inability to collect on our trade accounts receivable from any of our largest customers could have a material adverse effect on our business, financial condition, liquidity and results of operations. Moreover, the difficult macroeconomic conditions and uncertainties in the global credit markets could negatively impact our customers and consumers which, in turn, could have an adverse impact on our business, financial condition, liquidity and results of operations.

A material disruption in our information technology systems and e-commerce operations could adversely affect our business or results of operations. We rely extensively on our information technology (‘‘IT’’) systems to track inventory, manage our supply chain, record and process transactions, manage customer communications, summarize results and manage our business. The failure of our IT systems to operate properly or effectively, problems with transitioning to upgraded or replacement systems or difficulty in integrating new systems could adversely impact our business. In addition, our IT systems may be subject to damage and/or interruption from power outages, computer, network and telecommunications failures, computer viruses, hackers, security breaches and

26 usage errors by our employees and harmful acts by our website visitors. If our IT systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data (including customer data) and interruptions or delays in our operations in the interim. Any significant disruption in our IT systems could harm our reputation and credibility and could adversely affect our business, financial condition or results of operations, as well as our ability to effect the transitions of the recently sold businesses.

Privacy breaches and liability for online content could negatively affect our reputation, credibility and business. We rely on third party computer hardware, software and fulfillment operations for our e-commerce operations and for the various social media tools and websites we use as part of our marketing strategy. There is a growing concern over the security of personal information transmitted over the internet, consumer identity theft and user privacy. Despite the implementation of reasonable security measures by us and our third party providers, these sites and systems may be susceptible to electronic or physical computer break-ins and security breaches. Any perceived or actual unauthorized disclosure of personally- identifiable information regarding our customers or website visitors could harm our reputation and credibility, reduce our e-commerce net sales, impair our ability to attract website visitors and reduce our ability to attract and retain customers. Additionally, as the number of users of forums and social media features on our websites increases, we could be exposed to liability in connection with material posted on our websites by users and other third parties. Finally, we could incur significant costs in complying with the multitude of state, federal and foreign laws regarding unauthorized disclosure of personal information and, if we fail to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these laws, we could be subject to potential claims for damages and other remedies.

We may be exposed to risks and costs associated with credit card fraud and identity theft. A growing portion of our customer orders are placed through our e-commerce websites. In addition, a significant portion of our direct-to-consumer sales require us and other parties involved in processing transactions to collect and to securely transmit certain customer data, such as credit card information, over public networks. Third parties may have the ability to breach the security of customer transaction data. Although we take the security of our systems and the privacy of our customers’ confidential information seriously, there can be no assurances that our security measures will effectively prevent others from obtaining unauthorized access to our information and our customers’ information. Any security breach could cause consumers to lose confidence in the security of our website or stores and choose not to purchase from us. Any security breach could also expose us to risks of data loss, litigation and liability and could seriously disrupt our operations and harm our reputation, any of which could harm our business.

We cannot assure that we can attract and retain talented, highly qualified executives, or maintain satisfactory relationships with our employees. Our success depends, to a significant extent, both upon the continued services of our executive management team, including brand-level executives, as well as our ability to attract, hire, motivate and retain additional talented and highly qualified management in the future, including the areas of design, merchandising, sales, supply chain, marketing, production and systems, as well as our ability to hire and train qualified retail management and associates. In addition, we will need to provide for the succession of senior management, including brand-level executives. The loss of key members of management and our failure to successfully plan for succession could disrupt our operations and our ability to successfully operate our business and execute our strategic plan.

27 Our business could suffer if we cannot adequately establish, defend and protect our trademarks and other proprietary rights. We believe that our trademarks and other proprietary rights are significantly important to our success and competitive position. Accordingly, we devote substantial resources to the establishment and protection of our trademarks and anti-counterfeiting activities. Counterfeiting of our products, particularly our kate spade new york brand, continues, however, and in the course of our international expansion we have experienced conflicts with various third parties that have acquired or claimed ownership rights in some of our trademarks or otherwise have contested our rights to our trademarks. We have, in the past, resolved certain of these conflicts through both legal action and negotiated settlements, none of which, we believe, has had a material impact on our financial condition, liquidity or results of operations. However, the actions taken to establish and protect our trademarks and other proprietary rights might not be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as a violation of their trademarks and proprietary rights. Moreover, in certain countries others may assert rights in, or ownership of, our trademarks and other proprietary rights or we may not be able to successfully resolve such conflicts, or resolving such conflicts may require us to make significant monetary payments. In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the US. The loss of such trademarks and other proprietary rights, or the loss of the exclusive use of such trademarks and other proprietary rights, could have a material adverse effect on us. Any litigation regarding our trademarks or other proprietary rights could be time consuming and costly.

Our reliance on independent foreign manufacturers could cause delay and loss and damage our reputation and customer relationships. Also, there are risks associated with our agreement with Li & Fung, which results in a single foreign buying/sourcing agent for a significant portion of our products. We do not own any product manufacturing facilities; all of our products are manufactured in accordance with our specifications through arrangements with independent suppliers. Products produced in Asia represent a substantial majority of our sales. We also source product in the US and other regions, including approximately 151 suppliers manufacturing our products. At the end of 2014, such suppliers were located in 15 countries, with the largest finished goods supplier at such time accounting for approximately 12.0% of the total of finished goods we purchased in 2014. A supplier’s failure to manufacture and deliver products to us in a timely manner or to meet our quality standards could cause us to miss the delivery date requirements of our customers for those items. The failure to make timely deliveries may drive customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us and our reputation in the marketplace. Also, a manufacturer’s failure to comply with safety and content regulations and standards, including with respect to children’s product and fashion jewelry, could result in substantial liability and damage to our reputation. While we provide our manufacturers with standards, and we employ independent testing for safety and content issues, we might not be able to prevent or detect all failures of our manufacturers to comply with such standards and regulations. Additionally, we require our independent manufacturers (as well as our licensees) to operate in compliance with applicable laws and regulations. While we believe that our internal and vendor operating guidelines promote ethical business practices and our staff periodically visits and monitors the operations of our independent manufacturers, we do not control these manufacturers or their labor practices. The violation of labor or other laws by an independent manufacturer used by us (or any of our licensees), or the divergence of an independent manufacturer’s (or licensee’s) labor practices from those generally accepted as ethical in the US, could interrupt, or otherwise disrupt the shipment of finished products to us or damage our reputation. Any of these, in turn, could have a material adverse effect on our business, financial condition, liquidity and results of operations.

28 On February 23, 2009, we entered into a long-term, buying/sourcing agency agreement with Li & Fung, pursuant to which Li & Fung acts as the primary global apparel and accessories buying/sourcing agent, with the exception of our jewelry product lines. We pay to Li & Fung an agency commission based on the cost of our product purchases through Li & Fung. We are obligated to use Li & Fung as our buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. Our agreement with Li & Fung is not exclusive; however, we are required to source a specified percentage of product purchases from Li & Fung. Our arrangements with foreign suppliers and with our foreign buying/sourcing agents are subject generally to the risks of doing business abroad, including currency fluctuations and revaluations, restrictions on the transfer of funds, terrorist activities, labor disputes, pandemic disease and, in certain parts of the world, political, economic and currency instability. Our operations have not been materially affected by any such factors to date. However, due to the very substantial portion of our products that are produced abroad, any substantial disruption of our relationships with our foreign suppliers could adversely affect our operations. Moreover, difficult macroeconomic conditions and uncertainties in the global credit markets could negatively impact our suppliers, which in turn, could have an adverse impact on our business, financial position, liquidity and results of operations.

There are risks associated with our arrangement to continue to operate the Ohio distribution facility with a third party operations and labor management company that provides distribution operations services, including risks related to increased operating expenses, systems capabilities and operating under a third party arrangement. In connection with our streamlining initiatives, in July 2011, we announced our plan to close our Ohio Facility in the second half of 2012 and migrate the distribution function to a third party service provider, and that we had entered into a Memorandum of Agreement (the ‘‘Agreement’’) between us and the Chicago and Midwest Regional Joint Board of Workers United (the ‘‘Union’’), which was ratified by the Union. The Agreement set forth the terms and conditions pursuant to which we had planned to effectuate orderly layoffs of our employees at the Ohio Facility, in connection with the anticipated closure and sale of the Ohio Facility in the fourth quarter of 2012. The Agreement provided, among other things, that the terms and conditions of the collective bargaining agreement between the Company and the Union, effective June 17, 2008 to June 16, 2011, as previously extended to July 16, 2011 by the parties (the ‘‘CBA’’), were to remain in effect during the expected shutdown of the Ohio Facility, except as such terms are amended by the Agreement. In August 2011, we entered into an agreement with Li & Fung for the provision of distribution services in the United States and at that time we planned to migrate from our Ohio Facility to the Li & Fung facility. In August 2012, we encountered systems and operational issues that delayed the planned migration of our product distribution function out of the Ohio Facility. Subsequently, we determined that we would continue to use the Ohio Facility and discontinue the migration of the product distribution function to Li & Fung, and we mutually agreed with Li & Fung to allow the distribution agreement with Li & Fung to expire as of January 31, 2013. In connection with such expiration, we decided that, given the complex distribution needs of our businesses, we should continue to use the Ohio Facility, and on February 5, 2013, we entered into a contract with a third-party distribution center operations and labor management company to provide distribution operations services at the Ohio Facility. These actions resulted in charges related to contract terminations, severance, asset impairments and other charges and were substantially completed in the second quarter of 2013. In addition, we notified the employees covered by the Agreement of the completion of layoffs on March 31, 2013, at which time the Agreement and CBA terminated. The third-party distribution center operations company employs many of our prior employees, including union employees, at the Ohio Facility. There are a number of risks associated with continuing to operate the Ohio Facility, including increased operating expenses, risks related to systems capabilities at the Ohio Facility and risks related to the ability of the third-party distribution center operations company to appropriately staff the Ohio Facility

29 with both union and non-union employees on reasonable and appropriate terms. We also have limited ability to control our third-party distribution center operations company, and such company may take actions with respect to its employees without our approval and may not maintain good relations with its employees and unions. Issues that arise in connection with the operation of our Ohio Facility could cause supply disruptions and other logistical issues and could therefore have a material, adverse effect on our business, financial condition, liquidity and results of operations.

Our international sourcing operations are subject to a variety of legal, regulatory, political, labor and economic risks, including risks relating to the importation and exportation of product. We source most of our products outside the US through arrangements with independent suppliers in 15 countries as of January 3, 2015. There are a number of risks associated with importing our products, including but not limited to the following: • the potential reimposition of quotas, which could limit the amount and type of goods that may be imported annually from a given country, in the context of a trade retaliatory case; • changes in social, political, legal and economic conditions, or labor unrest or terrorist acts that could result in the disruption of trade from the countries in which our manufacturers or suppliers are located; • the imposition of additional regulations, or the administration of existing regulations, relating to products which are imported, exported or otherwise distributed; • the imposition of additional duties, tariffs, taxes and other charges or other trade barriers on imports or exports; • risks of increased sourcing costs, including costs for materials and labor and such increases potentially resulting from the elimination of quota on apparel products; • our ability to adapt to and compete effectively in the current quota environment, in which general quota has expired on apparel products, resulting in changing in sourcing patterns and lowered barriers to entry, but political activities which could result in the reimposition of quotas or other restrictive measures have been initiated or threatened; • significant delays in the delivery of cargo due to security considerations; • the imposition of anti-dumping or countervailing duty proceedings resulting in the potential assessment of special anti-dumping or countervailing duties; and • the enactment of new legislation or the administration of current international trade regulations, or executive action affecting international textile agreements, including the US reevaluation of the trading status of certain countries and/or retaliatory duties, quotas or other trade sanctions, which, if enacted, would increase the cost of products purchased from suppliers in such countries. Any one of these or similar factors could have a material adverse effect on our business, financial condition, liquidity, results of operations and current business practices.

We face risks associated with operating in international markets. Approximately 21.0% of our revenues were generated by operations outside the US during the 2014 fiscal year. Our ability to operate and be successful in new international markets and to operate and maintain the current level of sales in our existing international markets, is subject to risks associated with international operations. These include complying with a variety of foreign laws and regulations, adapting to local customs and culture, unexpected changes in regulatory requirements, new tariffs or other barriers in some international markets, political instability and terrorist attacks, changes in diplomatic and trade relationships, currency risks and general economic conditions in specific countries and markets. Any one of

30 these or similar factors could have a material adverse effect on our business, financial condition, liquidity, results of operations and current business practices.

We rely on third parties to provide us with services in connection with the administration of certain aspects of our business. We have entered into agreements with third party service providers, both domestic and overseas, to provide processing and administrative functions over a broad range of areas, and we may continue to do so in the future. These areas include finance and accounting, information technology, human resources, buying/sourcing, distribution functions, and e-commerce. Services provided by third parties could be interrupted as a result of many factors, including contract disputes. Any failure by third parties to provide us with these services on a timely basis or within our service level expectations and performance standards could result in a disruption of our operations and could have a material adverse effect on our business, financial condition, liquidity and results of operations. In addition, to the extent we are unable to maintain these arrangements, we would incur substantial costs, including costs associated with hiring new employees, in order to return these services in-house or to transition the services to other third parties.

Our ability to utilize all or a portion of our US deferred tax assets may be limited significantly if we experience an ‘‘ownership change.’’ As of January 3, 2015, we had US deferred tax assets of approximately $456.3 million, which include net operating loss (‘‘NOL’’) carryforwards and other items which could be considered net unrealized built in losses (‘‘NUBIL’’). Among other factors, our ability to utilize our NOL and/or our NUBIL items to offset future taxable income may be limited significantly if we experience an ‘‘ownership change’’ as defined in section 382 of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’). In general, an ownership change will occur if there is a cumulative increase in ownership of our stock by ‘‘5-percent shareholders’’ (as defined in the Code) that exceeds 50 percentage points over a rolling three-year period. The limitation arising from an ‘‘ownership change’’ under section 382 of the Code on our ability to utilize our US deferred tax assets depends on the value of our stock at the time of the ownership change. We continue to monitor changes in our ownership and do not believe we had a change in control as of January 3, 2015. If all or a portion of our deferred tax assets are subject to limitation because we experience an ownership change, depending on the value of our stock at the time of the ownership change, our future cash flows could be adversely impacted due to increased tax liability. As of January 3, 2015, substantially all of the tax benefits of our US deferred tax assets had been offset with a full valuation allowance that was recognized in our financial statements.

The outcome of current and future litigations and other proceedings in which we are involved may have a material adverse effect on our results of operations, liquidity or cash flows. We are a party to several litigations and other proceedings and claims which, if determined unfavorably to us, could have a material adverse effect on our results of operations, liquidity or cash flows. We may in the future become party to other claims and legal actions which, either individually or in the aggregate, could have a material adverse effect on our results of operations, liquidity or cash flows. In addition, any of the current or possible future legal proceedings in which we may be involved could require significant management and financial resources, which could otherwise be devoted to the operation of our business.

Item 1B. Unresolved Staff Comments. None.

31 Item 2. Properties. Our distribution and administrative functions are conducted in leased facilities. We also lease space for our specialty retail and outlet stores. We believe that our existing facilities are well maintained, in good operating condition and are adequate for our present level of operations. We use unaffiliated third parties to provide distribution services to meet our distribution requirements. Our principal executive offices, as well as certain sales, merchandising and design staffs, are located at 2 Park Avenue, New York, NY, where we lease approximately 135,000 square feet. We also lease approximately 106,000 square feet in an office building in North Bergen, New Jersey, which houses operational staff. The following table sets forth information with respect to our key leased properties:

Approximate Square Footage Location(a) Primary Use Occupied West Chester, OH(b) ...... Apparel Distribution Center 601,000 2 Park Avenue, New York, NY ...... Offices 135,000 North Bergen, NJ(c) ...... Offices 106,000

(a) We also lease showroom, warehouse and office space in various other domestic and international locations. We closed our Allentown, PA distribution center during 2008 and exited certain New York offices during 2014, for which we remain obligated under the respective leases.

(b) During the third quarter of 2013, we sold the West Chester, OH facility for net proceeds of $20.3 million and entered into a sale-leaseback arrangement with the buyer for a 10-year term.

(c) During the second quarter of 2013, we sold the North Bergen, NJ office for net proceeds of $8.7 million and entered into a sale-leaseback arrangement with the buyer for a 12-year term with two five-year renewal options.

Item 3. Legal Proceedings. The Company is a party to various 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 (see Notes 1 and 9 of Notes to Consolidated Financial Statements).

Executive Officers of the Registrant. Information as to the executive officers of the Company, as of January 3, 2015 is set forth below:

Name Age Position(s) Craig A. Leavitt ..... 54 Chief Executive Officer George M. Carrara . . 46 President and Chief Operating Officer Thomas Linko ...... 42 Chief Financial Officer Christopher Di Nardo . 48 Senior Vice President, General Counsel and Secretary William Higley ...... 55 Senior Vice President — Human Resources Linda Yanussi ...... 53 Senior Vice President — Information Technology and Global Operations Executive officers serve at the discretion of the Board of Directors. Mr. Leavitt joined the Company in April 2008 as Co-President and Chief Operating Officer of Kate Spade LLC and was named Chief Executive Officer of Kate Spade & Company in February 2014. Prior to joining the Company, he was President of Global Retail at Link Theory Holdings, where he had total responsibility for merchandising, operations, planning and allocation and real estate for the Theory and Helmut Lang retail businesses. Prior to that, Mr. Leavitt spent several years at Diesel, where he was most

32 recently Executive Vice President of Sales and Retail. Previously, Mr. Leavitt spent 16 years at Polo Ralph Lauren, where he held positions of increasing responsibility, the last being Executive Vice President of Retail Concepts. Mr. Carrara joined the Company in April 2012 as Executive Vice President, Chief Financial Officer and Chief Operating Officer and was promoted to his current role in February 2014. Prior to that, he had held numerous finance positions at Tommy Hilfiger over the prior 12 years, including Chief Financial Officer for the Jeans division from 1999 to 2003; Chief Operating Officer and Chief Financial Officer of wholesale operations from 2003 to 2004; Executive Vice President of US Operations — Wholesale and Retail from 2004 to 2005 and Chief Operating Officer from 2006 to 2011. Mr. Linko joined the Company in July 2012 as Chief Financial Officer of the formerly owned Juicy Couture brand. In 2013, he was appointed Chief Operating Officer and, upon the sale of the Juicy Couture IP, led the wind-down of the business. Mr. Linko was named Chief Financial Officer of Kate Spade & Company in October 2014. Prior to joining the Company, he was Chief Financial Officer at Delta Galil, a global manufacturer and marketer of private label apparel products for men, women and children. In addition, Mr. Linko spent 12 years at Tommy Hilfiger, where he oversaw the financial operations as the Senior Vice President of Finance for Tommy Hilfiger North America. Mr. Di Nardo joined the Company in March 1990. Upon earning his Juris Doctor in 1995, he was promoted to Counsel, and since has held roles of increasing responsibility within the legal department, most recently as Vice President — Deputy General Counsel. In December 2013, Mr. Di Nardo was promoted to his current position as Senior Vice President, General Counsel and Corporate Secretary. Mr. Di Nardo serves on the Board of Directors of the American Apparel & Footwear Association, and is a member of that organization’s Executive Committee. Mr. Higley joined the Company in March 1995 as Benefits Manager and has held various positions within the Human Resources department. From 2005 until assuming his current position in January 2013, Mr. Higley served as the Vice President of Human Resources. In his present role, he oversees corporate Human Resources in the US and Asia, which includes Workplace Solutions, Payroll, HRIS, Compensation and Benefits and general HR support. Mr. Higley began his career working at Chase Bank followed by small regional banks as well as The Bank of New York prior to joining the Company. Ms. Yanussi joined the Company in April 2012 as Vice President of Information Technology and assumed her current position in January 2013. Prior to joining the Company, she held various positions at Tommy Hilfiger over a period of eleven years, most recently as Senior Vice President of Operations and Logistics, North America for over four years and as Vice President of Operations prior to that.

Item 4. Mine Safety Disclosures. Not applicable.

33 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. MARKET INFORMATION Our common stock trades on the NYSE under the symbol KATE. The table below sets forth the high and low closing sale prices of our common stock for the periods indicated.

Fiscal Period High Low 2014: 1st Quarter ...... $40.15 $27.56 2nd Quarter ...... 39.20 31.69 3rd Quarter ...... 40.45 25.95 4th Quarter ...... 32.21 24.64 2013: 1st Quarter ...... $19.23 $12.45 2nd Quarter ...... 22.84 18.44 3rd Quarter ...... 26.01 22.58 4th Quarter ...... 33.59 24.32

HOLDERS On February 20, 2015, the closing sale price of our common stock was $33.88. As of February 20, 2015, the approximate number of record holders of common stock was 3,441.

DIVIDENDS We did not pay any dividends during 2014 or 2013.

34 PERFORMANCE GRAPH Comparison of Cumulative Five Year Return $700

$600

$500

$400

$300

$200

$100

$0 1/2/10 1/1/11 12/31/11 12/29/12 12/28/13 1/3/15

Kate Spade & Company S&P SmallCap 600 S&P MidCap 400

Prior Benchmarking Group New Benchmarking Group 26FEB201523043026

2009 2010 2011 2012 2013 2014 Kate Spade & Company ...... $100.00 $127.18 $153.29 $215.45 $563.23 $572.11 S&P SmallCap 600 ...... 100.00 126.31 127.59 148.42 209.74 221.81 S&P MidCap 400 ...... 100.00 126.64 124.45 146.69 195.84 214.97 New Benchmarking Group(a) ...... 100.00 127.37 119.54 133.72 151.88 125.79 Prior Benchmarking Group(b) ...... 100.00 135.41 128.75 175.99 221.23 224.70 (a) The New Benchmarking Group consisted of Ann, Inc.; Express, Inc.; Guess?, Inc.; J.Crew Group, Inc.; lululemon athletica inc.; Michael Kors Holdings Limited; Tumi Holdings Inc.; Under Armour, Inc.; Urban Outfitters, Inc.; Vera Bradley, Inc.; and Vince Holding Corp. (b) The Prior Benchmarking Group consisted of Abercrombie & Fitch Co.; Aeropostale, Inc.; American Apparel, Inc.; American Eagle Outfitters, Inc.; Ann, Inc.; Bebe Stores, Inc.; Chico’s FAS, Inc.; Coach, Inc.; Express, Inc.; Guess?, Inc.; Michael Kors Holdings Limited; New York & Company, Inc.; Pacific Sunwear of California, Inc.; Tumi Holdings Inc.; Urban Outfitters, Inc. and Wet Seal, Inc. The line graph above compares the cumulative total stockholder return on the Company’s Common Stock over a 5-year period with the return on (i) the Standard & Poor’s SmallCap 600 Stock Index (‘‘S&P SmallCap 600’’); (ii) the Standard & Poor’s MidCap 400 Stock Index (‘‘S&P MidCap 400’’) (which the Company’s shares became a part of on March 21, 2014); and (iii) two indices comprised of: (a) the previously designated compensation peer group (the ‘‘Prior Benchmarking Group’’) designated by the Board’s Compensation Committee in consultation with its compensation consultants, against which

35 executive compensation practices of the Company are compared and (b) the new compensation peer group (the ‘‘New Benchmarking Group’’) designated by the Compensation Committee in July 2014 in consultation with its compensation consultants, which reflects a total of five additions to and twelve deletions from the Prior Benchmarking Group. We have historically constructed our compensation benchmarking group based on companies with comparable products, revenue composition and size. We believe the New Benchmarking Group provides a more meaningful comparison in terms of comparable products, revenue composition and size in light of changes in the Company’s operations of the past year. In accordance with SEC disclosure rules, the measurements are indexed to a value of $100 at January 1, 2010 (the last trading day before the beginning of our 2010 fiscal year) and assume that all dividends were reinvested.

ISSUER PURCHASES OF EQUITY SECURITIES The following table summarizes information about our purchases during the quarter ended January 3, 2015, of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934:

Total Number of Maximum Shares Approximate Purchased Dollar Value of as Part of Shares that Publicly May Yet Be Total Number of Announced Purchased Shares Plans or Under the Plans Purchased Average Price Programs (In or Programs Period (In thousands)(a) Paid Per Share thousands) (In thousands)(b) October 5, 2014 — November 1, 2014 ...... — $ — — $28,749 November 2, 2014 — December 6, 2014 .... — — — 28,749 December 7, 2014 — January 3, 2015 ...... — — — 28,749 Total — 13 Weeks Ended January 3, 2015 . . . — $ — — $28,749

(a) Includes shares withheld to cover tax-withholding requirements relating to the vesting of restricted stock issued to employees pursuant to the Company’s shareholder-approved stock incentive plans. (b) The Company initially announced the authorization of a share buyback program in December 1989. Since its inception, the Company’s Board of Directors has authorized the purchase under the program of an aggregate of $2.275 billion of the Company’s stock. The ABL Facility currently restricts the Company’s ability to repurchase stock.

36 Item 6. Selected Financial Data. The following table sets forth certain information regarding our results of operations and financial position and is qualified in its entirety by the Consolidated Financial Statements and notes thereto, which appear elsewhere herein.

2014 2013 2012 2011 2010 (Amounts in thousands, except per common share data) Net sales ...... $1,138,603 $ 803,371 $ 544,765 $ 569,820 $ 670,826 Gross profit ...... 680,271 496,590 339,932 309,983 293,203 Operating income (loss) ...... 33,472 20,215 (36,022) (140,335) (126,134) Income (loss) from continuing operations(a)(b) . . . 76,726 (32,165) (52,687) 101,144 (164,328) Net income (loss)(b) ...... 159,160 72,995 (74,505) (171,687) (251,467) Working capital ...... 221,705 206,473 36,407 124,772 39,043 Total assets ...... 926,338 977,511 902,523 950,004 1,257,659 Total debt ...... 410,743 394,201 406,294 446,315 577,812 Total stockholders’ equity (deficit) ...... 199,611 (32,482) (126,930) (108,986) (24,170) Per common share data: Basic Income (loss) from continuing operations . . . 0.61 (0.27) (0.48) 1.07 (1.74) Net income (loss) ...... 1.26 0.60 (0.68) (1.81) (2.67) Diluted Income (loss) income from continuing operations ...... 0.60 (0.27) (0.48) 0.91 (1.74) Net income (loss) ...... 1.25 0.60 (0.68) (1.35) (2.67) Weighted average shares outstanding, basic ..... 126,264 121,057 109,292 94,664 94,243 Weighted average shares outstanding, diluted(c) . . 127,019 121,057 109,292 120,692 94,243

(a) During 2014, 2013 and 2012, we recorded pretax charges of $42.0 million, $10.6 million and $43.2 million, respectively, related to our streamlining initiatives, which are discussed in Note 13 of Notes to Consolidated Financial Statements. During 2013, we recorded a pretax non-cash impairment charge of $6.1 million related to our former investment in the Mexx business. During 2014 and 2013, we recorded pretax non-cash impairment charges of $1.5 million and $3.3 million, respectively, in our Adelington Design Group segment related to the TRIFARI trademark. During 2012, we recorded a pretax gain of $40.1 million related to the KSJ Buyout (see Note 2 of Notes to Consolidated Financial Statements). During 2011, we recorded a pretax gain of $287.0 million related to the sales of: (i) the global trademark rights for the LIZ CLAIBORNE family of brands; (ii) the trademark rights in the US and Puerto Rico for MONET; (iii) the Dana Buchman trademark; and (iv) the trademark rights related to our former Curve brand and selected other smaller fragrance brands. During 2010, we recorded non-cash pretax impairment charges of $2.6 million primarily within our Adelington Design Group segment principally related to merchandising rights of our LIZ CLAIBORNE and former licensed DKNY↧ Jeans brands. (b) During 2014, we recorded a net benefit of $87.4 million resulting from the reversal of reserves for uncertain tax positions due to the expiration of the related statutes of limitations. (c) Because we incurred losses from continuing operations in 2013, 2012 and 2010, outstanding stock options, nonvested shares and potentially dilutive shares issuable upon conversion of the Convertible Notes are antidilutive. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods.

37 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Business/Segments We operate our kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands through one operating segment in North America and four operating segments internationally: Japan, Southeast Asia, Europe and Latin America. Our Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent activities for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker (‘‘CODM’’) to evaluate performance and allocate resources. In identifying our reportable segments, we considered our management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of our operating segments. As such, we configured our operations into the following three reportable segments: • KATE SPADE North America segment — consists of our kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in North America. • KATE SPADE International segment — consists of our kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in International markets (principally in Japan, Southeast Asia, Europe and Latin America). • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands; (ii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iii) the licensed LIZ CLAIBORNE NEW YORK brand. We, as licensor, also license to third parties the right to produce and market products bearing certain Company-owned trademarks.

Market Environment The industries in which we operate have historically been subject to cyclical variations, including recessions in the general economy. Our results are dependent on a number of factors impacting consumer spending, including, but not limited to, general economic and business conditions; consumer confidence; wages and employment levels; the housing market; levels of perceived and actual consumer wealth; consumer debt levels; availability of consumer credit; credit and interest rates; fluctuations in foreign currency exchange rates; fuel and energy costs; energy shortages; the performance of the financial equity and credit markets; tariffs and other trade barriers; taxes; general political conditions, both domestic and abroad; and the level of customer traffic within department stores, malls and other shopping and selling environments. Macroeconomic challenges and uncertainty continue to dampen consumer spending; job growth remains inconsistent, with stagnating real wages in certain markets in which we operate; consumer retail traffic remains inconsistent and the retail environment remains promotional. In addition, as economic conditions improve in certain real estate markets in which we operate, the landlord community is requiring higher rents and occupancy costs. Furthermore, economic conditions in international markets in which we operate, including Europe and Asia, remain uncertain and volatile. We continue to focus on the execution of our strategic plans and improvements in productivity, with a primary focus on operating cash flow generation, retail execution and international expansion.

Competitive Profile We operate in global fashion markets that are intensely competitive and subject to, among other things, macroeconomic conditions and consumer demands, tastes and discretionary spending habits. As we

38 anticipate that the global economic uncertainty will continue into the foreseeable future, we will continue to carefully manage liquidity and spending. In summary, the measure of our success in the future will depend on our ability to continue to navigate through an uncertain macroeconomic environment with challenging market conditions, execute on our strategic vision, including attracting and retaining the management talent necessary for such execution, designing and delivering products that are acceptable to the marketplaces that we serve, sourcing the manufacture and distribution of our products on a competitive and efficient basis, and continuing to drive profitable growth. We will concentrate our investments on initiatives to further develop kate spade new york into a global lifestyle brand. We have established the following operating and financial goals as we focus our efforts on two axes of growth — geographic expansion and product category expansion: (i) continuing to drive top line growth by expanding certain product categories, opening new retail locations in North America, Japan and Europe and launching additional e-commerce platforms in Europe; (ii) accelerating growth in Greater China through newly formed joint ventures that are expected to leverage the expertise of our new joint venture partner and the global demand for our products; (iii) maximizing licensing opportunities to expand product categories and grow margins; (iv) extending our use of capital efficient partnerships in selected geographies; (v) driving quality of sale initiatives with continued moderation of promotions across channels and increased marketing to support those efforts; and (vi) increase investments in marketing that leverage Customer Relationship Management (‘‘CRM’’) capability and focus on acquiring new full price customers. Reference is also made to the other economic, competitive, governmental and technological factors affecting our operations, markets, products, services and prices as set forth in this report, including, without limitation, under ‘‘Statement Regarding Forward-Looking Statements’’ and ‘‘Item 1A — Risk Factors’’ in this Annual Report on Form 10-K.

Recent Developments and Operational Initiatives In the first quarter of 2015, we entered a global licensing agreement with Fossil Group, Inc. for the design, development and distribution of kate spade new york watches through 2025, with the first collection of watches designed, developed and distributed in collaboration with us to launch in 2016. In February 2014, we reacquired the existing KATE SPADE businesses in Southeast Asia from Globalluxe Kate Spade HK Limited (‘‘Globalluxe’’) for $32.3 million and we announced that in the first quarter of 2015 we expect to: • acquire the 60.0% interest in KS China Co., Limited (‘‘KSC’’) currently owned by E-Land Fashion China Holdings, Limited for $36.0 million, including a contract termination payment of approximately $26.0 million; and • convert the reacquired businesses in Hong Kong, Macau and Taiwan and the KATE SPADE business in China into 50.0% owned joint ventures with Walton Brown, a subsidiary of The Lane Crawford Joyce Group (‘‘LCJG’’), a leading luxury retail, brand management and distribution company in Asia, and receive $21.0 million from LCJG for their interests in the joint ventures, subject to adjustments. On January 29, 2015, we announced that we will be absorbing key elements of KATE SPADE SATURDAY’s success into kate spade new york and discontinuing KATE SPADE SATURDAY as a standalone business. We also announced a new business model for JACK SPADE to leverage the distribution network of its retail partners and expand its e-commerce platform. As part of these actions, KATE SPADE SATURDAY’s 16 Company-owned and three partnered store locations are expected to be closed during the first half of 2015. We will also close JACK SPADE’s 12 Company-owned stores during the first half of 2015. KATE SPADE SATURDAY’s e-commerce site will remain active during the wind-down phase until the label is incorporated and reintroduced into the kate spade new york brand. We expect total restructuring charges of $32.0 – $39.0 million relating to these actions, including: (i) estimated

39 contract assignment and termination costs of $21.0 – $25.0 million; (ii) estimated employee-related costs (including severance) of $4.0 – $5.0 million; and (iii) non-cash asset impairment charges of $7.0 – $9.0 million. In the fourth quarter of 2014, we launched the UK KATE SPADE e-commerce website. On February 3, 2014, we completed the sale of 100.0% of the capital stock of Lucky Brand Dungarees, Inc. (‘‘Lucky Brand’’) to LBD Acquisition Company, LLC (‘‘LBD Acquisition’’), a Delaware limited liability company and affiliate of Leonard Green & Partners, L.P., for aggregate consideration of $225.0 million, comprised of $140.0 million cash consideration and a three-year $85.0 million Lucky Brand Note (the ‘‘Lucky Brand Note’’) issued by the successor of LBD Acquisition, Lucky Brand Dungarees, LLC (‘‘Lucky Brand LLC’’) at closing, subject to working capital and other adjustments. The Lucky Brand Note matures in February 2017 and is guaranteed by substantially all of Lucky Brand LLC’s subsidiaries. The Lucky Brand Note is secured by a second-priority lien on all accounts receivable and inventory of Lucky Brand LLC and the guarantor subsidiaries and a first-priority lien on all other collateral of Lucky Brand LLC and the guarantors. The accounts receivable and inventory secure Lucky Brand LLC’s asset-based revolving loan facility on a first-priority basis, and the other collateral secures that loan facility on a second-priority basis. The principal amount of the Lucky Brand Note increases by $5.0 million per year in equal monthly increments and bears cash interest of $8.0 million per year, payable semiannually in arrears. The Lucky Brand Note is prepayable at any time by Lucky Brand LLC without a prepayment premium, subject to certain restrictions as to the minimum amount that may be prepaid without our consent. Under a transition services agreement with Lucky Brand LLC, we are required to provide Lucky Brand LLC with certain transitional services, such as IT support, accounting services, tax services and other services that were provided at the corporate level while Lucky Brand was owned by us. The services are being provided for up to a maximum of two years from the closing date, subject to earlier termination of the various services by Lucky Brand LLC. On November 6, 2013, we sold the Juicy Couture brandname and related intellectual property assets (the ‘‘Juicy Couture IP’’) the Juicy Couture IP to an affiliate of Authentic Brands Group (‘‘ABG’’) for a total purchase price of $195.0 million (an additional payment may be payable to us in an amount of up to $10.0 million if certain conditions regarding future performance are achieved). The Juicy Couture IP was licensed back to us to accommodate the wind-down of operations, which was substantially completed in the second quarter of 2014. We paid guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license. On April 7, 2014, we sold our Juicy Couture business in Europe to an operating partner of ABG for $8.6 million, subject to working capital adjustments. On November 19, 2013, we entered into an agreement to terminate the lease of our Juicy Couture flagship store on Fifth Avenue in New York City in exchange for a $51.0 million payment. On May 15, 2014, we surrendered such premises to the landlord and received proceeds of $45.8 million (net of taxes and fees), in addition to $5.0 million previously received.

Debt and Liquidity Enhancements In May 2014, we terminated our prior revolving credit agreement and completed a fourth amendment to and restatement of our revolving credit facility (as amended to date, the ‘‘ABL Facility’’), which extended the maturity date of the facility to May 2019. Availability under the ABL Facility is in an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of our eligible cash, accounts receivable and inventory. On April 10, 2014, we entered into a term loan credit agreement (the ‘‘Term Loan Credit Agreement’’), which provides for term loans in an aggregate principal amount of $400.0 million (collectively the ‘‘Term Loan’’) 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%)

40 plus 3.0% per annum, payable in cash. We drew on the Term Loan on May 12, 2014 and used $354.8 million of the net proceeds of $392.0 million to redeem all of our remaining outstanding Senior Notes. See ‘‘Financial Position, Liquidity and Capital Resources.’’ On April 14, 2014, we redeemed $37.2 million aggregate principal amount of the Senior Notes at a price equal to 103.0% of their aggregate principal amount, plus accrued interest using cash on hand. On May 12, 2014, we redeemed the remaining $334.8 million aggregate principal amount of the Senior Notes at a price equal to 105.25% of their aggregate principal amount, plus accrued interest. As a result of these transactions, no Senior Notes remain outstanding. Our cost reduction efforts have included tighter controls surrounding discretionary spending and streamlining initiatives that have included rationalization of distribution centers and office space and staff reductions, including consolidation of certain support functions. We expect that our streamlining initiatives will provide long-term cost savings. We will also continue to closely manage spending, with 2015 capital expenditures expected to be approximately $75.0 million, compared to $100.0 million in 2014. For a discussion of certain risks relating to our recent initiatives, see ‘‘Item 1A — Risk Factors’’ in this Annual Report on Form 10-K.

Discontinued Operations The activities of our former Lucky Brand and Juicy Couture businesses have been segregated and reported as discontinued operations for all periods presented.

2014 Overall Results Our 2014 results reflected: • Net sales growth in our KATE SPADE North America segment; • Net sales growth in our KATE SPADE International segment, reflecting increases across all geographies in the segment and $26.3 million of incremental net sales from the acquisition of the KATE SPADE businesses in Southeast Asia; and • Reduced net sales and gross profit in our Adelington Design Group segment, primarily related to the LIZWEAR, LIZ CLAIBORNE NEW YORK and private label jewelry businesses. During 2014, we recorded the following pretax items: • Expenses associated with our streamlining initiatives of $42.0 million; • A $16.9 million loss on the extinguishment of debt in connection with the redemption of the Senior Notes, which were refinanced with proceeds from the Term Loan; • Additional inventory charges of $7.9 million as a result of our decision to exit KATE SPADE SATURDAY as a standalone business and close our JACK SPADE retail stores; and • A non-cash impairment charge of $1.5 million in our Adelington Design Group segment related to our trademark for the TRIFARI brand. Our 2013 results reflected: • Significant net sales growth in both KATE SPADE North America and KATE SPADE International, reflecting organic growth and the inclusion of Kate Spade Japan Co., Ltd. (‘‘KSJ’’) net sales in our results for the entire year in 2013, compared to two months in 2012; and • Reduced net sales and gross profit in our Adelington Design Group segment, primarily related to the licensed LIZ CLAIBORNE brands.

41 During 2013, we recorded the following pretax items: • A non-cash impairment charge of $3.3 million in our Adelington Design Group segment related to our trademark for the TRIFARI brand; • A $6.1 million impairment charge related to our former investment in the Mexx business; • A $1.7 million net loss on the extinguishment of debt in connection with the conversion of $19.9 million of our Convertible Notes into 5.6 million shares of our common stock; and • Expenses associated with our streamlining initiatives of $10.6 million and charges primarily associated with other exiting activities of $2.8 million.

Net Sales Net sales in 2014 were $1.139 billion, an increase of $335.2 million or 41.7%, compared to 2013 net sales of $803.4 million, including an estimated $18.4 million increase in net sales resulting from the inclusion of an additional week in 2014. Net sales increased in our KATE SPADE North America and KATE SPADE International segments, partially offset by a decline in net sales within our Adelington Design Group segment.

Gross Profit and Income (Loss) from Continuing Operations Gross profit in 2014 was $680.3 million, an increase of $183.7 million compared to 2013, primarily due to increased net sales in our KATE SPADE North America and KATE SPADE International segments, partially offset by decreased net sales in our Adelington Design Group segment. Our gross profit rate decreased from 61.8% in 2013 to 59.7% in 2014, primarily reflecting: (i) additional inventory charges of $7.9 million in 2014 as a result of our decision to exit KATE SPADE SATURDAY as a standalone business and close our JACK SPADE retail stores; (ii) a more promotional retail environment; (iii) a change in mix in our KATE SPADE North America segment related to accelerating outlet store openings in order to capitalize on the one-time opportunity presented by the Juicy Couture real estate portfolio; (iv) foreign currency pressure on our operations in Japan; and (v) the impact of off-price sales associated with the liquidation of excess KATE SPADE SATURDAY launch year inventory. We recorded income from continuing operations of $76.7 million in 2014, as compared to a loss from continuing operations of $(32.2) million in 2013. Income from continuing operations in 2014 includes an income tax benefit of $84.3 million, which reflects a net $87.4 million reduction in the reserve for uncertain tax positions due to the expiration of the related statutes of limitations. The remaining year-over-year change primarily reflected: (i) an increase in gross profit; (ii) a decrease in Interest expense, net; (iii) the absence in 2014 of an impairment of cost investment of $6.1 million that was incurred in 2013; (iv) an increase in Selling, general & administrative expenses (‘‘SG&A’’), including charges related to streamlining initiatives, brand-exiting activities and acquisition related costs; and (v) a loss on extinguishment of debt of $16.9 million in 2014 compared to $1.7 million in 2013.

Balance Sheet We ended 2014 with a net debt position (total debt less cash and cash equivalents and marketable securities) of $226.7 million as compared to $264.0 million at year-end 2013. The $37.3 million decrease in our net debt primarily reflected: (i) the receipt of net proceeds of $141.0 million primarily from the disposition of the Lucky Brand business; (ii) the funding of $100.0 million of capital and in-store shop expenditures over the last 12 months; (iii) the receipt of proceeds of $41.9 million from the exercise of stock options; (iv) the payment of $32.3 million for the acquisition of the existing KATE SPADE business in Southeast Asia from Globalluxe; and (v) the use of $33.5 million in cash from other activities of our discontinued operations over the past 12 months. We also generated $44.6 million of cash from continuing operating activities over the past 12 months.

42 RESULTS OF OPERATIONS As discussed above, we present our results based on three reportable segments.

2014 vs. 2013 The following table sets forth our operating results for the year ended January 3, 2015 (53 weeks), compared to the year ended December 28, 2013 (52 weeks):

Fiscal Years Ended January 3, December 28, Variance 2015 2013 $ % Dollars in millions Net Sales ...... $1,138.6 $803.4 $ 335.2 41.7% Gross Profit ...... 680.3 496.6 183.7 37.0% Selling, general & administrative expenses ...... 645.3 473.1 (172.2) (36.4)% Impairment of intangible assets ...... 1.5 3.3 1.8 53.5% Operating Income ...... 33.5 20.2 13.3 65.6% Other expense, net ...... (4.0) (2.1) (1.9) (95.6)% Impairment of cost investment ...... — (6.1) 6.1 * Loss on extinguishment of debt ...... (16.9) (1.7) (15.2) * Interest expense, net ...... (20.2) (47.1) 26.9 57.1% Benefit for income taxes ...... (84.3) (4.6) 79.7 * Income (Loss) from Continuing Operations ...... 76.7 (32.2) 108.9 * Discontinued operations, net of income taxes .... 82.5 105.2 (22.7) (21.6)% Net Income ...... $ 159.2 $ 73.0 $ 86.2 *

* Not meaningful.

Net Sales Net sales for 2014 were $1.139 billion, an increase of $335.2 million or 41.7%, as compared to 2013 net sales of $803.4 million. Excluding the additional week in 2014, comparable direct-to-consumer net sales, including e-commerce, increased by 24.4% in the 2014; excluding e-commerce net sales, comparable direct-to-consumer net sales increased by 21.6%. Including the additional week in 2014, comparable direct-to-consumer net sales, including e-commerce, increased by 25.9% in 2014; excluding e-commerce net sales, comparable direct-to-consumer net sales increased by 23.1%. Net sales results for our segments are provided below: • KATE SPADE North America net sales were $891.8 million, a 49.2% increase compared to 2013. We ended 2014 with 108 specialty retail stores and 58 outlet stores, reflecting the net addition over the last 12 months of 20 specialty retail stores and 16 outlet stores. Key operating metrics for our North America retail operations included the following: – Average retail square footage in 2014 was approximately 315 thousand square feet, a 42.9% increase compared to 2013; and – Sales productivity was $1,437 per average square foot in 2014, as compared to $1,234 for 2013.

43 The store counts at the end of 2014 included 15 specialty retail stores and 1 outlet store for KATE SPADE SATURDAY and JACK SPADE with average retail square footage in 2014 of 20 thousand square feet. • KATE SPADE International net sales were $213.6 million, a 46.9% increase compared to 2013, reflecting increases across all geographies in the segment. Net sales included $23.1 million of incremental net sales from the acquisition of the KATE SPADE businesses in Southeast Asia. We ended 2014 with 42 specialty retail stores, 15 outlet stores and 54 concessions, reflecting the net addition over the last 12 months of 6 specialty retail stores, 5 outlet stores and 9 concessions and the acquisition of 6 specialty retail stores, 2 concessions and 1 outlet store. Key operating metrics for our International retail operations included the following: – Average retail square footage, including concessions, in 2014 was approximately 94 thousand square feet, a 34.4% increase compared to 2013; and – Sales productivity was $1,711 per average square foot in 2014, as compared to $1,536 for 2013. The store counts at the end of 2014 included 16 specialty retail stores, 5 concessions and 2 outlets for KATE SPADE SATURDAY, JACK SPADE and Hong Kong, Macau and Taiwan with average retail square footage in 2014 of 22 thousand square feet. • Adelington Design Group net sales were $33.3 million, a decrease of $27.0 million, or 44.8%, compared to 2013, reflecting the following: – An $8.2 million decrease related to the LIZWEAR brand; – An $8.2 million decrease related to the LIZ CLAIBORNE and MONET brands; – A net $7.4 million decrease related to the LIZ CLAIBORNE NEW YORK and private label jewelry businesses; and – A $3.2 million decrease primarily related to the expiration of our former Dana Buchman brand supplier agreement in October 2013. Comparable direct-to-consumer net sales are calculated as follows: • New stores become comparable after 14 full fiscal months of operations (on the first day of the 15th full fiscal month); • Except in unusual circumstances, closing stores become non-comparable one full fiscal month prior to the scheduled closing date; • A remodeled store will be changed to non-comparable when there is a 20.0% or more increase/ decrease in its selling square footage (effective at the start of the fiscal month when construction begins). The store becomes comparable again after 14 full fiscal months from the re-open date; • A store that relocates becomes non-comparable when the new location is materially different from the original location (in respect to selling square footage and/or traffic patterns); • Stores that are acquired are not comparable until they have been reflected in our results for a period of 12 months; and • E-commerce sales are comparable after 12 full fiscal months from the website launch date (on the first day of the 13th full month). We evaluate sales productivity based on net sales per average square foot, which is defined as net sales divided by the average of beginning and end of period gross square feet and excludes e-commerce net sales.

Gross Profit Gross profit in 2014 was $680.3 million (59.7% of net sales), compared to $496.6 million (61.8% of net sales) in 2013. The increase in gross profit was primarily due to increased net sales in our KATE SPADE

44 North America and KATE SPADE International segments, partially offset by decreased net sales in our Adelington Design Group segment. Our gross profit rate decreased from 61.8% in 2013 to 59.7% in 2014, primarily reflecting: (i) additional inventory charges of $7.9 million in 2014 as a result of our decision to exit KATE SPADE SATURDAY as a standalone business and close our JACK SPADE retail stores; (ii) a more promotional retail environment; (iii) a change in mix in our KATE SPADE North America segment related to accelerating outlet store openings in order to capitalize on the one-time opportunity presented by the Juicy Couture real estate portfolio; (iv) foreign currency pressure on our operations in Japan; and (v) the impact of off-price sales associated with the liquidation of excess KATE SPADE SATURDAY launch year inventory. Expenses related to warehousing activities, including receiving, storing, picking, packing and general warehousing charges are included in SG&A; accordingly, our gross profit may not be directly comparable to others who may include these expenses as a component of cost of goods sold.

Selling, General & Administrative Expenses SG&A increased $172.2 million, or 36.4%, to $645.3 million in 2014 compared to 2013. The change in SG&A reflected the following: • A $106.4 million increase in SG&A in our KATE SPADE North America segment, primarily related to direct-to-consumer expansion reflecting: (i) increased rent and other store operating expenses; (ii) increased compensation related expenses; and (iii) increased e-commerce fees and advertising expenses; • A $49.1 million increase in SG&A in our KATE SPADE International segment, primarily related to direct-to-consumer expansion, reflecting: (i) increased rent, concession fees and other store operating expenses; (ii) increased compensation related expenses; and (iii) increased advertising expenses. The increase also included incremental SG&A associated with the KATE SPADE businesses in Southeast Asia; • A $26.6 million increase in expenses associated with our streamlining initiatives, brand-exiting activities and acquisition related costs; • A $5.9 million decrease associated with reduced costs at our Adelington Design Group segment; and • A $4.0 million decrease in expenses related principally to distribution functions that were included in the Juicy Couture and Lucky Brand historical results, but are not directly attributable to Juicy Couture or Lucky Brand and therefore, have not been included in discontinued operations. SG&A as a percentage of net sales was 56.7%, compared to 58.9% in 2013.

Impairment of Intangible Assets In 2014 and 2013, we recorded non-cash impairment charges of $1.5 million and $3.3 million, respectively, in our Adelington Design Group segment related to our trademark for the TRIFARI brand.

Operating Income Operating income for 2014 was $33.5 million (2.9% of net sales), compared to $20.2 million (2.5% of net sales) in 2013.

Other Expense, Net Other expense, net amounted to $4.0 million in 2014 and $2.1 million in 2013. Other expense, net consisted primarily of (i) foreign currency transaction gains and losses and (ii) equity in the losses of KSC.

45 Impairment of Cost Investment In 2013, we recorded a $6.1 million impairment charge related to our former investment in the Mexx business.

Loss on Extinguishment of Debt In 2014, we recorded a $16.9 million loss on the extinguishment of debt in connection with the redemption of the Senior Notes, which were refinanced with proceeds from the issuance of the Term Loan. In 2013, we recorded a $1.7 million loss on the extinguishment of debt in connection with the conversion of $19.9 million of our 6.0% Convertible Senior Notes due June 2014 (the ‘‘Convertible Notes’’) into 5.6 million shares of our common stock.

Interest Expense, Net Interest expense, net was $20.2 million in 2014, as compared to $47.1 million in 2013, primarily reflecting (i) a net decrease of $13.0 million in interest expense due to the refinancing of the Senior Notes with the net proceeds from the Term Loan in the second quarter of 2014; (ii) the recognition of $11.3 million of interest income in 2014 related to the Lucky Brand Note; (iii) a decrease of $3.1 million related to reduced borrowings under the ABL Facility and the extinguishment of the Convertible Notes; and (iv) a $2.3 million write-off of deferred financing fees in 2014 as a result of a reduction in the size of our ABL Facility.

Benefit for Income Taxes In 2014 and 2013, we recorded a benefit for income taxes of $84.3 million and $4.6 million, respectively. The income tax benefits reflected refunds from certain tax jurisdictions, partially offset by 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. In addition to those items, the 2014 benefit for income taxes included a net $87.4 million reduction in the reserve for uncertain tax positions, resulting from the expiration of the related statutes of limitations. We did not record income tax benefits for substantially all losses incurred during 2014 and 2013, as it is not more likely than not that we will utilize such benefits due to the combination of our history of pretax losses and our ability to carry forward or carry back tax losses or credits.

Income (Loss) from Continuing Operations Income (loss) from continuing operations in 2014 was $76.7 million, or 6.7% of net sales, compared to $(32.2) million in 2013, or (4.0)% of net sales. Earnings per share (‘‘EPS’’), basic from continuing operations was $0.61 in 2014 and $(0.27) in 2013. EPS, diluted from continuing operations was $0.60 in 2014 and $(0.27) in 2013.

Discontinued Operations, Net of Income Taxes Income from discontinued operations in 2014 was $82.5 million, reflecting a gain on disposal of discontinued operations of $130.0 million and a $(47.5) million loss from discontinued operations. Income from discontinued operations in 2013 was $105.2 million, reflecting a gain on disposal of discontinued operations of $143.4 million and a $(38.2) million loss from discontinued operations. EPS, basic and diluted, from discontinued operations was $0.65 in 2014 and $0.87 in 2013.

Net Income Net income in 2014 was $159.2 million, compared to $73.0 million in 2013. EPS, basic was $1.26 in 2014 and 0.60 in 2013. EPS, diluted was $1.25 in 2014 and $0.60 in 2013.

46 Segment Adjusted EBITDA Our Chief Executive Officer has been identified as the CODM. Our 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. We do not allocate amounts reported below Operating income (loss) to our reportable segments, other than equity income (loss) in our equity method investee. Our definition of Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Segment Adjusted EBITDA for our reportable segments are provided below.

Fiscal Years Ended Variance January 3, December 28, 2015 2013 $ % In thousands Reportable Segments Adjusted EBITDA: KATE SPADE North America ...... $143,009 $ 70,250 $72,759 103.6% KATE SPADE International(a) ...... 810 (815) 1,625 * Adelington Design Group ...... 4,092 12,008 (7,916) (65.9)% Other(b) ...... (940) (4,334) 3,394 78.3% Total Reportable Segments Adjusted EBITDA ...... 146,971 77,109 Depreciation and amortization, net(b) ...... (48,441) (35,088) Charges due to streamlining initiatives(c), brand-exiting activities, acquisition related costs, impairment of intangible assets and loss on asset disposals and impairments, net ...... (30,371) (15,716) Share-based compensation(d) ...... (37,270) (7,269) Equity loss included in Reportable Segments Adjusted EBITDA ...... 2,583 1,179 Operating Income ...... 33,472 20,215 Other expense, net(a) ...... (4,033) (2,062) Impairment of cost investment ...... — (6,109) Loss on extinguishment of debt ...... (16,914) (1,707) Interest expense, net ...... (20,178) (47,065) Benefit for income taxes ...... (84,379) (4,563) Income (Loss) from Continuing Operations ...... $ 76,726 $(32,165)

* Not meaningful. (a) Amounts include equity in the losses of our equity method investee of $2.6 million and $1.2 million in 2014 and 2013, respectively. (b) Excludes amortization included in Interest expense, net. (c) See Note 13 of Notes to Consolidated Financial Statements for a discussion of streamlining charges. (d) Includes share-based compensation expense of $17.3 million and $2.8 million in 2014 and 2013, respectively, that was classified as restructuring.

47 A discussion of Segment Adjusted EBITDA of our reportable segments for the years ended January 3, 2015 and December 28, 2013 follows: • KATE SPADE North America Adjusted EBITDA for 2014 was $143.0 million (16.0% of net sales), compared to $70.3 million (11.8% of net sales) in 2013. The period-over-period increase reflected an increase in gross profit, as discussed above, partially offset by an increase in SG&A related to direct-to-consumer expansion, including an increase in rent and other store operating expenses, payroll related expenses, e-commerce fees and advertising expenses. • KATE SPADE International Adjusted EBITDA for 2014 was $0.8 million (0.4% of net sales), compared to $(0.8) million ((0.6)% of net sales) in 2013. The period-over-period increase reflected an increase in gross profit, as discussed above, partially offset by an increase in SG&A related to direct-to-consumer expansion, including an increase in rent, concession fees and other store operating expenses, payroll related expenses and advertising expenses. KATE SPADE International Adjusted EBITDA in 2014 included $2.8 million of incremental Adjusted EBITDA from the acquisition of the KATE SPADE businesses in Southeast Asia. • Adelington Design Group Adjusted EBITDA for 2014 was $4.1 million (12.3% of net sales), compared to Adjusted EBITDA of $12.0 million (19.9% of net sales) in 2013. The decrease in Adjusted EBITDA reflected decreased gross profit, partially offset by reduced SG&A.

2013 vs. 2012 The following table sets forth our operating results for the year ended December 28, 2013 (52 weeks), compared to the year ended December 29, 2012 (52 weeks):

Fiscal Years Ended December 28, December 29, Variance Dollars in millions 2013 2012 $ % Net Sales ...... $ 803.4 $ 544.8 $ 258.6 47.5% Gross Profit ...... 496.6 339.9 156.7 46.1% Selling, general & administrative expenses ...... 473.1 375.9 (97.2) (25.8)% Impairment of intangible asset ...... 3.3 — (3.3) * Operating Income (Loss) ...... 20.2 (36.0) 56.2 * Other expense, net ...... (2.1) (0.3) (1.8) * Impairment of cost investment ...... (6.1) — (6.1) * Gain on acquisition of subsidiary ...... — 40.1 (40.1) * Loss on extinguishment of debt ...... (1.7) (9.8) 8.1 82.5% Interest expense, net ...... (47.1) (51.6) 4.5 8.8% Benefit for income taxes ...... (4.6) (4.9) (0.3) (8.0)% Loss from Continuing Operations ...... (32.2) (52.7) 20.5 39.0% Discontinued operations, net of income taxes ...... 105.2 (21.8) 127.0 * Net Income (Loss) ...... $ 73.0 $ (74.5) $ 147.5 *

* Not meaningful.

48 Net Sales Net sales for 2013 were $803.4 million, an increase of $258.6 million or 47.5%, as compared to 2012 net sales of $544.8 million. Comparable direct-to-consumer net sales, including e-commerce, increased by 28.2% in 2013; excluding e-commerce net sales, comparable direct-to-consumer net sales increased by 16.3%. Net sales results for our segments are provided below: • KATE SPADE North America net sales were $597.7 million, a 45.3% increase compared to 2012. We ended 2013 with 88 specialty retail stores and 42 outlet stores, reflecting the net addition over the last 12 months of 30 specialty retail stores and 10 outlet stores. Key operating metrics for our North America retail operations included the following: – Average retail square footage in 2013 was approximately 220 thousand square feet, a 33.1% increase compared to 2012; and – Sales productivity was $1,234 per average square foot as compared to $1,114 for 2012. • KATE SPADE International net sales were $145.4 million, a 188.4% increase compared to 2012, reflecting increases across all geographies in the segment. The acquisition of KSJ resulted in a $79.3 million increase in net sales in 2013 compared to 2012. We ended with 30 specialty retail stores, 9 outlet stores and 43 concessions, reflecting the net addition over the last 12 months of 7 specialty retail stores, 1 outlet store and 11 concessions. Key operating metrics for our International retail operations included the following: – Average retail square footage, including concessions, in 2013 was approximately 70 thousand square feet, a 196.2% increase compared to 2012; and – Sales productivity was $1,536 per average square foot as compared to $963 for 2012. • Adelington Design Group net sales were $60.2 million, a decrease of $22.6 million, or 27.3%, compared to 2011, reflecting the following: – A net $12.5 million decrease primarily related to the LIZWEAR and LIZ CLAIBORNE NEW YORK; – A $6.6 million decrease related to our former licensed DKNY↧ Jeans brand, our former Dana Buchman brand and other brands that have been licensed or exited; and – A $3.5 million decrease in the wholesale non-apparel operations of our private label jewelry business and our TRIFARI brand.

Gross Profit Gross profit in 2013 was $496.6 million (61.8% of net sales), compared to $339.9 million (62.4% of net sales) in 2012. The increase in gross profit is primarily due to increased net sales in our KATE SPADE North America and KATE SPADE International segments, partially offset by decreased net sales in our Adelington Design Group. Our gross profit rate decreased from 62.4% in 2012 to 61.8% in 2013, primarily reflecting a more promotional retail environment.

49 Selling, General & Administrative Expenses SG&A increased $97.2 million, or 25.8%, to $473.1 million in 2013 compared to 2012. The change in SG&A reflected the following: • A $55.2 million increase in SG&A in our KATE SPADE North America segment, primarily related to direct-to-consumer expansion reflecting: (i) increased e-commerce fees and advertising expenses; (ii) increased compensation related expenses; and (iii) increased rent and other store operating expenses. The increase also included incremental SG&A associated the launch of KATE SPADE SATURDAY. • A $76.6 million increase in SG&A in our KATE SPADE International segment, primarily related to direct-to-consumer expansion reflecting: (i) incremental SG&A associated with KSJ; (ii) increased compensation related expenses; (iii) increased rent and other store operating expenses; and (iv) increased e-commerce fees and advertising expenses. • A $32.4 million decrease in expenses associated with our streamlining initiatives, brand-exiting activities and acquisition related costs; and • A $2.2 million decrease in SG&A in our Adelington Design Group primarily related to a decrease in compensation related costs and advertising expenses. SG&A as a percentage of net sales was 58.9% in 2013, compared to 69.0% in 2012.

Impairment of Intangible Asset In 2013, we recorded a $3.3 million non-cash impairment charge in our Adelington Design Group segment related to the TRIFARI trademark.

Operating Income (Loss) Operating income for 2013 was $20.2 million (2.5% of net sales), compared to an operating loss of $(36.0) million ((6.6)% of net sales) in 2012.

Other Expense, Net Other expense, net amounted to $2.1 million in 2013 and $0.3 million in 2012. Other expense, net consists primarily of (i) foreign currency transaction gains and losses; and (ii) equity in the earnings of our equity investees.

Impairment of Cost Investment In 2013, we recorded a $6.1 million impairment charge related to our former investment in the Mexx business.

Gain on Acquisition of Subsidiary In 2012, we recorded a $40.1 million gain on the acquisition of KSJ, resulting from the adjustment of our pre-existing 49.0% interest in KSJ to estimated fair value.

Loss on Extinguishment of Debt In 2013, we recorded a $1.7 million loss on the extinguishment of debt in connection with the conversion of $19.9 million of our Convertible Notes into 5.6 million shares of our common stock. In 2012, we recorded a $9.8 million loss on the extinguishment of debt in connection with the conversion of $49.4 million of our

50 Convertible Notes into 14.2 million shares of our common stock and the repurchase or redemption of 121.5 million euro aggregate principal amount of our Euro Notes.

Interest Expense, Net Interest expense, net decreased to $47.1 million in 2013 from $51.6 million in 2012, primarily reflecting a decrease of $7.0 million in interest expense on the Euro Notes and Convertible Notes and a $4.2 million decrease related to the amortization of deferred financing fees, partially offset by an increase of $6.7 million in interest expense related to the Senior Notes and ABL Facility.

Benefit for Income Taxes In 2013 and 2012, we recorded a benefit for income taxes of $4.6 million and $4.9 million, respectively. The income tax benefit primarily represented refunds from certain tax jurisdictions and a reduction in the reserve for uncertain tax positions, partially offset by 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. We did not record income tax benefits for substantially all losses incurred during 2013 and 2012, as it is not more likely than not that we will utilize such benefits due to the combination of our history of pretax losses and our ability to carry forward or carry back tax losses or credits.

Loss from Continuing Operations Loss from continuing operations in 2013 was $(32.2) million, or (4.0)% of net sales, compared to $(52.7) million in 2012, or (9.7)% of net sales. EPS, basic and diluted, from continuing operations was $(0.27) in 2013 and $(0.48) in 2012.

Discontinued Operations, Net of Income Taxes Income from discontinued operations in 2013 was $105.2 million, reflecting a gain on disposal of discontinued operations of $143.4 million and a $(38.2) million loss from discontinued operations in 2013. Loss from discontinued operations of $(21.8) million in 2012 reflected a loss of $(9.6) million from discontinued operations and a loss on disposal of discontinued operations of $(12.2) million in 2012. EPS, basic and diluted, from discontinued operations was $0.87 in 2013 and $(0.20) in 2012.

Net Income (Loss) Net income (loss) in 2013 was $73.0 million, compared to $(74.5) million in 2012. EPS, basic and diluted, was $0.60 in 2013 and $(0.68) in 2012.

51 Segment Adjusted EBITDA Segment Adjusted EBITDA for our reportable segments are provided below. Fiscal Years Ended December 28, December 29, Variance In thousands 2013 2012 $ % Reportable Segments Adjusted EBITDA: KATE SPADE North America ...... $ 70,250 $ 24,924 $45,326 181.9% KATE SPADE International(a) ...... (815) 3,454 (4,269) (123.6)% Adelington Design Group ...... 12,008 17,694 (5,686) (32.1)% Other(b) ...... (4,334) (4,332) (2) — Total Reportable Segments Adjusted EBITDA ...... 77,109 41,740 Depreciation and amortization, net(b) ...... (35,088) (25,641) Charges due to streamlining initiatives(c), brand-exiting activities, acquisition related costs, impairment of intangible assets and loss on asset disposals and impairments, net ...... (15,716) (46,455) Share-based compensation(d) ...... (7,269) (6,911) Equity loss included in Reportable Segments Adjusted EBITDA ...... 1,179 1,245 Operating Income (Loss) ...... 20,215 (36,022) Other expense, net(a) ...... (2,062) (325) Impairment of cost investment ...... (6,109) — Gain on acquisition of subsidiary ...... — 40,065 Loss on extinguishment of debt ...... (1,707) (9,754) Interest expense, net ...... (47,065) (51,612) Benefit for income taxes ...... (4,563) (4,961) Loss from Continuing Operations ...... $(32,165) $ (52,687)

(a) Amounts include equity in the losses of equity method investees of $1.2 million in 2013 and 2012, respectively. (b) Excludes amortization included in Interest expense, net. (c) See Note 13 of Notes to Consolidated Financial Statements for a discussion of streamlining charges. (d) Includes share-based compensation expense of $2.8 million in 2013 that was classified as restructuring. A discussion of Segment Adjusted EBITDA of our reportable segments for 2013 and 2012 follows: • KATE SPADE North America Adjusted EBITDA in 2013 was $70.3 million (11.8% of net sales), compared to $24.9 million (6.1% of net sales) in 2012. The period-over-period increase reflected an increase in gross profit, partially offset by an increase in SG&A related to direct-to-consumer expansion, the launch of KATE SPADE SATURDAY and the impact of costs associated with defending the KATE SPADE SATURDAY trademark. • Kate Spade International Adjusted EBITDA in 2013 was $(0.8) million ((0.6)% of net sales), compared to Adjusted EBITDA of $3.5 million (6.9% of net sales) in 2012. The decrease in Adjusted EBITDA reflected an increase in SG&A related to direct-to-consumer expansion, partially offset by an increase in gross profit. • Adelington Design Group Adjusted EBITDA in 2013 was $12.0 million (19.9% of net sales), compared to Adjusted EBITDA of $17.7 million (21.4% of net sales) in 2012. The decrease in Adjusted EBITDA reflected reduced gross profit and SG&A related to brands that have been exited, as discussed above.

52 FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES Cash Requirements Our primary ongoing cash requirements are to: (i) fund seasonal working capital needs (primarily accounts receivable and inventory); (ii) fund capital expenditures related to the opening and refurbishing of our specialty retail and outlet stores and normal maintenance activities; (iii) fund outstanding liabilities and remaining efforts associated with our streamlining initiatives and dispositions, including contract termination costs, employee related costs and other costs associated with the exit of KATE SPADE SATURDAY and the closure of the JACK SPADE retail stores, as well as any remaining costs associated with the sale of the Juicy Couture IP and Lucky Brand; (iv) invest in our information systems; (v) fund operational and contractual obligations; and (vi) potentially repurchase or retire debt obligations. We expect that our streamlining initiatives will provide long-term cost savings.

Sources and Uses of Cash Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, as well as borrowings through our lines of credit. Term Loan. On April 10, 2014, we entered into the Term Loan Credit Agreement, which provides for term loans in an aggregate principal amount of $400.0 million, maturing in April 2021. The Term Loan is subject to amortization payments of $1.0 million per quarter, which commenced on October 1, 2014, with the balance due at maturity. Interest on the outstanding principal amount of the Term Loan accrues at a rate equal to LIBOR (with a floor of 1.0%) plus 3.0% per annum, payable in cash. The Term Loan was funded on May 12, 2014, and we used $354.8 million of the net proceeds of $392.0 million from the Term Loan to redeem all of our remaining outstanding Senior Notes on May 12, 2014, as discussed above. The Term Loan and other obligations under the Term Loan Credit Agreement are guaranteed by certain of our restricted subsidiaries (the ‘‘Guarantors’’), which include (i) all of our existing material domestic restricted subsidiaries, (ii) all of our future wholly owned restricted subsidiaries (other than foreign subsidiaries, CFCs, CFC holding companies and subsidiaries of any of the foregoing and certain immaterial subsidiaries) and (iii) all of our future non-wholly owned restricted subsidiaries that guarantee capital markets debt securities or term indebtedness of the Company or any Guarantor. The Term Loan Credit Agreement permits us to incur, from time to time, additional incremental term loans under the Term Loan Credit Agreement (subject to obtaining commitments for such term loans) and other pari passu lien indebtedness, subject to an overall limit of $100.0 million plus such additional amount that would cause our consolidated net total secured debt ratio not to exceed 3.75 to 1.0 on a pro forma basis. Any such incremental term loans and other pari passu lien indebtedness are permitted to share in the collateral described below on a pari passu basis with the Term Loan. The Term Loan may be prepaid, at our option, in whole or in part, at any time at par plus accrued interest; provided that if the Term Loan is prepaid or refinanced in connection with a repricing transaction within six months after the initial borrowing, a 1.0% penalty is applicable. Subject to certain permitted liens and other exclusions and exceptions, the Term Loan is secured (i) on a first-priority basis by a lien on our KATE SPADE trademarks and certain related rights owned by us and the Guarantors (the ‘‘Term Priority Collateral’’) and (ii) by a second-priority security interest in our and the Guarantors’ other assets (the ‘‘ABL Priority Collateral’’ and together with the Term Priority Collateral, the ‘‘Collateral’’), which secure our ABL Facility on a first-priority basis. The Term Loan is required to be prepaid in an amount equal to 50.0% of our Excess Cash Flow (as defined in the Term Loan Credit Agreement) with respect to each fiscal year ending on or after January 2, 2016. The percentage of Excess Cash Flow that must be so applied is reduced to 25.0% if our consolidated net total debt ratio is less than 2.75 to 1.0 and to 0% if our consolidated net total debt ratio is less than 2.25 to 1.0. Lenders may elect not to accept mandatory prepayments.

53 The Term Loan Credit Agreement limits our and our restricted subsidiaries’ ability to, among other things, incur indebtedness, make dividend payments or other restricted payments, create liens, sell assets (including securities of our restricted subsidiaries), permit certain restrictions on dividends and transfers of assets by our 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 our assets, in each case subject to certain designated exceptions and qualifications. The Term Loan Credit Agreement also contains certain affirmative covenants and events of default that are customary for credit agreements governing term loans. ABL Facility. In May 2014, we terminated our prior revolving credit agreement and completed a fourth amendment to and restatement of the ABL Facility, which extended the maturity date of the facility to May 2019. Availability under the ABL Facility shall be in an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of our 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 facility provided under the ABL Facility of 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 our current domestic subsidiaries, certain of our future domestic subsidiaries and certain of our foreign subsidiaries. The ABL Facility is secured by a first- priority lien on substantially all of our assets and the assets of the other borrowers and guarantors (other than certain trademark collateral in which the lenders under the Term Loan Credit Agreement have a first- priority lien, which trademark collateral secures the obligations under the ABL Facility on a second- priority lien basis). The ABL Facility limits our and our 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 our restricted subsidiaries and enter into sale and leaseback transactions. These covenants are subject to important exceptions and qualifications, and many of the covenants are subject to an exception based on meeting the fixed charge coverage ratio and/or certain minimum availability tests. The ABL Facility also contains representations and warranties (some of which are brought down to the time of each borrowing made), affirmative covenants and events of default that are customary for asset-based revolving credit agreements. In addition, the terms and conditions of the ABL Facility: (i) provide for a decrease in fees and interest rates compared to our previous asset-based revolving loan facility (including eurocurrency spreads of 1.50% to 2.00% over LIBOR, depending on the level of aggregate availability), (ii) require us to maintain pro forma compliance with a fixed charge coverage ratio of 1.0:1.0 on a trailing four-quarter basis if availability under the ABL Facility for three consecutive business days falls below the greater of $15.0 million and 10.0% of the lesser of the aggregate commitments and the borrowing base and (iii) require us 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. Based on our forecast of borrowing availability under the ABL Facility, we anticipate that cash flows from operations and the projected borrowing availability under our ABL Facility will be sufficient to fund our liquidity requirements for at least the next 12 months.

54 There can be no certainty that availability under the ABL Facility will be sufficient to fund our liquidity needs. Should we be unable to comply with the requirements in the ABL Facility, we would be unable to borrow under such agreement and any amounts outstanding would become immediately due and payable, unless we were able to secure a waiver or an amendment under the ABL Facility. Should we be unable to borrow under the ABL Facility, or if outstanding borrowings thereunder become immediately due and payable, our liquidity would be significantly impaired, which would have a material adverse effect on our business, financial condition and results of operations. In addition, an acceleration of amounts outstanding under the ABL Facility would likely cause cross-defaults under our other outstanding indebtedness, including the Term Loan. The sufficiency and availability of our projected sources of liquidity may be adversely affected by a variety of factors, including, without limitation: (i) the level of our operating cash flows, which will be impacted by retailer and consumer acceptance of our products, general economic conditions and the level of consumer discretionary spending; (ii) the status of, and any adverse changes in, our credit ratings; (iii) our ability to maintain required levels of borrowing availability under the ABL Facility and to comply with other covenants included in our debt and credit facilities; (iv) the financial wherewithal of our larger department store and specialty retail store customers; and (v) interest rate and exchange rate fluctuations. Because of the continuing uncertainty and risks relating to future economic conditions, we may, from time to time, explore various initiatives to improve our liquidity, including issuance of debt securities, sales of various assets, additional cost reductions and other measures. In addition, where conditions permit, we may also, from time to time, seek to retire, exchange or purchase our outstanding debt in privately- negotiated transactions or otherwise. We may not be able to successfully complete any such actions. Cash and Debt Balances. We ended 2014 with $184.0 million in cash and cash equivalents, compared to $130.2 million at the end of 2013 and with $410.7 million of debt outstanding, compared to $394.2 million at the end of 2013. The $37.3 million decrease in our net debt primarily reflected: (i) the receipt of net proceeds of $141.0 million primarily from the disposition of Lucky Brand; (ii) the funding of $100.0 million of capital and in-store shop expenditures over the last 12 months; (iii) the receipt of proceeds of $41.9 million from the exercise of stock options; (iv) the payment of $32.3 million for the acquisition of the existing KATE SPADE business in Southeast Asia from Globalluxe; and (v) the use of $33.5 million in cash from other activities of our discontinued operations over the past 12 months. We also generated $44.6 million in cash from continuing operations over the past 12 months. Accounts Receivable increased $0.5 million, or 0.6%, at year-end 2014 compared to year-end 2013, primarily due an increase in KATE SPADE accounts receivable due to increased wholesale sales, offset by the wind-down of the Juicy Couture operations. Inventories decreased $26.4 million, or 14.3% at year-end 2014 compared to year-end 2013, primarily due to the wind-down of the Juicy Couture operations and inventory charges incurred in 2014 related to our decision to exit KATE SPADE SATURDAY as a standalone business and close JACK SPADE retail stores, partially offset by an increase in kate spade new york inventory. Borrowings under our ABL Facility peaked at $6.0 million during 2014, compared to a peak of $193.4 million in 2013. Outstanding borrowings were $6.0 million at January 3, 2015, compared to $3.0 million at December 28, 2013. Net cash provided by (used in) operating activities of our continuing operations was $44.6 million in 2014, compared to $(33.2) million in 2013. This $77.8 million period-over-period change was primarily due to improved earnings in 2014 compared to 2013 (excluding depreciation and amortization, foreign currency gains and losses, impairment charges and other non-cash items), partially offset by a decrease in working capital items. The operating activities of our discontinued operations used $30.2 million of cash and provided $9.2 million of cash in the fiscal years ended January 3, 2015 and December 28, 2013, respectively.

55 Net cash used in investing activities of our continuing operations was $(134.6) million in 2014, compared to $(49.2) million in 2013. Net cash used in investing activities in 2014 reflected: (i) the use of $100.0 million for capital and in-store shop expenditures; (ii) the payment of $32.3 million for the acquisition of the existing KATE SPADE business in Southeast Asia from Globalluxe; and (iii) the use of $2.4 million for investments in and advances to KSC. Net cash used in investing activities in 2013 primarily reflected: (i) the use of $67.6 million for capital and in-store shop expenditures; (ii) the receipt of net proceeds from the sale of property and equipment of $20.3 million; (iii) the use of $5.5 million for investments in and advances to KSC; and (iv) the receipt of proceeds of $4.0 million from the disposition of our investment in Mexx Lifestyle, B.V. The investing activities of our discontinued operations provided $137.8 million and $143.3 million during the fiscal years ended January 3, 2015 and December 28, 2013, respectively. Net cash provided by financing activities was $40.6 million in 2014, compared to $6.1 million in 2013. The $34.5 million period-over-period change primarily reflected: (i) the receipt of proceeds of $398.0 million from the issuance of the Term Loan; (ii) the use of $390.7 million for the redemption of the Senior Notes; (iii) an increase in proceeds from the exercise of stock options of $37.1 million; and (iv) the receipt of net proceeds of $8.7 million from the sale-leaseback of our North Bergen, NJ office building in 2013.

Commitments and Capital Expenditures Pursuant to a buying/sourcing agency agreement, Li & Fung Limited (‘‘Li & Fung’’) acts as the primary global apparel and accessories buying/sourcing agent, with the exception of our jewelry product lines. We pay to Li & Fung an agency commission based on the cost of product purchases using Li & Fung as our buying/sourcing agent. We are obligated to use Li & Fung as our buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. Our agreement with Li & Fung is not exclusive; however, we are required to source a specified percentage of product purchases from Li & Fung. In connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to third parties, for which we or certain of our subsidiaries remain secondarily liable for the remaining obligations on 185 such leases. As of January 3, 2015, the future aggregate payments under these leases amounted to $152.0 million and extended to various dates through 2025. On December 3, 2014, Mexx Canada Company filed for bankruptcy protection from its creditors under Canadian bankruptcy laws. Although an inactive and insolvent subsidiary of ours may be secondarily liable under approximately 60 leases that were assigned to Mexx Canada Company in connection with the disposal of the Mexx business, we do not currently believe that these circumstances will require payments by us for liabilities under the leases. However, these are recent developments and the amount of our potential liability, if any, with respect to these leases cannot be determined at this time. In the first quarter of 2015, we agreed to acquire to E-Land’s 60% interest in KSC for an aggregate payment of $36.0 million, comprised of approximately $10.0 million to acquire E-Land’s interest in KSC and approximately $26.0 million to terminate related contracts (see Note 23 of Notes to Consolidated Financial Statements). Our 2015 capital expenditures are expected to be approximately $75.0 million, compared to $100.0 million in 2014. These expenditures primarily relate to our plan to open 25-30 retail stores globally in 2015, the continued technological upgrading of our management information systems and costs associated with the refurbishment of selected specialty retail and outlet stores. We expect capital expenditures and working capital cash needs to be financed with cash provided by operating activities and our ABL Facility.

56 The following table summarizes as of January 3, 2015 our contractual cash obligations by future period (see Notes 1, 9, 10 and 23 of Notes to Consolidated Financial Statements): Payments Due by Period Less than After Contractual cash obligations * 1 year 1-3 years 4-5 years 5 years Total (In millions) Operating lease commitments ...... $ 65.4 $119.9 $106.1 $194.9 $ 486.3 Capital lease obligations ...... 1.9 4.2 4.4 13.1 23.6 Inventory purchase commitments ...... 156.4 — — — 156.4 Term Loan ...... 4.0 8.0 8.0 378.0 398.0 Interest on Term Loan(a) ...... 16.2 31.6 31.0 19.4 98.2 Revolving credit facility ...... — — 6.0 — 6.0 Pension withdrawal liability(b) ...... 4.9 2.2 — — 7.1 Total ...... $248.8 $165.9 $155.5 $605.4 $1,175.6

* The table above does not include any amounts for assigned leases and amounts recorded for uncertain tax positions. We cannot estimate the amounts or timing of payments related to uncertain tax positions as we have not yet entered into substantive settlement discussions with taxing authorities. (a) Interest is calculated at 4.0% per annum. (b) Includes interest of $0.3 million. Debt consisted of the following: January 3, December 28, In thousands 2015 2013 10.5% Senior Secured Notes(a) ...... $ — $382,209 Term Loan credit facility(a)(b) ...... 396,158 — Revolving credit facility ...... 6,000 2,997 Capital lease obligations ...... 8,585 8,995 Total debt ...... $410,743 $394,201

(a) The Senior Notes were refinanced in the second quarter of 2014 with proceeds from the issuance of the Term Loan. (b) The balance as of January 3, 2015 included an unamortized debt discount of $1.8 million. For information regarding our debt and credit instruments, refer to Note 10 of Notes to Consolidated Financial Statements. Availability under the ABL Facility is an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of our 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 facility provided under the ABL Facility of 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. As of January 3, 2015, availability under our ABL Facility was as follows: Letters of Total Borrowing Outstanding Credit Available Excess (a) (a) (b) In thousands Facility Base Borrowings Issued Capacity Capacity ABL Facility(a) ...... $200,000 $249,832 $6,000 $13,140 $180,860 $160,860

(a) Availability under the ABL Facility is the lesser of $200.0 million or a borrowing base that is computed monthly and comprised of 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.

57 Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements.

Hedging Activities Our operations are exposed to risks associated with fluctuations in foreign currency exchange rates. In order to reduce exposures related to changes in foreign currency exchange rates, we use forward contracts and may utilize foreign currency collars, options and swap contracts to hedge specific exposure to variability in forecasted cash flows associated primarily with inventory purchases mainly of our KATE SPADE business in Japan. As of January 3, 2015, we had forward contracts maturing through March 2016 to sell 4.3 billion yen for $39.1 million. We use foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with intercompany loans. As of January 3, 2015, we had forward contracts to sell 4.0 billion yen for $33.4 million maturing through March 2015. Transaction gains of $4.5 million, $8.5 million and $1.0 million related to these derivative instruments for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively, were reflected within Other expense, net.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, goodwill, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods. Estimates by their nature are based on judgments and available information. The estimates that we make are based upon historical factors, current circumstances and the experience and judgment of our management. We evaluate our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluations. Therefore, actual results could materially differ from those estimates under different assumptions and conditions.

58 For accounts receivable, we estimate the net collectibility, considering both historical and anticipated trends as well as an evaluation of economic conditions and the financial positions of our customers. For inventory, we review the aging and salability of our inventory and estimate the amount of inventory that we will not be able to sell in the normal course of business. This distressed inventory is written down to the expected recovery value to be realized through off-price channels. If we incorrectly anticipate these trends or unexpected events occur, our results of operations could be materially affected. We utilize various valuation methods to determine the fair value of acquired tangible and intangible assets. For inventory, the method uses the expected selling prices of finished goods. Intangible assets acquired are valued using a discounted cash flow model. Should any of the assumptions used in these projections differ significantly from actual results, material impairment losses could result where the estimated fair values of these assets become less than their carrying amounts. For accrued expenses related to items such as employee insurance, workers’ compensation and similar items, accruals are assessed based on outstanding obligations, claims experience and statistical trends; should these trends change significantly, actual results would likely be impacted. Changes in such estimates, based on more accurate information, may affect amounts reported in future periods. We are not aware of any reasonably likely events or circumstances that would result in different amounts being reported that would materially affect our financial condition or results of operations.

Revenue Recognition Revenue is recognized from our direct-to-consumer, wholesale and licensing operations. Retail store and e-commerce revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. The Company does not recognize revenue for estimated gift card breakage. Revenue within our wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. We review and refine these estimates on a monthly basis based on current experience, trends and retailer performance. Our historical estimates of these costs have not differed materially from actual results. Retail store and e-commerce revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. We do not recognize revenue for estimated gift card breakage. Licensing revenues are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees.

Income Taxes Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. We also assess the likelihood of the realization of deferred tax assets and adjust the carrying amount of these deferred tax assets by a valuation allowance to the extent we believe it more likely than not that all or a portion of the deferred tax assets will not be realized. We consider many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in our effective tax rate in future periods for various reasons, including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax

59 authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is our policy to recognize the impact of an uncertain income tax position on our income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. We record interest expense and penalties payable to relevant tax authorities as income tax expense.

Accounts Receivable — Trade, Net In the normal course of business, we extend credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on an evaluation of historical and anticipated trends, the financial condition of our customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with our customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. Should circumstances change or economic or distribution channel conditions deteriorate significantly, we may need to increase our provisions. Our historical estimates of these costs have not differed materially from actual results.

Inventories, Net Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. We continually evaluate the composition of our inventories by assessing slow-turning, ongoing product as well as prior seasons’ fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of our individual product lines, the impact of market trends and economic conditions and the value of current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. We review our inventory position on a monthly basis and adjust our estimates based on revised projections and current market conditions. If economic conditions worsen, we incorrectly anticipate trends or unexpected events occur, our estimates could be proven overly optimistic and required adjustments could materially adversely affect future results of operations. Our historical estimates of these costs and our provisions have not differed materially from actual results.

Intangibles, Net Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. Our annual impairment test is performed as of the first day of the third fiscal quarter. We assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that an indefinite-lived intangible asset is impaired, then we are not required to take further action. However, if we conclude otherwise, then we are required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. We

60 estimate the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We recognize an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset’s value may be impaired. Impairment testing is based on a review of forecasted operating cash flows. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to our Consolidated Statement of Operations. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years. In 2014, we recorded a non-cash impairment charge of $1.5 million to reduce the carrying value of the TRIFARI trademark to zero, due to the expected exit of the brand. In 2013, we recorded a non-cash impairment charge of $3.3 million which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark (see Note 11 of Notes to Consolidated Financial Statements). As a result of the impairment analysis performed in connection with our purchased trademarks with indefinite lives, no impairment charges were recorded during 2012.

Goodwill Goodwill is not amortized but rather tested for impairment at least annually. Our annual impairment test is performed as of the first day of the third fiscal quarter. We assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that goodwill is impaired. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that goodwill is impaired, then we are not required to take further action. However, if we conclude otherwise, then we are required to determine the fair value of goodwill and perform the quantitative impairment test by comparing the fair value and carrying amount of the related reporting unit. A two-step impairment test is then performed on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. We determine the fair value of our reporting units using the market approach, as is typically used for companies providing products where the value of such a company is more dependent on the ability to generate earnings than the value of the assets used in the production process. Under this approach, we estimate fair value based on market multiples of revenues and earnings for comparable companies. We also use discounted future cash flow analyses to corroborate these fair value estimates. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit’s goodwill based upon the residual of the summed identified tangible and intangible assets.

61 As a result of the impairment analysis performed in connection with our goodwill, no impairment charges were recorded during 2014, 2013 or 2012. During 2014, we recorded additional goodwill as a result of the reacquisition of the KATE SPADE business in Southeast Asia (see Note 2 of Notes to Consolidated Financial Statements).

Accrued Expenses Accrued expenses for employee insurance, workers’ compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted.

Share-Based Compensation We recognize compensation expense based on the fair value of employee share-based awards, including stock options, restricted stock and restricted stock with market conditions that impact vesting, net of estimated forfeitures. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share-based awards expected to be forfeited prior to vesting. Determining the fair value of shares with market conditions at the grant date requires judgment, including the weighting of historical and estimated implied volatility of the Company’s stock price and where appropriate, a market index. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.

Inflation The rate of inflation over the past few years has not had a significant impact on our sales or profitability.

ACCOUNTING PRONOUNCEMENTS For a discussion of recently adopted and recent accounting pronouncements, see Notes 1 and 21 of Notes to Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We finance our capital needs through available cash and cash equivalents, operating cash flows, letters of credit and our ABL Facility. Our floating rate Term Loan and ABL Facility expose us to market risk for changes in interest rates. Loans thereunder bear interest at rates that vary with changes in prevailing market rates. We do not speculate on the future direction of interest rates. As of January 3, 2015 and December 28, 2013, our exposure to changing market rates related to our ABL Facility was as follows:

Dollars in millions January 3, 2015 December 28, 2013 Variable rate debt ...... $6.0 $3.0 Average interest rate ...... 1.68% 3.06% A ten percent change in the average rate would have a minimal impact to interest expense during the year ended January 3, 2015. The Term Loan interest is based on LIBOR (with a floor of 1.0%) plus 3.0% per annum; therefore a ten percent change in the average LIBOR rate would not impact interest expense, since the LIBOR rate was below the floor of 1.0% at January 3, 2015. As of January 3, 2015, we had forward contracts with net notional amounts of $72.5 million. Unrealized gains (losses) for outstanding foreign currency forward contracts were $2.7 million. A sensitivity analysis to

62 changes in foreign currency exchange rates indicated that if the yen weakened by 10.0% against the US dollar, the fair value of these instruments would increase by $6.3 million at January 3, 2015. Conversely, if the yen strengthened by 10.0% against the US dollar, the fair value of these instruments would decrease by $7.7 million at January 3, 2015. Any resulting changes in the fair value of the instruments would be partially offset by changes in the underlying balance sheet positions. We do not hedge all transactions denominated in foreign currency. We are exposed to credit related losses if the counterparties to our derivative instruments fail to perform their obligations. We systemically measure and assess such risk as it relates to the credit ratings of these counterparties, all of which currently have satisfactory credit ratings and therefore we do not expect to realize losses associated with counterparty default.

Item 8. Financial Statements and Supplementary Data. See the ‘‘Index to Consolidated Financial Statements and Schedule’’ appearing at the end of this Annual Report on Form 10-K for information required under this Item 8.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.

Item 9A. Controls and Procedures. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated our disclosure controls and procedures at the end of each of our fiscal quarters. Our Chief Executive Officer and Chief Financial Officer concluded that, as of January 3, 2015, our disclosure controls and procedures were effective to ensure that all information required to be disclosed is recorded, processed, summarized and reported within the time periods specified, and that information required to be filed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) is accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended January 3, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. See ‘‘Index to Consolidated Financial Statements and Schedule’’ appearing at the end of this Annual Report on Form 10-K for Management’s Report on Internal Control Over Financial Reporting.

Item 9B. Other Information. None.

63 PART III Item 10. Directors, Executive Officers and Corporate Governance. With respect to our Executive Officers, see ‘‘Executive Officers of the Registrant’’ in Part I of this Annual Report on Form 10-K. Information regarding Section 16(a) compliance, the Audit Committee (including membership and Audit Committee Financial Experts but excluding the ‘‘Audit Committee Report’’), our code of ethics and background of our Directors appearing under the captions ‘‘Section 16(a) Beneficial Ownership Reporting Compliance,’’ ‘‘Corporate Governance,’’ ‘‘Additional Information-Company Code of Ethics and Business Practices’’ and ‘‘Election of Directors’’ in our Proxy Statement for the 2015 Annual Meeting of Shareholders (the ‘‘2015 Proxy Statement’’) is hereby incorporated by reference.

Item 11. Executive Compensation. Information called for by this Item 11 is incorporated by reference to the information set forth under the headings ‘‘Compensation Discussion and Analysis’’ and ‘‘Executive Compensation’’ (other than the Board Compensation Committee Report) in the 2015 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. EQUITY COMPENSATION The following table summarizes information about the stockholder approved Kate Spade & Company Outside Directors’ 1991 Stock Ownership Plan (the ‘‘Outside Directors’ Plan’’); Fifth & Pacific Companies, Inc. 1992 Stock Incentive Plan; Fifth & Pacific Companies, Inc. 2000 Stock Incentive Plan (the ‘‘2000 Plan’’); Fifth & Pacific Companies, Inc. 2002 Stock Incentive Plan (the ‘‘2002 Plan’’); Fifth & Pacific Companies, Inc. 2005 Stock Incentive Plan (the ‘‘2005 Plan’’); Fifth & Pacific Companies, Inc. 2011 Stock Incentive Plan (the ‘‘2011 Plan’’); and Fifth & Pacific Companies, Inc. 2013 Stock Incentive Plan (the ‘‘2013 Plan’’), which together comprise all of our existing equity compensation plans, as of January 3, 2015. In January 2006, we adopted the Fifth & Pacific Companies, Inc. Outside Directors’ Deferral Plan, which amended and restated the Outside Directors’ Plan by eliminating equity grants under the Outside Directors’ Plan, including the annual grant of shares of Common Stock. The last grant under the Outside Directors’ Plan was made on January 10, 2006. All subsequent Director stock grants have been made under the remaining shareholder approved plans.

Number of Securities Remaining Available for Number of Securities to be Weighted Average Exercise Future Issuance Under Issued Upon Exercise of Price of Outstanding Equity Compensation Plans Outstanding Options, Options, Warrants and (Excluding Securities Plan Category Warrants and Rights Rights Reflected in Column) Equity Compensation Plans Approved by Stockholders . 1,839,227(a) $ 11.25(b) 6,816,276(c) Equity Compensation Plans Not Approved by Stockholders ...... — N/A — Total ...... 1,839,227(a) $ 11.25(b) 6,816,276(c)

(a) Includes 808,258 shares of Common Stock issuable under the 2002, 2005, 2011 and 2013 Plans pursuant to participants’ elections thereunder to defer certain director compensation. Excluded from the above table are 1,719,574 restricted share units including shares with market conditions impacting the quantity of shares vesting.

64 (b) Shares of Common Stock issuable under the 2002, 2005, 2011 and 2013 Plans pursuant to participants’ election thereunder to defer certain director compensation were not included in calculating the Weighted Average Exercise Price. (c) In addition to options, warrants and rights, the 2000 Plan, the 2002 Plan, the 2005 Plan, the 2011 Plan and the 2013 Plan authorize the issuance of restricted stock, unrestricted stock and performance stock. Each of the 2000 and the 2002 Plans contains a sub-limit on the aggregate number of shares of restricted Common Stock, which may be issued; the sub-limit under the 2000 Plan is set at 1,000,000 shares and the sub-limit under the 2002 Plan is set at 1,800,000 shares. The 2005 Plan contains an aggregate 2,000,000 shares sub-limit on the number of shares of restricted stock, restricted stock units, unrestricted stock and performance shares that may be awarded. The 2011 Plan contains an aggregate 1,500,000 shares sub-limit on the number of shares of restricted stock, restricted stock units, unrestricted stock and performance shares that may be awarded. For purposes of computing the number of shares available for grant, awards other than stock options and stock appreciation rights will be counted against the 2011 Plan maximum in a 1.6-to-1.0 ratio. Security ownership information of certain beneficial owners and management as called for by this Item 12 is incorporated by reference to the information set forth under the heading ‘‘Security Ownership of Certain Beneficial Owners and Management’’ in the 2015 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence. Information called for by this Item 13 is incorporated by reference to the information set forth under the headings ‘‘Certain Relationships and Related Transactions’’ in the 2015 Proxy Statement.

Item 14. Principal Accounting Fees and Services. Information called for by this Item 14 is incorporated by reference to the information set forth under the heading ‘‘Ratification of the Appointment of the Independent Registered Public Accounting Firm’’ in the 2015 Proxy Statement.

PART IV Item 15. Exhibits and Financial Statement Schedules. (a) 1. Financial Statements ...... Refer to Index to Consolidated Financial Statements on Page F-1 (a) 2. Schedule SCHEDULE II — Valuation and Qualifying Accounts . . F-54 NOTE: Schedules other than those referred to above and parent company financial statements have been omitted as inapplicable or not required under the instructions contained in Regulation S-X or the information is included elsewhere in the financial statements or the notes thereto.

65 (a) 3. Exhibits

Exhibit No. Description 2(a) — Merger Agreement, dated as of September 1, 2011, by and among Registrant and Liz Claiborne Foreign Holdings, Inc. and Gores Malibu Holdings (Luxembourg) S.a.r.l., EuCo B.V. (incorporated herein by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K dated September 6, 2011). 2(b) — Asset Purchase Agreement, dated as of September 1, 2011, by and among Registrant and Liz Claiborne Canada Inc. and Gores Malibu Holdings (Luxembourg) S.a.r.l., 3256890 Nova Scotia Limited (incorporated herein by reference to Exhibit 2.2 to Registrant’s Current Report on Form 8-K dated September 6, 2011). 3(a) — Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) to Registrant’s Current Report on Form 8-K dated May 28, 2009). 3(b) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) to Registrant’s Current Report on Form 8-K dated June 3, 2010). 3(c) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated May 18, 2012). 3(d) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) and to Registrant’s Current Report on Form 8-K dated May 17, 2013). 3(e) — By-Laws of Registrant, as amended through May 27, 2010 (incorporated herein by reference to Exhibit 3(b) to Registrant’s Current Report on Form 8-K dated June 3, 2010). 3(f) — Amendment to By-Laws of Registrant (incorporated herein by reference to Exhibit 3(b) to Registrant’s Current Report on Form 8-K dated May 17, 2013). 3(g) — Amendment to Articles of Incorporation of Registrant (incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated March 3, 2014). 4(a) — Specimen certificate for Registrant’s Common Stock, par value $1.00 per share (incorporated herein by reference to Exhibit 4(a) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 26, 1992). 10(a)*+ — Description of Kate Spade & Company 2014 Employee Incentive Plan (Cash). 10(b)+ — Kate Spade & Company 401(k) Savings and Profit Sharing Plan, as amended and restated (incorporated herein by reference to Exhibit 10(g) to Registrant’s 2002 Annual Report). 10(b)(i)+ — First Amendment to the Kate Spade & Company 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(i) to the 2003 Annual Report). 10(b)(ii)+ — Second Amendment to the Kate Spade & Company 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(ii) to the 2003 Annual Report). 10(b)(iii)+ — Third Amendment to the Kate Spade & Company 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(iii) to the 2003 Annual Report). 10(b)(iv)+ — Trust Agreement (the ‘‘401(k) Trust Agreement’’) dated as of October 1, 2003 between Registrant and Fidelity Management Trust Company (incorporated herein by reference to Exhibit 10(e)(iv) to the 2003 Annual Report). 10(b)(v)+ — First Amendment to the 401(k) Trust Agreement (incorporated herein by reference to Exhibit 10(e)(v) to Registrant’s Annual Report on Form 10-K for the fiscal year ended January 1, 2005 (the ‘‘2004 Annual Report’’). 10(b)(vi)+ — Second Amendment to the 401(k) Trust Agreement (incorporated herein by reference to Exhibit 10(e)(vi) to the 2004 Annual Report).

66 Exhibit No. Description 10(c)+ — Liz Claiborne, Inc. Amended and Restated Outside Directors’ 1991 Stock Ownership Plan (the ‘‘Outside Directors’ 1991 Plan’’) (incorporated herein by reference to Exhibit 10(m) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 1995). 10(c)(i)+ — Amendment to the Outside Directors’ 1991 Plan, effective as of December 18, 2003 (incorporated herein by reference to Exhibit 10(f)(i) to the 2003 Annual Report). 10(c)(ii)+ — Form of Option Agreement under the Outside Directors’ 1991 Plan (incorporated herein by reference to Exhibit 10(m)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 1996). 10(c)(iii)+ — Liz Claiborne, Inc. Outside Directors’ Deferral Plan (incorporated herein by reference to Exhibit 10(f)(iii) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the ‘‘2005 Annual Report). 10(d)+ — Liz Claiborne, Inc. 2000 Stock Incentive Plan (the ‘‘2000 Plan’’) (incorporated herein by reference to Exhibit 4(e) to Registrant’s Form S-8 dated as of January 25, 2001). 10(d)(i)+ — Amendment No. 1 to the 2000 Plan (incorporated herein by reference to Exhibit 10(h)(i) to the 2003 Annual Report). 10(d)(ii)+ — Form of Option Grant Certificate under the 2000 Plan (incorporated herein by reference to Exhibit 10(z)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2000 (the ‘‘2000 Annual Report’’)). 10(d)(iii) — Form of Special Retention Award Agreement under the Company’s 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K dated June 17, 2011). 10(e)+ — Liz Claiborne, Inc. 2002 Stock Incentive Plan (the ‘‘2002 Plan’’) (incorporated herein by reference to Exhibit 10(y)(i) to Registrant’s Quarterly Report on Form 10-Q for the period ended June 29, 2002 (the ‘‘2nd Quarter 2002 10-Q’’)). 10(e)(i)+ — Amendment No. 1 to the 2002 Plan (incorporated herein by reference to Exhibit 10(y)(iii) to the 2nd Quarter 2002 10-Q). 10(e)(ii)+ — Amendment No. 2 to the 2002 Plan (incorporated herein by reference to Exhibit 10(i)(ii) to the 2003 Annual Report). 10(e)(iii)+ — Amendment No. 3 to the 2002 Plan (incorporated herein by reference to Exhibit 10(i)(iii) to the 2003 Annual Report). 10(e)(iv)+ — Form of Option Grant Certificate under the 2002 Plan (incorporated herein by reference to Exhibit 10(y)(ii) to the 2nd Quarter 2002 10-Q). 10(f)+ — Description of Supplemental Life Insurance Plans (incorporated herein by reference to Exhibit 10(q) to the 2000 Annual Report). 10(g)+ — Liz Claiborne, Inc. Supplemental Executive Retirement Plan effective as of January 1, 2002, constituting an amendment, restatement and consolidation of the Liz Claiborne, Inc. Supplemental Executive Retirement Plan and the Liz Claiborne, Inc. Bonus Deferral Plan (incorporated herein by reference to Exhibit 10(t)(i) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 29, 2001). 10(g)(i)+ — Liz Claiborne, Inc. 2005 Supplemental Executive Retirement Plan effective as of January 1, 2005, including amendments through December 31, 2008 (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 31, 2008). 10(g)(ii)+ — Trust Agreement, dated as of January 1, 2002, between Registrant and Wilmington Trust Company (incorporated herein by reference to Exhibit 10(t)(i) to the 2002 Annual Report). 10(h)+ — Liz Claiborne Inc. 2005 Stock Incentive Plan (the ‘‘2005 Plan’’) (incorporated herein by reference to Exhibit 10.1(b) to Registrant’s Current Report on Form 8-K dated May 26, 2005).

67 Exhibit No. Description 10(h)(i)+ — Amendment No. 1 to the 2005 Plan (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated July 12, 2005). 10(h)(ii)+ — Form of Restricted Stock Grant Certificate under the 2005 Plan (incorporated herein by reference to Exhibit 10(a) to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2005). 10(h)(iii)+ — Form of Option Grant Confirmation under the 2005 Plan (incorporated herein by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K dated December 4, 2008). 10(i)+ — Liz Claiborne Inc. 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated May 23, 2011 which incorporates by reference Exhibit A to Definitive Proxy Statement for the 2011 Annual Meeting of the Registrant, filing April 7, 2011). 10(i)(i) — Form of Restricted Stock Unit Grant Certificate under the 2011 Plan (incorporated herein by reference to Exhibit 10.47 to Registrant’s Form S-4 dated January 18, 2013). 10(i)(ii) — Form of Option Grant Certificate under the 2011 Plan (incorporated herein by reference to Exhibit 10.46 to Registrant’s Form S-4 dated January 18, 2013). 10(j) — Fifth & Pacific Companies, Inc. 2013 Incentive Plan (the ‘‘2013 Plan’’) (incorporated herein by reference to Appendix B to Definitive Proxy Statement for the 2013 Annual Meeting of the Registrant filed April 3, 2013). 10(j)(i) — Form of 2014 Market Share Unit Award Notice of Grant under the 2013 Plan (incorporated herein by reference to Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q for the period ended April 5, 2014 (the ‘‘1st Quarter 2014 10-Q’’). 10(j)(ii) — Form of 2014 Performance Share Award Notice of Grant under the 2013 Plan (incorporated herein by reference to Exhibit 10.4 to the 1st Quarter 2014 10-Q). 10(j)(iii) — Form of Staking Market Share Unit Award Grant Certificate under the 2013 Plan (incorporated herein by reference to Exhibit 10.5 to the 1st Quarter 2014 10-Q). 10(j)(iv)* — Form of Market Share Unit Award Notice of Grant under the 2013 Plan. 10(j)(v)* — Form of Option Grant Certificate under the 2013 Plan. 10(j)(vi)* — Form of Performance Share Award Notice of Grant under the 2013 Plan. 10(k)+ — 2010 Section 162(m) Long Term Performance Plan (incorporated herein by reference to Exhibit D to Definitive Proxy Statement filed April 13, 2010). 10(l)+ — Form of Executive Severance Agreement (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated April 3, 2012). 10(m) — Severance Benefit Agreement, by and between Registrant and William L. McComb, dated July 14, 2009 (incorporated herein by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated July 15, 2009). 10(n) — Executive Termination Benefits Agreement, by and between Registrant and William L. McComb, dated as of July 14, 2009 (incorporated herein by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated July 15, 2009). 10(o) — Employment Agreement by and between Registrant and Craig Leavitt, dated January 7, 2014 (incorporated herein by reference to Exhibit 10(o) to the 2013 Annual Report). 10(p) — Employment Agreement by and between Registrant and Deborah Lloyd, dated January 7, 2014 (incorporated herein by reference to Exhibit 10(p) to the 2013 Annual Report). 10(q) — Purchase Agreement, dated October 12, 2011, between Registrant, J.C. Penney Corporation, Inc. and J.C. Penney Company, Inc. (incorporated herein by reference to Exhibit 10(y) to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011).

68 Exhibit No. Description 10(s) — Term Loan Credit Agreement dated as of April 10, 2014 among Kate Spade & Company, as Borrower, the Lenders and Bank of America, N.A., as Administrative Agent for the Lenders, JPMorgan Chase Bank, N.A., as Syndication Agent, Suntrust Bank and Wells Fargo Bank National Association, as Co-Documentation Agents and Bank of America, N.A., JPMorgan Securities, LLC, as Joint Bookrunners and Joint Lead Arrangers (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended April 5, 2014). 10(t) — Credit Agreement, dated May 16, 2014, among Kate Spade & Company, Kate Spade UK Limited, and Kate Spade Canada Inc., as borrowers, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and US Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, Bank of America, N.A., as Syndication Agent, Wells Fargo Bank, N.A. and SunTrust Bank, as Documentation Agents (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended July 5, 2014). 10(u) — Purchase Agreement, dated as of October 7, 2013, by and among ABG-Juicy LLC, as Buyer, Fifth & Pacific Companies, Inc., as Seller, and Juicy Couture, Inc. (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended September 28, 2013). 10(u)(i) — Amendment Agreement, dated as of November 6, 2013, by and among ABG-Juicy LLC, Fifth & Pacific Companies, Inc., and Juicy Couture, Inc. (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended September 28, 2013). 10(u)(ii) — Purchase Agreement, dated as of December 10, 2013, by and among LBD Acquisition Company, LLC, as Buyer, Fifth & Pacific Companies, Inc., as Seller, and Lucky Brand Dungarees, Inc. (incorporated herein by reference to Registrant’s Current Report on Form 8-K filed December 10, 2013). 10(u)(iii) — Secured Note, dated February 3, 2014 and due February 1, 2017, by and between LBD Acquisition Company, LLC, as payor, and Fifth & Pacific Companies, Inc., as payee (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended April 5, 2014). 21* — List of Registrant’s Subsidiaries. 23* — Consent of Independent Registered Public Accounting Firm. 31(a)* — Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 31(b)* — Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 32(a)*# — Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. 32(b)*# — Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. 99* — Undertakings. 101.INS* XBRL Instance Document. 101.SCH* XBRL Taxonomy Extension Schema Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.

69 Exhibit No. Description 101.LAB* XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Taxonomy Extension Presentation Linkbase Document.

+ Compensation plan or arrangement required to be noted as provided in Item 14(a)(3). * Filed herewith. ǵ Certain portions of this exhibit have been omitted in connection with the grant of confidential treatment therefore. # A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

70 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on March 3, 2015.

KATE SPADE & COMPANY

By: /s/ Thomas Linko By: /s/ Michael Rinaldo By: /s/ George M. Carrara Thomas Linko, Michael Rinaldo, George M. Carrara, Chief Financial Officer Vice President—Corporate President and Chief Operating (principal financial officer) Controller and Chief Officer Accounting Officer (principal accounting officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on March 3, 2015.

Signature Title

/s/ Craig A. Leavitt Chief Executive Officer and Director Craig A. Leavitt (principal executive officer) /s/ Bernard W. Aronson Director Bernard W. Aronson /s/ Lawrence Benjamin Director Lawrence Benjamin /s/ Raul J. Fernandez Director Raul J. Fernandez /s/ Kenneth B. Gilman Director Kenneth B. Gilman /s/ Nancy J. Karch Director and Chairman of the Board Nancy J. Karch /s/ Kenneth P. Kopelman Director Kenneth P. Kopelman /s/ Kay Koplovitz Director Kay Koplovitz /s/ Deborah Lloyd Director Deborah Lloyd /s/ Douglas Mack Director Douglas Mack /s/ Doreen A. Toben Director Doreen A. Toben

71 KATE SPADE & COMPANY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Page Number MANAGEMENT’S REPORTS AND REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...... F-2 to F-4 FINANCIAL STATEMENTS Consolidated Balance Sheets as of January 3, 2015 and December 28, 2013 ...... F-5 Consolidated Statements of Operations for the Three Fiscal Years Ended January 3, 2015 ...... F-6 Consolidated Statements of Comprehensive Income (Loss) for the Three Fiscal Years Ended January 3, 2015 ...... F-7 Consolidated Statements of Retained Earnings, Accumulated Comprehensive Loss and Changes in Capital Accounts for the Three Fiscal Years Ended January 3, 2015 F-8 Consolidated Statements of Cash Flows for the Three Fiscal Years Ended January 3, 2015 ...... F-9 Notes to Consolidated Financial Statements ...... F-10 to F-53 SCHEDULE II — Valuation and Qualifying Accounts ...... F-54

F-1 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Securities and Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Management has evaluated the effectiveness of the Company’s internal control over financial reporting as of January 3, 2015 based upon criteria for effective internal control over financial reporting described in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘‘COSO’’) in 2013. Based on our evaluation, management determined that the Company’s internal control over financial reporting was effective as of January 3, 2015 based on the criteria in Internal Control — Integrated Framework issued by COSO. The Company’s internal control over financial reporting as of January 3, 2015 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report which appears herein.

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Kate Spade & Company is responsible for the preparation, objectivity and integrity of the consolidated financial statements and other information contained in this Annual Report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include some amounts that are based on management’s informed judgments and best estimates. Deloitte & Touche LLP, an independent registered public accounting firm, has audited these consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and has expressed herein their unqualified opinion on those financial statements. The Audit Committee of the Board of Directors, which oversees all of the Company’s financial reporting process on behalf of the Board of Directors, consists solely of independent directors, meets with the independent registered public accounting firm, internal auditors and management periodically to review their respective activities and the discharge of their respective responsibilities. Both the independent registered public accounting firm and the internal auditors have unrestricted access to the Audit Committee, with or without management, to discuss the scope and results of their audits and any recommendations regarding the system of internal controls. March 3, 2015

/s/ Craig A. Leavitt /s/ Thomas Linko Craig A. Leavitt Thomas Linko Chief Executive Officer Chief Financial Officer

F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Kate Spade & Company We have audited the internal control over financial reporting of Kate Spade & Company (the ‘‘Company’’) as of January 3, 2015, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 3, 2015, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended January 3, 2015 of the Company and our report dated March 3, 2015 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

New York, New York March 3, 2015

F-3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Kate Spade & Company We have audited the accompanying consolidated balance sheets of Kate Spade & Company (the ‘‘Company’’) as of January 3, 2015 and December 28, 2013, and the related consolidated statements of operations, statements of comprehensive income (loss), statements of retained earnings, accumulated other comprehensive loss and changes in capital accounts, and cash flows for each of the three fiscal years in the period ended January 3, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Kate Spade & Company as of January 3, 2015 and December 28, 2013, and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 3, 2015, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of January 3, 2015, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 3, 2015 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

New York, New York March 3, 2015

F-4 Kate Spade & Company CONSOLIDATED BALANCE SHEETS

In thousands, except share data January 3, 2015 December 28, 2013 Assets Current Assets: Cash and cash equivalents ...... $ 184,044 $ 130,222 Accounts receivable — trade, net ...... 90,091 89,554 Inventories, net ...... 158,241 184,634 Deferred income taxes ...... 616 218 Other current assets ...... 41,508 45,031 Assets held for sale ...... — 202,054 Total current assets ...... 474,500 651,713 Property and Equipment, Net ...... 174,072 149,071 Goodwill ...... 64,798 49,111 Intangibles, Net ...... 90,327 90,678 Deferred Income Taxes ...... 56 57 Note Receivable ...... 88,976 — Other Assets ...... 33,609 36,881 Total Assets ...... $ 926,338 $ 977,511 Liabilities and Stockholders’ Equity (Deficit) Current Liabilities: Short-term borrowings ...... $ 10,459 $ 3,407 Accounts payable ...... 88,402 142,654 Accrued expenses ...... 150,926 200,178 Income taxes payable ...... 3,008 2,631 Liabilities held for sale ...... — 96,370 Total current liabilities ...... 252,795 445,240 Long-Term Debt ...... 400,284 390,794 Other Non-Current Liabilities ...... 56,465 157,335 Deferred Income Taxes ...... 17,183 16,624 Commitments and Contingencies (Note 9) Stockholders’ Equity (Deficit): Preferred stock, $0.01 par value, authorized shares — 50,000,000, issued shares — none ...... — — Common stock, $1.00 par value, authorized shares — 250,000,000, issued shares — 176,437,234 ...... 176,437 176,437 Capital in excess of par value ...... 199,100 155,984 Retained earnings ...... 1,145,643 1,020,633 Accumulated other comprehensive loss ...... (29,986) (20,879) 1,491,194 1,332,175 Common stock in treasury, at cost — 49,065,798 and 53,501,234 shares ...... (1,291,583) (1,364,657) Total stockholders’ equity (deficit) ...... 199,611 (32,482) Total Liabilities and Stockholders’ Equity (Deficit) ...... $ 926,338 $ 977,511

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-5 Kate Spade & Company CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended January 3, 2015 December 28, 2013 December 29, 2012 In thousands, except per common share data Net Sales ...... $1,138,603 $803,371 $544,765 Cost of goods sold ...... 458,332 306,781 204,833 Gross Profit ...... 680,271 496,590 339,932 Selling, general & administrative expenses ...... 645,266 473,075 375,954 Impairment of intangible assets ...... 1,533 3,300 — Operating Income (Loss) ...... 33,472 20,215 (36,022) Other expense, net ...... (4,033) (2,062) (325) Impairment of cost investment ...... — (6,109) — Gain on acquisition of subsidiary ...... — — 40,065 Loss on extinguishment of debt ...... (16,914) (1,707) (9,754) Interest expense, net ...... (20,178) (47,065) (51,612) Loss Before Benefit for Income Taxes ...... (7,653) (36,728) (57,648) Benefit for income taxes ...... (84,379) (4,563) (4,961) Income (Loss) from Continuing Operations ...... 76,726 (32,165) (52,687) Discontinued operations, net of income taxes .... 82,434 105,160 (21,818) Net Income (Loss) ...... $ 159,160 $ 72,995 $(74,505) Earnings per Share, Basic: Income (Loss) from Continuing Operations ..... $ 0.61 $ (0.27) $ (0.48) Net Income (Loss) ...... $ 1.26 $ 0.60 $ (0.68) Earnings per Share, Diluted: Income (Loss) from Continuing Operations ..... $ 0.60 $ (0.27) $ (0.48) Net Income (Loss) ...... $ 1.25 $ 0.60 $ (0.68) Weighted Average Shares, Basic ...... 126,264 121,057 109,292 Weighted Average Shares, Diluted ...... 127,019 121,057 109,292

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-6 Kate Spade & Company CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Fiscal Years Ended January 3, 2015 December 28, 2013 December 29, 2012 In thousands Net Income (Loss) ...... $159,160 $ 72,995 $(74,505) Other Comprehensive (Loss) Income, Net of Income Taxes: Cumulative translation adjustment, net of income taxes of $0 ...... (10,234) (11,788) (3,990) Unrealized losses on available-for-sale securities, net of income taxes of $0 ...... — — (160) Change in fair value of cash flow hedging derivatives, net of income taxes of $566, $602 and $0, respectively ...... 1,127 983 — Comprehensive Income (Loss) ...... $150,053 $ 62,190 $(78,655)

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-7 Treasury Shares Treasury (4,150) — — (4,150) (9,107) — — (9,107) (10,805) — — (10,805) Accumulated (5,959) — (544,200) 10,782 4,823 72,995 — — — 72,995 (74,505) — — — (74,505) (23,266) — (4,010,331) 65,215 41,949 159,160 — — — 159,160 (652) (112,230) — (5,634,179) 133,001 20,119 7,779 — — — — 7,779 9,618 — — — — 9,618 43,116 — — — — 43,116 (10,642) (2,929) — (1,340,325) 19,776 6,205 (148,658) (96,883) — (14,197,106) 293,635 48,094 Capital in Other Common Stock Shares Amount Value Par Earnings Loss Shares Amount Total Number of Excess of Retained Comprehensive Number of 176,437,234 $176,437 $ 302,330 $1,246,063 $ (5,924) 75,592,899 $(1,827,892) $(108,986) 176,437,234 176,437 147,018 1,071,551 (10,074) 59,851,190 (1,511,862) (126,930) 176,437,234 176,437 155,984 1,020,633 (20,879) 53,501,234 (1,364,657) (32,482) 176,437,234 $176,437 $ 199,100 $1,145,643 $(29,986) 49,065,798 $(1,291,583) $ 199,611 Kate Spade & Company CHANGES IN CAPITAL ACCOUNTS CHANGES IN CAPITAL ...... — — — — ...... — — — — ...... — — — — ...... — — ...... — — ...... — — ...... — — ...... — — ...... — — ...... — — — ...... — — — The accompanying Notes to Consolidated Financial Statements are an integral part of these statements...... — — — ...... — — — CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, ACCUMULATED OTHER COMPREHENSIVE LOSS EARNINGS, ACCUMULATED AND OF RETAINED STATEMENTS CONSOLIDATED ...... — — — In thousands, except share data Net loss BALANCE, DECEMBER 31, 2011 Other comprehensive loss, net of income taxes Restricted shares issued, net of cancellations and withheld for taxesRestricted . .Amortization — share-based compensation Exchanges of Convertible Senior Notes, net — — (3,791) (195) — (204,278) 2,619 (1,367) Exercise of stock options Other comprehensive loss, net of income taxes BALANCE, DECEMBER 29, 2012 Net income Restricted shares issued, net of cancellations and withheld for taxesRestricted . .Amortization — share-based compensation Exchanges of Convertible Senior Notes, net — — — (5,724) — (171,577) 3,422 (2,302) Exercise of stock options Other comprehensive loss, net of income taxes BALANCE, DECEMBER 28, 2013 Net income Exercise of stock options Restricted shares issued, net of cancellations and withheld for taxesRestricted . .Amortization — share-based compensation 3, 2015 BALANCE, JANUARY — — — (10,884) — (425,105) 7,859 (3,025)

F-8 Kate Spade & Company CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended January 3, 2015 December 28, 2013 December 29, 2012 In thousands Cash Flows from Operating Activities: Net income (loss) ...... $159,160 $ 72,995 $ (74,505) Adjustments to arrive at income (loss) from continuing operations . . . (82,434) (105,160) 21,818 Income (loss) from continuing operations ...... 76,726 (32,165) (52,687) Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: Depreciation and amortization ...... 54,438 38,780 35,837 Impairment of intangible assets ...... 1,533 3,300 — Loss on asset disposals and impairments, including streamlining initiatives, net ...... 13,063 8,110 28,685 Deferred income taxes ...... (350) (3,665) (6,384) Share-based compensation ...... 37,270 7,269 6,911 Foreign currency transaction losses, net ...... 6,535 9,656 1,579 Gain on acquisition of subsidiary ...... — — (40,065) Loss on extinguishment of debt ...... 16,914 1,707 9,754 Other, net ...... 2,570 1,250 1,180 Changes in assets and liabilities: Increase in accounts receivable — trade, net ...... (27,643) (1,167) (3,333) Increase in inventories, net ...... (21,903) (47,115) (11,978) (Increase) decrease in other current and non-current assets ...... (12,840) (8,753) 1,208 (Decrease) increase in accounts payable ...... (9,681) 21,695 3,887 Decrease in accrued expenses and other non-current liabilities .... (9,006) (34,337) (49,680) (Decrease) increase in income taxes payable ...... (83,062) 2,243 814 Net cash (used in) provided by operating activities of discontinued operations ...... (30,200) 9,161 85,630 Net cash provided by (used in) operating activities ...... 14,364 (24,031) 11,358 Cash Flows from Investing Activities: Proceeds from sales of property and equipment ...... — 20,264 — Purchases of property and equipment ...... (93,609) (65,130) (46,999) Net proceeds from disposition ...... — 4,000 — Payments for purchases of businesses ...... (32,268) — (41,027) Payments for in-store merchandise shops ...... (6,344) (2,461) (1,366) Investments in and advances to equity investees ...... (2,400) (5,500) (5,000) Other, net ...... 17 (363) 1,598 Net cash provided by (used in) investing activities of discontinued operations ...... 137,759 143,306 (38,301) Net cash provided by (used in) investing activities ...... 3,155 94,116 (131,095) Cash Flows from Financing Activities: Proceeds from borrowings under revolving credit agreement ...... 8,411 650,553 247,097 Repayment of borrowings under revolving credit agreement ...... (4,960) (647,706) (247,097) Proceeds from issuance of Term Loan ...... 398,000 — — Repayment of Senior Notes ...... (390,693) — — Repayment of Term Loan ...... (2,000) — — Proceeds from issuance of Senior Secured Notes ...... — — 164,540 Repayment of Euro Notes ...... — — (158,027) Proceeds from capital lease ...... — 8,673 — Principal payments under capital lease obligations ...... (410) (4,651) (4,476) Proceeds from exercise of stock options ...... 41,949 4,823 6,205 Payment of deferred financing fees ...... (9,712) (5,597) (7,140) Net cash provided by financing activities ...... 40,585 6,095 1,102

Effect of Exchange Rate Changes on Cash and Cash Equivalents .... (4,282) (5,197) (1,899) Net Change in Cash and Cash Equivalents ...... 53,822 70,983 (120,534) Cash and Cash Equivalents at Beginning of Year ...... 130,222 59,402 179,936 Cash and Cash Equivalents at End of Year ...... 184,044 130,385 59,402 Less: Cash and Cash Equivalents Held for Sale ...... — 163 — Cash and Cash Equivalents ...... $184,044 $ 130,222 $ 59,402

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-9 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS AND BASIS OF PRESENTATION Kate Spade & Company and its wholly-owned and majority-owned subsidiaries (the ‘‘Company’’) are engaged primarily in the design and marketing of a broad range of accessories and apparel. The Company operates its kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands through one operating segment in North America and four operating segments internationally: Japan, Southeast Asia, Europe and Latin America. The Company’s Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company’s activities for which separate financial information is available and which is utilized on a regular basis by the Company’s chief operating decision maker (‘‘CODM’’) to evaluate performance and allocate resources. In identifying the Company’s reportable segments, the Company considers its management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of its operating segments. As such, the Company configured its operations into the following three reportable segments: • KATE SPADE North America segment — consists of the Company’s kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in North America. • KATE SPADE International segment — consists of the Company’s kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in International markets (principally in Japan, Southeast Asia, Europe and Latin America). • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands; (ii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iii) the licensed LIZ CLAIBORNE NEW YORK brand. On February 5, 2014, the Company, through its Kate Spade, LLC and Kate Spade Hong Kong Ltd. subsidiaries, reacquired existing KATE SPADE businesses in Southeast Asia from Globalluxe Kate Spade HK Limited (‘‘Globalluxe’’) for $32.3 million, including $2.3 million for working capital and other previously agreed adjustments. In the first quarter of 2015, the Company and Walton Brown, a subsidiary of The Lane Crawford Joyce Group (‘‘LCJG’’), agreed to form two joint ventures focused on growing the Company’s business in China and Hong Kong, Macau and Taiwan (see Note 2 — Acquisitions and Note 23 — Subsequent Events). On February 3, 2014, the Company completed the sale of 100.0% of the capital stock of Lucky Brand Dungarees, Inc. (‘‘Lucky Brand’’) to LBD Acquisition Company, LLC (‘‘LBD Acquisition’’), a Delaware limited liability company and affiliate of Leonard Green & Partners, L.P. (‘‘Leonard Green’’), for an aggregate payment of $225.0 million, comprised of $140.0 million cash consideration and a three-year $85.0 million note (the ‘‘Lucky Brand Note’’) issued by Lucky Brand Dungarees, LLC (‘‘Lucky Brand LLC’’) at closing, subject to working capital and other adjustments (the ‘‘Lucky Brand Transaction’’). The assets and liabilities of the former Lucky Brand business were segregated and reported as held for sale as of December 28, 2013 (see Note 3 — Discontinued Operations). The Lucky Brand Note matures in February 2017 and is guaranteed by substantially all of Lucky Brand LLC’s subsidiaries. The Lucky Brand Note is secured by second-priority lien on all accounts receivable and inventory of Lucky Brand LLC and the guarantor subsidiaries and a first-priority lien on all other collateral of Lucky Brand LLC and the guarantors. The accounts receivable and inventory secure Lucky Brand LLC’s asset- based revolving loan facility on a first-priority basis, and the other collateral secures that loan facility on a second-priority basis. The principal amount of the Lucky Brand Note increases by $5.0 million per year in equal monthly increments and bears cash interest of $8.0 million per year, payable semiannually in arrears.

F-10 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Lucky Brand Note is prepayable at any time by Lucky Brand LLC without a prepayment premium, subject to certain restrictions as to the minimum amount that may be prepaid without the Company’s consent. On November 6, 2013, the Company completed the sale of its Juicy Couture brandname and related intellectual property assets (the ‘‘Juicy Couture IP’’) to an affiliate of Authentic Brands Group (‘‘ABG’’) for a total purchase price of $195.0 million. An additional payment may be payable to the Company in an amount of up to $10.0 million if certain conditions regarding future performance are achieved. The Juicy Couture IP was licensed back to the Company to accommodate the wind-down of operations, which was substantially completed in the second quarter of 2014. The Company’s subsidiary, Juicy Couture, Inc., paid guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license. On March 29, 2014, the Company entered into an agreement to sell its Juicy Couture business in Europe to an operating partner of ABG for $8.6 million, subject to working capital adjustments. The transaction closed on April 7, 2014. On November 19, 2013, the Company entered into an agreement to terminate the lease of the Juicy Couture flagship store on Fifth Avenue in New York City in exchange for $51.0 million. On May 15, 2014, the Company surrendered such premises to the landlord and received proceeds of $45.8 million (net of taxes and fees), in addition to $5.0 million previously received by the Company. The activities of the Company’s former Lucky Brand and Juicy Couture businesses have been segregated and reported as discontinued operations for all periods presented. Summarized financial data for the aforementioned brands that are classified as discontinued operations are provided in Note 3 — Discontinued Operations.

PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of the Company. All inter-company balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Estimates by their nature are based on judgments and available information. Therefore, actual results could materially differ from those estimates under different assumptions and conditions. Critical accounting policies are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, goodwill, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods.

F-11 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue Recognition The Company recognizes revenue from its direct-to-consumer, wholesale and licensing operations. Retail store and e-commerce revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. The Company does not recognize revenue for estimated gift card breakage. Revenue within the Company’s wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. The Company reviews and refines these estimates on a monthly basis based on current experience, trends and retailer performance. The Company’s historical estimates of these costs have not differed materially from actual results. Licensing revenues, which amounted to $16.2 million, $17.8 million and $19.6 million during 2014, 2013 and 2012, respectively, are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees.

Income Taxes Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. The Company also assesses the likelihood of the realization of deferred tax assets and adjusts the carrying amount of these deferred tax assets by a valuation allowance to the extent the Company believes it more likely than not that all or a portion of the deferred tax assets will not be realized. Many factors are considered when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in the Company’s effective tax rate in future periods for various reasons including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is the Company’s policy to recognize the impact of an uncertain income tax position on its income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense.

Accounts Receivable — Trade, Net In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility

F-12 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) based on an evaluation of historical and anticipated trends, the financial condition of the Company’s customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with the Company’s customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. The Company’s historical estimates of these costs have not differed materially from actual results.

Inventories, Net Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. The Company continually evaluates the composition of its inventories by assessing slow-turning, ongoing product as well as prior seasons’ fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of the Company’s individual product lines, the impact of market trends and economic conditions and the value of current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. The Company’s historical estimates of these costs and its provisions have not differed materially from actual results.

Intangibles, Net Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. The Company’s annual impairment test is performed as of the first day of the third fiscal quarter. The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that an indefinite-lived intangible asset is impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset’s value may be impaired. Impairment testing is based on a review of forecasted operating cash flows. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the Consolidated Statement of Operations.

F-13 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Intangible merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years. In the fourth quarter of 2014 and the third quarter of 2013, the Company recorded non-cash impairment charges of $1.5 million and $3.3 million, respectively, which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark (see Note 11 — Fair Value Measurements). As a result of the impairment analysis performed in connection with the Company’s purchased trademarks with indefinite lives, no impairment charges were recorded during 2012.

Goodwill Goodwill is not amortized but rather tested for impairment at least annually. The Company’s annual impairment test is performed as of the first day of the third fiscal quarter. The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that goodwill is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that goodwill is impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of goodwill and perform the quantitative impairment test by comparing the fair value and carrying amount of the related reporting unit. A two-step impairment test is then performed on goodwill. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the market approach, as is typically used for companies providing products where the value of such a company is more dependent on the ability to generate earnings than the value of the assets used in the production process. Under this approach, the Company estimates fair value based on market multiples of revenues and earnings for comparable companies. The Company also uses discounted future cash flow analyses to corroborate these fair value estimates. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit’s goodwill based upon the residual of the summed identified tangible and intangible assets. As a result of the impairment analysis performed in connection with the Company’s goodwill, no impairment charges were recorded during 2014, 2013 or 2012. During 2014, the Company recorded additional goodwill as a result of the reacquisition of the KATE SPADE business in Southeast Asia; a portion of the goodwill will be reclassified to Investment in unconsolidated subsidiary in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 2 — Acquisitions and Note 23 — Subsequent Events).

Accrued Expenses Accrued expenses for employee insurance, workers’ compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual

F-14 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted.

Share-Based Compensation The Company recognizes compensation expense based on the fair value of employee share-based awards, including stock options, restricted stock and restricted stock with market conditions that impact vesting, net of estimated forfeitures. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share- based awards expected to be forfeited prior to vesting. Determining the fair value of shares with market conditions at the grant date requires judgment, including the weighting of historical and estimated implied volatility of the Company’s stock price and where appropriate, a market index. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.

OTHER SIGNIFICANT ACCOUNTING POLICIES Fair Value Measurements The Company applies the relevant accounting guidance on fair value measurements to (i) all financial instruments that are being measured and reported on a fair value basis; (ii) non-financial assets and liabilities measured and reported at fair value on a non-recurring basis; and (iii) disclosures of fair value of certain financial assets and liabilities. The following fair value hierarchy is used in selecting inputs for those instruments measured at fair value that distinguishes between assumptions based on market data (observable) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels. Level 1 — Quoted market prices in active markets for identical assets or liabilities; Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. The fair values of the Company’s Level 2 derivative instruments were primarily based on observable forward exchange rates. Unobservable quantitative inputs used in the valuation of the Company’s derivative instruments included volatilities, discount rates and estimated credit losses. Fair value measurement for the Company’s assets assumes the highest and best use (the use that generates the highest returns individually or as a group) for the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. This applies even if the intended use of the asset by the Company is different. Fair value measurement for the Company’s liabilities assumes that the liability is transferred to a market participant at the measurement date and that the nonperformance risk relating to the liability is the same before and after the transaction. Nonperformance risk refers to the risk that the obligation will not be fulfilled and includes the Company’s own credit risk. The Company does not apply fair value measurement to any instruments not required to be measured at fair value on a recurring basis.

Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at the date of purchase are classified as cash equivalents.

F-15 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation and amortization. Building improvements are depreciated using the straight-line method over their estimated useful lives of 20 to 39 years. Machinery and equipment and furniture and fixtures are depreciated using the straight-line method over their estimated useful lives of three to seven years. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful lives of the assets. Costs for maintenance and repairs are expensed as incurred. Leased property meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. Amortization of capitalized leased assets is recorded on the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The Company recognizes a liability for the fair value of an asset retirement obligation (‘‘ARO’’) if the fair value can be reasonably estimated. The Company’s ARO’s are primarily associated with the removal and disposal of leasehold improvements at the end of a lease term when the Company is contractually obligated to restore a facility to a condition specified in the lease agreement. Amortization of ARO’s is recorded on a straight-line basis over the lease term. The Company capitalizes the costs of software developed or obtained for internal use. Capitalization of software developed or obtained for internal use commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis over five years, when such software is substantially ready for use. The Company evaluates the recoverability of property and equipment if circumstances indicate an impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows to be generated from such assets, on an undiscounted basis. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of the impaired assets is reduced to fair value through a charge to the Company’s Consolidated Statement of Operations. The Company recorded pretax charges of $10.4 million in 2014, $1.5 million in 2013 and $26.4 million in 2012 to reduce the carrying values of certain property and equipment to their estimated fair values (see Note 11 — Fair Value Measurements).

Operating Leases The Company leases office space, retail stores and distribution facilities. Many of these operating leases provide for tenant improvement allowances, rent increases and/or contingent rent provisions. Rental expense is recognized on a straight-line basis commencing with the possession date of the property, which is the earlier of the lease commencement date or the date when the Company takes possession of the property. Certain store leases include contingent rents that are based on a percentage of retail sales over stated thresholds. Tenant allowances are amortized on a straight-line basis over the life of the lease as a reduction of rent expense and are included in Selling, general & administrative expenses (‘‘SG&A’’). The Company leases retail stores under leases with terms that are typically five or ten years. The Company amortizes rental abatements, construction allowances and other rental concessions classified as deferred rent on a straight-line basis over the initial term of the lease. The initial lease term can include one renewal under limited circumstances if the renewal is reasonably assured, based on consideration of all of the following factors: (i) a written renewal at the Company’s option or an automatic renewal; (ii) there is no minimum sales requirement that could impair the Company’s ability to renew; (iii) failure to renew would subject the Company to a substantial penalty; and (iv) there is an established history of renewals in the format or location.

F-16 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Derivative Instruments The Company’s derivative instruments are recorded in the Consolidated Balance Sheets as either an asset or liability and measured at their fair value. The changes in a derivative’s fair value are recognized either currently in earnings or Accumulated other comprehensive loss, depending on whether the derivative qualifies for hedge accounting treatment. The Company tests each derivative for effectiveness at inception of each hedge and at the end of each reporting period. The Company uses foreign currency forward contracts, collars, options and swap contracts for the purpose of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases by Kate Spade Japan Co., Ltd. (‘‘KSJ’’), the Company’s wholly-owned subsidiary. These instruments are designated as cash flow hedges. To the extent the hedges are highly effective, the effective portion of the changes in fair value is included in Accumulated other comprehensive loss, net of income taxes, with the corresponding asset or liability recorded in the Consolidated Balance Sheet. The ineffective portion of the cash flow hedge is recognized primarily as a component of Cost of goods sold in current period earnings. Amounts recorded in Accumulated other comprehensive loss are reflected in current period earnings when the hedged transaction affects earnings. If fluctuations in the relative value of the currencies involved in the hedging activities were to move dramatically, such movement could impact the Company’s results of operations. The Company purchases short-term foreign currency contracts to neutralize balance sheet and other expected exposures, including intercompany loans. These derivative instruments do not qualify as cash flow hedges and are recorded at fair value with all gains or losses recognized as a component of SG&A or Other expense income, net in current period earnings (see Note 12 — Derivative Instruments).

Foreign Currency Translation Assets and liabilities of non-US subsidiaries are translated at period-end exchange rates. Revenues and expenses for each month are translated using that month’s average exchange rate and then are combined for the period totals. Resulting translation adjustments are included in Accumulated other comprehensive loss. Gains and losses on translation of intercompany loans with foreign subsidiaries of a long-term investment nature are also included in this component of Stockholders’ equity (deficit).

Foreign Currency Transactions Outstanding balances in foreign currencies are translated at the end of period exchange rates. The resulting exchange differences are recorded in the Consolidated Statements of Operations or Accumulated other comprehensive loss, as appropriate.

Cost of Goods Sold Cost of goods sold for wholesale operations includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, import costs, third party inspection activities, buying/ sourcing agent commissions and provisions for shrinkage. For retail operations, in-bound freight from the Company’s warehouse to its own retail stores is also included. Warehousing activities including receiving, storing, picking, packing and general warehousing charges are included in SG&A and, as such, the Company’s gross profit may not be comparable to others who may include these expenses as a component of Cost of goods sold.

F-17 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Advertising, Promotion and Marketing All costs associated with advertising, promoting and marketing of Company products are expensed during the periods when the activities take place. Costs associated with cooperative advertising programs involving agreements with customers, whereby customers are required to provide documentary evidence of specific performance and when the amount of consideration paid by the Company for these services is at or below fair value, are charged to SG&A. Costs associated with customer cooperative advertising allowances without specific performance guidelines are recorded as a reduction of sales. The Company incurred expenses of $56.9 million, $42.8 million and $22.7 million for advertising, marketing & promotion for all brands in 2014, 2013 and 2012, respectively.

Shipping and Handling Costs Shipping and handling costs, which are mostly comprised of warehousing activities, are included as a component of SG&A in the Consolidated Statements of Operations. In fiscal years 2014, 2013 and 2012, shipping and handling costs were $32.8 million, $26.4 million and $15.4 million, respectively.

Investments in Unconsolidated Subsidiaries The Company uses the equity method of accounting for its investments in and its proportionate share in earnings of affiliates that it does not control, but over which it exerts significant influence (see Note 20 — Related Party Transactions). The Company considers whether the fair value of its equity method investments has declined below carrying value whenever adverse events or changes in circumstances indicate the recorded value may not be recoverable.

Cash Dividends and Common Stock Repurchases On December 16, 2008, the Board of Directors announced the suspension of the Company’s quarterly cash dividend indefinitely. The Company’s amended and restated revolving credit agreement currently restricts its ability to pay dividends and repurchase stock (see Note 10 — Debt and Lines of Credit).

Fiscal Year The Company’s fiscal year ends on the Saturday closest to December 31. The 2014 fiscal year, which ended on January 3, 2015, reflected a 53-week period. The 2013 and 2012 fiscal years, which ended December 28, 2013 and December 29, 2012, reflected 52-week periods.

Subsequent Events The Company’s policy is to evaluate all events or transactions that occur from the balance sheet date through the date of the issuance of its financial statements. The Company has evaluated events or transactions that occurred from the balance sheet date through the date the Company issued these financial statements (see Note 23 — Subsequent Events).

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS On December 29, 2013, the first day of the Company’s 2014 fiscal year, the Company adopted new accounting guidance on the presentation of unrecognized tax benefits, which requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax

F-18 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or that the tax law of the applicable jurisdiction does not require the entity to use; and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The adoption of the new accounting guidance did not affect the Company’s financial position, results of operations or cash flows.

NOTE 2: ACQUISITIONS On February 5, 2014, the Company, through its Kate Spade, LLC and Kate Spade Hong Kong Ltd. subsidiaries, reacquired existing KATE SPADE businesses in Southeast Asia from Globalluxe for a purchase price of $32.3 million, including $2.3 million for working capital and other previously agreed adjustments. The Company’s distribution partner operates the KATE SPADE businesses in Singapore, Malaysia, Indonesia and Thailand through distribution agreements and funded approximately $1.5 million to Globalluxe to acquire operating assets in those regions. Globalluxe and its distribution partners operated six stores and one concession in Hong Kong, one concession in Taiwan, one store in Macau, two stores and one concession in Singapore, two stores in Malaysia, three stores and one concession in Indonesia, and two stores and six concessions in Thailand. Prior to the acquisition from Globalluxe, the Company maintained wholesale distribution to Globalluxe. Following the transaction, the Company maintains wholesale distribution to distributors who operate the businesses in Singapore, Malaysia, Indonesia and Thailand. Since the date of the acquisition, the Company has directly owned and operated the businesses in Hong Kong Macau and Taiwan and will continue to do so until the expected conversion of these businesses to a joint venture with Walton Brown (see Note 23 — Subsequent Events). The allocation of the purchase price to the assets acquired and liabilities assumed was based upon the estimated fair values at the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets is reflected as goodwill. Accordingly, the Company recorded $21.8 million of goodwill, which is reflected in the KATE SPADE International reportable segment. The recorded goodwill is deductible for income tax purposes. The following table summarizes the estimated fair values of the assets acquired as of the acquisition date:

In thousands Assets acquired: Current assets ...... $ 3,549 Property and equipment, net ...... 1,267 Goodwill and intangibles, net(a) ...... 26,592 Other assets ...... 860 Total assets acquired ...... $32,268

(a) A portion of the goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan is expected to be reclassified to Investment in unconsolidated subsidiary in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 23 — Subsequent Events).

F-19 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents details of the acquired intangible assets:

In thousands Useful Life Estimated Fair Value Reacquired distribution rights ...... 1.7 years $4,500 Retail customer list ...... 3 years 256 On October 31, 2012, a subsidiary of the Company acquired the remaining 51.0% interest (‘‘KSJ Buyout’’) in KSJ held by Sanei International Co., Ltd. (‘‘Sanei’’). Prior to the acquisition, KSJ was a joint venture that was formed between Sanei, and KATE SPADE in August 2009. KSJ operated the kate spade new york and JACK SPADE businesses in Japan, and the Company continues to operate such businesses in Japan through its Japanese subsidiary. The purchase price for the KSJ, including post-closing adjustments was 3.308 billion yen or $41.4 million, including $0.4 million of cash acquired. Prior to obtaining control on October 31, 2012, the Company accounted for the investment in KSJ under the equity method. Upon obtaining control, the transaction was accounted for as an ‘‘acquisition achieved in stages,’’ in accordance with US GAAP. Accordingly, the Company re-measured the previously held equity interest in KSJ and adjusted it to fair value utilizing an income approach based on expected future after tax cash flows of KSJ, discounted to reflect risk associated with those cash flows and a market approach based on earnings and revenue multiples that other purchasers in the market would have used for that business. The fair value of the Company’s equity interest at the acquisition date was $47.2 million. The difference between the fair value of the Company’s ownership in KSJ and the Company’s carrying value of its investment of $7.1 million resulted in the recognition of a gain of $40.1 million in 2012, which was included on the accompanying Consolidated Statement of Operations as Gain on acquisition of subsidiary. The results of operations for KSJ have been included in the Company’s consolidated results since October 31, 2012. KSJ generated $98.3 million and $16.0 million of net sales and $(1.8) million of net loss and $0.7 million of net income for the years ended December 28, 2013 and December 29, 2012, respectively. KSJ also generated $5.7 million and $0.5 million of incremental Adjusted EBITDA for the years ended December 28, 2013 and December 29, 2012, respectively. Adjusted EBITDA is the Company’s measure of segment profitability, as discussed in Note 18 — Segment Reporting. Transaction costs related to the acquisition were not significant. The allocation of the purchase price to the assets acquired and liabilities assumed was based upon the estimated fair values at the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets is reflected as goodwill. Accordingly, the Company recorded $63.4 million of goodwill, which is reflected in the KATE SPADE International reportable segment. None of the recorded goodwill is deductible for income tax purposes.

F-20 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of the acquisition date:

In thousands Assets acquired: Current assets ...... $ 23,721 Property and equipment, net ...... 5,608 Goodwill and intangibles, net ...... 79,374 Other assets ...... 6,776 Total assets acquired ...... $115,479 Liabilities assumed: Current liabilities ...... $ 8,834 Non-current liabilities ...... 17,629 Total liabilities assumed ...... $ 26,463

The following table presents details of the acquired intangible assets:

In thousands Useful Life Estimated Fair Value Reacquired distribution rights ...... 3 years $14,900 Retail customer list ...... 3 years 1,100 The following unaudited pro forma financial information for the year ended December 29, 2012 reflects the results of continuing operations of the Company as if the KSJ Buyout had been completed on January 1, 2012. Pro forma adjustments have been made for changes in depreciation and amortization expenses related to the valuation of the acquired tangible and intangible assets at fair value, the elimination of non-recurring items and the addition of incremental costs related to debt used to finance the acquisition.

Fiscal Year Ended In thousands, except per share amounts December 29, 2012 Net sales ...... $617,134 Gross profit ...... 388,190 Operating loss ...... (32,187) Loss before benefit for income taxes ...... (54,251) Loss from continuing operations ...... (50,836) Diluted loss per share from continuing operations ...... (0.47) The unaudited pro forma financial information is presented for information purposes only. It is not necessarily indicative of what the Company’s financial position or results of operations actually would have been if the Company completed the acquisition at the date indicated, nor does it purport to project the Company’s future financial position or operating results.

F-21 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 3: DISCONTINUED OPERATIONS The components of Assets held for sale and Liabilities held for sale related to the former Lucky Brand business as of December 28, 2013 were as follows:

In thousands December 28, 2013 Assets held for sale: Cash and cash equivalents ...... $ 163 Accounts receivable — trade, net ...... 41,709 Inventories, net ...... 80,503 Property and Equipment, net ...... 68,533 Other assets ...... 11,146 Assets held for sale ...... $202,054 Liabilities held for sale: Accounts payable ...... $ 52,977 Accrued expenses ...... 27,773 Other liabilities ...... 15,620 Liabilities held for sale ...... $ 96,370

The Company completed the sale of Lucky Brand in February 2014 and substantially completed the wind-down operations of the Juicy Couture business in the second quarter of 2014. The Company recorded pretax and after tax income (charges) of $130.0 million, $143.4 and $(12.2) million in 2014, 2013 and 2012, respectively, to reflect the estimated difference between the carrying value of the net assets disposed and their estimated fair value, less costs to dispose, including transaction costs. Summarized results of discontinued operations are as follows:

Fiscal Years Ended In thousands January 3, 2015 December 28, 2013 December 29, 2012 Net sales ...... $209,519 $980,488 $961,950 Loss before provision for income taxes .... $(46,923) $(36,382) $ (3,056) Provision for income taxes ...... 660 1,821 6,572 Loss from discontinued operations, net of income taxes ...... $(47,583) $(38,203) $ (9,628) Income (loss) on disposal of discontinued operations, net of income taxes ...... $130,017 $143,363 $(12,190)

In connection with the sale of the Juicy Couture IP, the Company initiated actions to reduce staff at Juicy Couture during the fourth quarter of 2013. Also, as a result of the requirement to wind down the Juicy Couture operations, the Company closed Juicy Couture offices and retail locations. These actions, which were substantially completed by the end of the second quarter of 2014, resulted in charges related to asset impairments, severance and other items. For the 2014, 2013, and 2012 fiscal years, the Company recorded charges of $26.6 million, $48.4 million and $9.8 million, respectively, related to its streamlining initiatives within Discontinued operations, net of income taxes.

F-22 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 4: INVENTORIES, NET Inventories, net consisted of the following:

In thousands January 3, 2015 December 28, 2013 Raw materials and work in process ...... $ 538 $ 1,028 Finished goods ...... 157,703 183,606 Total ...... $158,241 $184,634

NOTE 5: PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following:

In thousands January 3, 2015 December 28, 2013 Land and buildings ...... $ 9,300 $ 9,300 Machinery and equipment ...... 140,189 171,811 Furniture and fixtures ...... 61,694 83,753 Leasehold improvements ...... 122,029 173,207 333,212 438,071 Less: Accumulated depreciation and amortization ...... 159,140 289,000 Total property and equipment, net ...... $174,072 $149,071

Depreciation and amortization expense on property and equipment for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, was $38.3 million, $28.0 million and $22.3 million, respectively, which included depreciation for property and equipment under capital leases of $0.8 million, $1.9 million and $2.9 million, respectively. Machinery and equipment under capital leases was $9.3 million as of January 3, 2015 and December 28, 2013. During the third quarter of 2013, the Company sold its West Chester, OH distribution center (the ‘‘Ohio Facility’’) for net proceeds of $20.3 million and entered into a sale-leaseback arrangement with the buyer for a 10-year term, which was classified as an operating lease. The Company realized a gain of $9.5 million associated with the sale-leaseback, which has been deferred and will be recognized as a reduction to SG&A over the lease term. During the second quarter of 2013, the Company sold its North Bergen, NJ office for net proceeds of $8.7 million. The Company entered into a sale-leaseback arrangement with the buyer for a 12-year term with two five-year renewal options, which was classified as a capital lease (see Note 9 — Commitments and Contingencies).

F-23 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 6: GOODWILL AND INTANGIBLES, NET The following tables disclose the carrying value of all intangible assets:

Weighted Average Amortization In thousands Period January 3, 2015 December 28, 2013 Amortized intangible assets: Gross carrying amount: Owned trademarks(a) ...... — $ 467 $ 2,000 Customer relationships ...... 11 years 7,422 7,273 Merchandising rights ...... 4 years 12,012 6,087 Reacquired rights(b) ...... 2 years 14,371 11,299 Other ...... 4 years 2,322 2,322 Subtotal ...... 36,594 28,981 Accumulated amortization: Owned trademarks ...... (467) (100) Customer relationships ...... (4,769) (4,022) Merchandising rights ...... (4,108) (2,595) Reacquired rights ...... (9,604) (4,394) Other ...... (2,219) (2,092) Subtotal ...... (21,167) (13,203) Net: Owned trademarks ...... — 1,900 Customer relationships ...... 2,653 3,251 Merchandising rights ...... 7,904 3,492 Reacquired rights ...... 4,767 6,905 Other ...... 103 230 Total amortized intangible assets, net ...... 15,427 15,778 Unamortized intangible assets: Owned trademarks ...... 74,900 74,900 Total intangible assets ...... $90,327 $ 90,678 Goodwill ...... $64,798 $ 49,111

(a) The change in the balance reflected a non-cash impairment charge of $1.5 million related to the TRIFARI trademark (see Note 1 — Basis of Presentation and Significant Accounting Policies). (b) The increase in the balance compared to December 28, 2013 primarily reflected the reacquired existing KATE SPADE businesses in Southeast Asia (see Note 2 — Acquisitions and Note 23 — Subsequent Events). Amortization expense of intangible assets was $8.2 million, $5.7 million and $2.1 million for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively.

F-24 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The estimated amortization expense of intangible assets for the next five years is as follows:

Amortization Expense Fiscal Year (In millions) 2015 ...... $7.7 2016 ...... 2.5 2017 ...... 2.0 2018 ...... 1.3 2019 ...... 0.4 The changes in carrying amount of goodwill for the years ended January 3, 2015 and December 28, 2013 were as follows:

Adelington Design KATE SPADE In thousands Group International Total Balance as of December 29, 2012 ...... $ 1,554 $ 58,669 $ 60,223 Translation adjustment ...... (107) (11,005) (11,112) Balance as of December 28, 2013 ...... 1,447 47,664 49,111 Acquisition of existing KATE SPADE businesses in Southeast Asia ...... — 21,836 21,836 Translation adjustment ...... (132) (6,017) (6,149) Balance as of January 3, 2015 ...... $ 1,315 $ 63,483 $ 64,798

NOTE 7: ACCRUED EXPENSES Accrued expenses consisted of the following:

In thousands January 3, 2015 December 28, 2013 Lease obligations ...... $ 28,152 $ 34,142 Payroll, bonuses and other employment related obligations . . 27,446 45,971 Streamlining initiatives ...... 13,633 17,829 Advertising ...... 11,026 9,883 Taxes, other than taxes on income ...... 9,275 13,762 Deferred income ...... 7,742 6,322 Insurance related ...... 6,109 7,739 Employee benefits ...... 5,354 8,134 Accrued disposition costs ...... 2,325 10,179 Interest ...... 355 8,375 Other ...... 39,509 37,842 Total ...... $150,926 $200,178

F-25 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 8: INCOME TAXES Loss before benefit for income taxes consisted of the following:

Fiscal Years Ended In thousands January 3, 2015 December 28, 2013 December 29, 2012 United States ...... $(6,165) $(34,370) $(47,259) International ...... (1,488) (2,358) (10,389) Total ...... $(7,653) $(36,728) $(57,648)

The (benefit) provision for income taxes was as follows:

Fiscal Years Ended In thousands January 3, 2015 December 28, 2013 December 29, 2012 Current: Federal ...... $(77,366) $ 686 $ 3,344 Foreign ...... 809 (2,326) 1,254 State and local ...... (7,472) 742 (3,175) Total Current(a) ...... (84,029) (898) 1,423 Deferred: Federal ...... 1,883 (626) (4,692) Foreign ...... (2,722) (437) (691) State and local ...... 489 (2,602) (1,001) Total Deferred ...... (350) (3,665) (6,384) $(84,379) $(4,563) $(4,961)

(a) Includes a net $87.4 million reduction in the reserve for uncertain tax positions, resulting from the expiration of the related statutes of limitations in the year ended January 3, 2015. The Company files a consolidated federal income tax return. Deferred income tax assets and liabilities represent the tax effects of revenues, costs and expenses, which are recognized for tax purposes in different periods from those used for financial statement purposes.

F-26 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effective income tax rate differed from the statutory federal income tax rate as follows:

Fiscal Years Ended January 3, 2015 December 28, 2013 December 29, 2012 Federal tax at statutory rate ...... 35.0% 35.0% 35.0% State and local income taxes, net of federal benefit ...... 97.6 7.2 8.4 Officer and share-based compensation .... 226.4 — — Change in valuation allowance ...... (185.7) (13.2) (41.3) Unrecognized tax benefits ...... 1,010.9 (1.9) (6.4) Rate differential on foreign income ...... (46.8) (15.0) (5.9) Gain on acquisition of subsidiary ...... — — 29.7 Conversion of debt to equity ...... — (1.5) (3.4) Indefinite-lived intangibles ...... (31.0) 4.8 (4.6) Other, net ...... (3.9) (3.0) (3.0) 1,102.5% 12.4% 8.5%

The components of net deferred taxes arising from temporary differences were as follows:

In thousands January 3, 2015 December 28, 2013 Deferred tax assets: Inventory valuation ...... $ 9,212 $ 6,088 Streamlining initiatives ...... — 10,003 Deferred compensation ...... 2,053 3,009 Nondeductible accruals ...... 10,363 83,661 Share-based compensation ...... 11,827 7,322 Net operating loss carryforward ...... 300,825 249,399 Tax credit carryforward ...... 34 53,495 Goodwill ...... 5,603 6,885 Capital loss carryforward ...... 68,839 72,788 Other ...... 15,906 19,339 Total deferred tax assets ...... 424,662 511,989 Deferred tax liabilities: Trademarks and other intangibles ...... (17,622) (16,636) Property and equipment ...... (5,632) (12,633) Other ...... (2,746) (1,584) Total deferred tax liabilities ...... (26,000) (30,853) Less: Valuation allowance ...... (415,173) (497,485) Net deferred tax liability ...... $ (16,511) $ (16,349)

The table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of January 3, 2015, and December 28, 2013, that arose from tax deductions related to share-based compensation that are greater than the compensation expense recognized for financial reporting. The deferred tax adjustment of that difference was $44.7 million as of January 3, 2015.

F-27 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of January 3, 2015, the Company and its domestic subsidiaries had net operating loss and foreign tax credit carryforwards of $787.6 million (federal tax effected amount of $275.6 million) for federal income tax purposes that may be used to reduce future federal taxable income. As of January 3, 2015 the cumulative amount of tax deductions related to share-based compensation and the corresponding compensation expense adjustment for financial reporting was $115.0 million (federal tax effected amount of $40.2 million). The net operating loss for federal income tax purposes will begin to expire in 2028. As of January 3, 2015, the Company and certain of its domestic subsidiaries recorded a $53.7 million deferred tax asset related to net operating loss carryforwards for state income tax purposes that may be used to reduce future state taxable income. The net operating loss carryforwards for state income tax purposes begin to expire in 2015. As of January 3, 2015, certain of the Company’s foreign subsidiaries recorded an $11.7 million deferred tax asset related to net operating loss carryforwards for foreign income tax purposes that may be used to reduce future foreign taxable income. The net operating loss carryforwards for foreign income tax purposes begin to expire in 2015. As of January 3, 2015, the Company had total deferred tax assets related to net operating loss carryforwards of $300.8 million, of which $235.4 million, $53.7 million and $11.7 million were attributable to federal, domestic state and local, and foreign subsidiaries, respectively. As of January 3, 2015, the Company and its subsidiaries recorded valuation allowances in the amount of $415.2 million against its net operating loss and other deferred tax assets due to of its history of pretax losses and inability to carry back tax losses or credits for refunds. This represents a total decrease in the valuation allowance of $82.3 million compared to the balance at December 28, 2013. The Company has not provided for deferred taxes on the outside basis difference in its investments in foreign subsidiaries that are essentially permanent in duration. As of January 3, 2015, there were no unremitted earnings. It is not practicable to determine the amount of income taxes that would be payable in the event such outside basis differences reverse or unremitted earnings are repatriated. The Company has not provided deferred taxes on the outside basis difference in its investment in Lucky Brand Dungarees, Inc. The Company’s outside basis difference would result in the recording of a deferred tax asset with an offsetting valuation allowance. Due to the terms of the stock purchase agreement for the purchase of Lucky Brand Dungarees, Inc. shares, the buyer caused the Company to treat the transaction as a deemed sale of assets, and as a result, the deferred tax asset would not be recognizable.

F-28 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Changes in the amounts of unrecognized tax benefits are summarized as follows:

Fiscal Years Ended January 3, 2015 December 28, 2013 December 29, 2012 In thousands Balance as of beginning of period ...... $84,108 $85,999 $103,982 Increases from prior period positions . . . 32 1,436 535 Decreases from prior period positions . . . — (4,348) (630) Increases from current period positions . — 2,000 37 Decreases relating to settlements with taxing authorities ...... — (153) (17,765) Reduction due to the lapse of the applicable statute of limitations ...... (74,916) (826) (160) Balance as of end of period(a) ...... $ 9,224 $84,108 $ 85,999

(a) As of January 3, 2015 and December 28, 2013, liabilities associated with the amounts are included within Income taxes payable and Other non-current liabilities on the accompanying Consolidated Balance Sheets. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. For the year ended January 3, 2015, the Company decreased its accruals for interest and penalties by $10.6 million and $1.6 million, respectively. For the year ended December 28, 2013, the Company increased its accruals for interest and penalties by $2.5 million and $0.1 million, respectively. For the year ended December 29, 2012, the Company increased its accrual for interest and penalties by $3.3 million and $0.2 million, respectively. At January 3, 2015 and December 28, 2013, the accrual for interest was $1.8 million and $12.4 million, respectively and the accrual for penalties was $1.1 million and $2.7 million, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $9.2 million. The Company expects to reduce the liability for unrecognized tax benefits by an amount between $1.4 million and $3.6 million within the next 12 months due to either settlement or the expiration of the statute of limitations. The Company files tax returns in the US Federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which the Company has unrecognized tax benefits, is audited and finally resolved. While it is difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that the unrecognized tax benefits reflect the most likely outcome. These unrecognized tax benefits, as well as the related interest, are adjusted in light of changing facts and circumstances. Favorable resolution would be recognized as a reduction to the effective tax rate in the period of resolution. The number of years with open tax audits varies depending upon the tax jurisdiction. The major tax jurisdictions include the US, Japan, United Kingdom, Canada and Brazil. The Company is generally no longer subject to US Federal examination by the Internal Revenue Service (‘‘IRS’’) for the years before 2009 and, with few exceptions, this applies to tax examinations by state authorities for the years before 2009. The Company filed amended US Federal tax returns for 2005, 2006 and 2007 to convert expiring foreign tax credits into foreign tax deductions. The result of the amended returns increased the Company’s US Federal net operating loss carryforwards by $47.0 million. As a result, the IRS has the ability to reopen its past examinations of those years. In addition, the IRS and other taxing authorities can also subject the

F-29 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company’s net operating loss carryforwards to further review when such net operation loss carryforwards are utilized.

NOTE 9: COMMITMENTS AND CONTINGENCIES Leases The Company leases office, showroom, warehouse/distribution, retail space and computers and other equipment under various non-cancelable operating lease agreements, which extend through 2027. Rental expense for 2014, 2013 and 2012 was $87.0 million, $54.3 million and $33.0 million, respectively, excluding certain costs such as real estate taxes and common area maintenance. At January 3, 2015, minimum aggregate rental commitments under non-cancelable operating and capital leases were as follows:

Fiscal Year 2015 2016 2017 2018 2019 Thereafter Total In millions Operating leases ...... $65.4 $60.9 $59.0 $55.4 $50.7 $194.9 $486.3 Capital leases ...... 1.9 2.1 2.1 2.2 2.2 13.1 23.6 Certain rental commitments have renewal options extending through the fiscal year 2027. Some of these renewals are subject to adjustments in future periods. Many of the leases call for additional charges, some of which are based upon various escalations, and, in the case of retail leases, the sales of the individual stores above base levels. Future rental commitments for leases have not been reduced by minimum non-cancelable sublease rentals aggregating $33.3 million. During the second quarter of 2013, the Company entered into a sale-leaseback agreement for its North Bergen, NJ office with a 12-year term and two five-year renewal options. This leaseback was classified as a capital lease and recorded at fair value. In connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to third parties, for which the Company or certain subsidiaries of the Company remain secondarily liable for the remaining obligations on 185 such leases. As of January 3, 2015, the future aggregate payments under these leases amounted to $152.0 million and extended to various dates through 2025.

Buying/Sourcing Pursuant to a buying/sourcing agency agreement, Li & Fung Limited (‘‘Li & Fung’’) acts as the primary global apparel and accessories buying/sourcing agent, with the exception of its jewelry product lines. The Company pays Li & Fung an agency commission based on the cost of product purchases using Li & Fung as its buying/sourcing agent. The Company is obligated to use Li & Fung as its buying/sourcing agent for a minimum value of inventory purchases each year through the termination of the agreement in 2019. The Company’s agreement with Li & Fung is not exclusive; however, the Company is required to source a specified percentage of product purchases from Li & Fung.

Other No single customer accounted for 10.0% of net sales in 2014. As of January 3, 2015, Nordstrom Inc. and The TJX Companies Inc., each accounted for greater than 10.0% of total accounts receivable, with a combined total of 39.6%.

F-30 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At January 3, 2015, the Company had short-term commitments for the purchase of raw materials and for the production of finished goods totaling $156.4 million. The Company is a party to several pending legal proceedings and claims. Although the outcome of any such actions cannot be determined with certainty, management is of the opinion that the final outcome of any of these actions should not have a material adverse effect on the Company’s financial position, results of operations, liquidity or cash flows.

NOTE 10: DEBT AND LINES OF CREDIT Long-term debt consisted of the following:

January 3, 2015 December 28, 2013 In thousands 10.5% Senior Secured Notes, due April 2019(a) ...... $ — $382,209 Term Loan credit facility, due April 2021(a)(b) ...... 396,158 — Revolving credit facility ...... 6,000 2,997 Capital lease obligations ...... 8,585 8,995 Total debt ...... 410,743 394,201 Less: Short-term borrowings(c) ...... 10,459 3,407 Long-term debt ...... $400,284 $390,794

(a) The Senior Notes were refinanced in the second quarter of 2014 with proceeds from the issuance of term loans in an aggregate principal amount of $400.0 million (collectively, the ‘‘Term Loan’’). (b) The balance as of January 3, 2015 included an unamortized debt discount of $1.8 million. (c) At January 3, 2015, the balance consisted of $4.0 million of Term Loan amortization payments, outstanding borrowings under the Company’s amended and restated revolving credit facility (as amended to date, the ‘‘ABL Facility’’) and obligations under capital leases. At December 28, 2013, the balance consisted of outstanding borrowings under the ABL Facility and obligations under capital leases.

Convertible Notes During the first quarter of 2013, a holder of $11.2 million aggregate principal amount of the Company’s 6.0% Convertible Senior Notes due June 2014 (the ‘‘Convertible Notes’’) converted all of such outstanding Convertible Notes into 3,171,670 shares of the Company’s common stock. During the third quarter of 2013, holders of the remaining $8.8 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 2,462,509 shares of the Company’s common stock. The Company recognized pretax losses of $1.7 million and $4.6 million on the extinguishment of debt related to the Convertible Notes for the years ended December 28, 2013 and December 29, 2012.

Senior Notes On April 7, 2011, the Company completed an offering of $220.0 million principal amount of 10.5% Senior Secured Notes due April 2019 (the ‘‘Original Notes,’’ together with the June 2012 issuance of $152.0 million aggregate principal amount of 10.5% Senior Notes (the ‘‘Additional Notes’’), the ‘‘Senior Notes’’). The Company used the net proceeds of $212.9 million from such issuance of the Original Notes primarily to fund a tender offer of then outstanding 128.5 million euro aggregate principal amount of 5.0% Euro Notes due July 8, 2013 (the ‘‘Euro Notes’’) on April 8, 2011. The remaining proceeds were used for

F-31 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) general corporate purposes. On June 8, 2012, the Company completed the offering of the Additional Notes, at 108.25% of par value. The Company used a portion of the net proceeds of $160.6 million from the offering of the Additional Notes to repay outstanding borrowings under its ABL Facility and to fund the redemption of 52.9 million euro aggregate principal amount of Euro Notes on July 12, 2012. The Company used the remaining proceeds to fund a portion of the KSJ Buyout. In 2012, the Company recognized a $5.1 million pretax loss on extinguishment of debt related to the Euro Notes redemptions. On April 14, 2014, the Company redeemed $37.2 million aggregate principal amount of the Senior Notes at a price equal to 103.0% of their aggregate principal amount, plus accrued interest using cash on hand. On May 12, 2014, the Company redeemed the remaining $334.8 million aggregate principal amount of the Senior Notes at a price equal to 105.25% of their aggregate principal amount, plus accrued interest, with the proceeds from the Term Loan. The Company recognized a $16.9 million loss on extinguishment of debt related to these transactions in the second quarter of 2014.

Term Loan On April 10, 2014, the Company entered into a term loan credit agreement (the ‘‘Term Loan Credit Agreement’’), which provides for the Term Loan in an aggregate principal amount of $400.0 million, maturing in April 2021. The Term Loan is subject to amortization payments of $1.0 million per quarter, which commenced on October 1, 2014, with the balance due at maturity. Interest on the outstanding principal amount of the Term Loan accrues at a rate equal to LIBOR (with a floor of 1.0%) plus 3.0% per annum, payable in cash. The Term Loan was funded on May 12, 2014, and the Company used $354.8 million of the net proceeds of $392.0 million from the Term Loan to redeem the Company’s remaining outstanding Senior Notes on May 12, 2014, as discussed above. The Term Loan and other obligations under the Term Loan Credit Agreement are guaranteed by certain of the Company’s restricted subsidiaries (the ‘‘Guarantors’’), which include (i) all of the Company’s existing material domestic restricted subsidiaries, (ii) all future wholly owned restricted subsidiaries of the Company (other than foreign subsidiaries, CFCs, CFC holding companies and subsidiaries of any of the foregoing and certain immaterial subsidiaries) and (iii) all future non-wholly owned restricted subsidiaries of the Company that guarantee capital markets debt securities or term indebtedness of the Company or any Guarantor. The Term Loan Credit Agreement permits the Company to incur, from time to time, additional incremental term loans under the Term Loan Credit Agreement (subject to obtaining commitments for such term loans) and other pari passu lien indebtedness, subject to an overall limit of $100.0 million plus such additional amount that would cause the Company’s consolidated net total secured debt ratio not to exceed 3.75 to 1.0 on a pro forma basis. Any such incremental term loans and other pari passu lien indebtedness are permitted to share in the collateral described below on a pari passu basis with the Term Loan. The Term Loan may be prepaid, at the Company’s option, in whole or in part, at any time at par plus accrued interest; provided that if the Term Loan is prepaid or refinanced in connection with a repricing transaction within six months after the initial borrowing, a 1.0% penalty is applicable. Subject to certain permitted liens and other exclusions and exceptions, the Term Loan is secured (i) on a first-priority basis by a lien on the Company’s KATE SPADE trademarks and certain related rights owned by the Company and the Guarantors (the ‘‘Term Priority Collateral’’) and (ii) by a second-priority security interest in the Company’s and the Guarantors’ other assets (the ‘‘ABL Priority Collateral’’ and together with the Term Priority Collateral, the ‘‘Collateral’’), which secure the Company’s ABL Facility on a first- priority basis. The Term Loan is required to be prepaid in an amount equal to 50.0% of the Company’s Excess Cash Flow (as defined in the Term Loan Credit Agreement) with respect to each fiscal year ending on or after

F-32 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 2, 2016. The percentage of Excess Cash Flow that must be so applied is reduced to 25.0% if the Company’s consolidated net total debt ratio is less than 2.75 to 1.0 and to 0% if the Company’s consolidated net total debt ratio is less than 2.25 to 1.0. Lenders may elect not to accept mandatory prepayments. The Term Loan Credit Agreement limits the Company’s and restricted subsidiaries’ ability to, among other things, incur indebtedness, make dividend payments or other restricted payments, create liens, sell assets (including securities of the Company’s restricted subsidiaries), permit certain restrictions on dividends and transfers of assets by the Company’s restricted subsidiaries, enter into certain types of transactions with shareholders and affiliates and enter into mergers, consolidations or sales of all or substantially all of the Company’s assets, in each case subject to certain designated exceptions and qualifications. The Term Loan Credit Agreement also contains certain affirmative covenants and events of default that are customary for credit agreements governing term loans.

ABL Facility In May 2014, the Company terminated its prior revolving credit agreement and completed a fourth amendment to and restatement of the ABL Facility, which extended the maturity date of the facility to May 2019. Availability under the ABL Facility shall be an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of the Company’s eligible cash, accounts receivable and inventory. The ABL Facility also includes a swingline subfacility of $30.0 million, a multicurrency subfacility of $35.0 million and the option to expand the facility by up to $100.0 million under certain specified conditions. A portion of the ABL Facility up to $125.0 million is available for the issuance of letters of credit, and standby letters of credit may not exceed $40.0 million in the aggregate. The ABL Facility allows two borrowing options: one borrowing option with interest rates based on euro currency rates and a second borrowing option with interest rates based on the alternate base rate, as defined in the ABL Facility, with a spread based on the aggregate availability under the ABL Facility. The ABL Facility is guaranteed by substantially all of the Company’s current domestic subsidiaries, certain of the Company’s future domestic subsidiaries and certain of the Company’s foreign subsidiaries. The ABL Facility is secured by a first-priority lien on substantially all of the assets of the Company and the other borrowers and guarantors (other than certain trademark collateral in which the lenders under the Term Loan Credit Agreement have a first-priority lien, which trademark collateral secures the obligations under the ABL Facility on a second-priority lien basis). The ABL Facility limits the Company’s, and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens, undergo certain fundamental changes, make investments, sell certain assets, enter into hedging transactions, make restricted payments and pay certain indebtedness, enter into transactions with affiliates, permit certain restrictions on dividends and transfers of assets by the Company’s restricted subsidiaries and enter into sale and leaseback transactions. These covenants are subject to important exceptions and qualifications, and many of the covenants are subject to an exception based on meeting the fixed charge coverage ratio and/or certain minimum availability tests. The ABL Facility also contains representations and warranties (some of which are brought down to the time of each borrowing made), affirmative covenants and events of default that are customary for asset-based revolving credit agreements. In addition, the terms and conditions of the ABL Facility: (i) provide for a decrease in fees and interest rates compared to the Company’s previous asset-based revolving loan facility (including eurocurrency spreads of 1.50% to 2.00% over LIBOR, depending on the level of aggregate availability), (ii) require the Company to maintain pro forma compliance with a fixed charge coverage ratio of 1.0:1.0 on a trailing

F-33 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) four-quarter basis if availability under the ABL Facility for three consecutive business days falls below the greater of $15.0 million and 10.0% of the lesser of the aggregate commitments and the borrowing base and (iii) require the Company to apply substantially all cash collections to reduce outstanding borrowings under the ABL Facility if availability under the ABL Facility for three consecutive business days falls below the greater of $20.0 million and 12.5% of the lesser of the aggregate commitments and the borrowing base. The funds available under the ABL Facility may be used for working capital and for general corporate purposes. The Company currently believes that the financial institutions under the ABL Facility are able to fulfill their commitments, although such ability to fulfill commitments will depend on the financial condition of the Company’s lenders at the time of borrowing. As of January 3, 2015, availability under the Company’s ABL Facility was as follows:

Letters of Total Borrowing Outstanding Credit Available Excess Facility(a) Base(a) Borrowings Issued Capacity Capacity(b) In thousands Revolving credit facility(a) ...... $200,000 $249,832 $6,000 $13,140 $180,860 $160,860

(a) Availability under the ABL Facility is the lesser of $200.0 million or a borrowing base that is computed monthly and comprised of the Company’s eligible cash, accounts receivable and inventory.

(b) Excess capacity represents available capacity reduced by the minimum required aggregate borrowing availability under the ABL Facility of $20.0 million.

Capital Lease Obligations In the second quarter of 2013, the Company entered into a sale-leaseback agreement for its office building in North Bergen, NJ, which included a sale price of $8.7 million and total lease payments of $26.9 million over a 12-year lease term. The Company’s capital lease obligations of $8.6 million and $9.0 million as of January 3, 2015 and December 28, 2013, respectively, included $0.5 million and $0.4 million within Short-term borrowings on the accompanying Consolidated Balance Sheets.

NOTE 11: FAIR VALUE MEASUREMENTS As discussed in Note 1 — Basis of Presentation and Significant Accounting Policies, the Company utilizes a three level hierarchy that defines the assumptions used to measure certain assets and liabilities at fair value. The following table presents the financial assets and liabilities the Company measures at fair value on a recurring basis, based on such fair value hierarchy:

Level 2 January 3, 2015 December 28, 2013 In thousands Financial Assets: Derivatives ...... $3,193 $1,701 Financial Liabilities: Derivatives ...... $ — $ —

F-34 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair values of the Company’s Level 2 derivative instruments were primarily based on observable forward exchange rates. Unobservable quantitative inputs used in the valuation of the Company’s derivative instruments included volatilities, discount rates and estimated credit losses. The following table presensts the non-financial assets the Company measured at fair value on a non-recurring basis in 2014, based on such fair value hierarchy:

Net Carrying Fair Value Measured and Recorded at Total Losses — Value as of Reporting Date Using: Year Ended January 3, 2015 Level 1 Level 2 Level 3 January 3, 2015 In thousands Property and equipment . . . $4,127 $ — $ — $4,127 $10,358 Intangibles, net ...... — — — — 1,533 As a result of the Company’s decision to close all KATE SPADE SATURDAY retail operations and JACK SPADE retail stores in the first half of 2015 (see Note 13 — Streamlining Initiatives and Note 23 — Subsequent Events), as well as a result of a decline in the respective future anticipated cash flows of certain retail locations of kate spade new york, KATE SPADE SATURDAY and JACK SPADE, the Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. In the fourth quarter of 2014, the Company recorded a non-cash impairment charge of $1.5 million to reduce the carrying balance of the TRIFARI trademark to zero, due to the expected exit of that brand. The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2013, based on such fair value hierarchy:

Net Carrying Fair Value Measured and Recorded at Total Losses — Value as of Reporting Date Using: Year Ended December 28, 2013 Level 1 Level 2 Level 3 December 28, 2013 In thousands Property and equipment . . $15,706 $ — $ — $15,706 $1,480 Intangibles, net ...... 1,900 — — 1,900 3,300 Other assets ...... — — — — 6,109 The Company performed impairment analyses on certain property and equipment as a result of a decline in the respective future anticipated cash flows of certain retail locations of JACK SPADE and the decision to revise the Company’s plan to outsource its distribution function (see Note 13 — Streamlining Initiatives). The Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. In the third quarter of 2013, the Company recorded a non-cash impairment charge of $3.3 million, which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark. The Company estimated the fair value of the trademark using the income-based relief-from-royalty valuation method which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use a comparable asset. The Company assumed a market royalty rate of 3.5%, a discount rate of 14.0% and a long term growth rate of 2.0%. Subsequent to the sale of its former global Mexx business, the Company retained a noncontrolling ownership interest in such business and accounted for its investment at cost (see Note 17 — Additional Financial Information). In the second quarter of 2013, the Company performed an impairment test based

F-35 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) on market multiples of comparable transactions and determined that the carrying value of the investment exceeded its fair value, resulting in an impairment charge, which was recorded in Impairment of cost investment on the accompanying Consolidated Statement of Operations. The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2012, based on such fair value hierarchy:

Net Carrying Fair Value Measured and Recorded at Total Losses — Value as of Reporting Date Using: Year Ended December 29, 2012 Level 1 Level 2 Level 3 December 29, 2012 In thousands Property and equipment . . $22,710 $ — $ — $22,710 $26,413 In connection with a change in the pattern of use and then likely disposal of the Company’s New Jersey corporate office, an impairment analysis was performed on the associated property and equipment. As a result of a decline in the estimated fair value of the Company’s Ohio distribution center, impairment analyses were performed on the associated property and equipment. The Company determined that a portion of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Operations. The fair values of the Company’s Level 3 Property and equipment and Intangible assets are based on either a market approach or an income approach using the Company’s forecasted cash flows over the estimated useful lives of such assets, as appropriate. The fair values and carrying values of the Company’s debt instruments are detailed as follows:

January 3, 2015 December 28, 2013 In thousands Fair Value Carrying Value Fair Value Carrying Value 10.5% Senior Secured Notes due April 2019(a) ...... $ — $ — $400,830 $382,209 Term Loan credit facility, due April 2021(a) 384,786 396,158 — — Revolving credit facility(b) ...... 6,000 6,000 2,997 2,997

(a) Carrying values include unamortized debt discount or premium. (b) Borrowings under the revolving credit facility bear interest based on market rate; accordingly, its fair value approximates its carrying value. The fair values of the Company’s debt instruments were estimated using market observable inputs, including quoted prices in active markets, market indices and interest rate measurements. Within the hierarchy of fair value measurements, these are Level 2 fair values. The fair values of cash and cash equivalents, receivables and accounts payable approximate their carrying values due to the short-term nature of these instruments. As of January 3, 2015, the carrying amount of the Lucky Brand Note was $89.0 million, including initial principal of $85.0 million and accrued payment in kind of $4.0 million. In evaluating its fair value, the Company considered various facts and circumstances, including (i) known changes in market values of comparable instruments in active markets; (ii) the inability to transfer the Lucky Brand Note and the lack of an active market to do so; and (iii) entity specific factors related to the issuer of the Lucky Brand Note including the absence of any factors that would suggest that the counterparty may be unable to meet its obligations under the terms of the Lucky Brand Note.

F-36 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Based on those factors and the inherent subjectivity in evaluating fair value of the Lucky Brand Note and similar instruments, the Company concluded that providing a range of fair value was appropriate. The Company determined the range of fair value of the Lucky Brand Note, including accrued payment in kind, to be between $79.0 million and $89.0 million. The low end of such range was determined using two methods. The Company reviewed the average change in fair value of comparable instruments in active markets and also estimated an implied discount based on the non-transferable nature of the Lucky Brand Note. The high end of the range considered entity specific circumstances and assumed LGP would pay the Lucky Brand Note in full.

NOTE 12: DERIVATIVE INSTRUMENTS In order to reduce exposures related to changes in foreign currency exchange rates, the Company uses forward contracts and may utilize foreign currency collars, options and swap contracts for purposes of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases by KSJ. As of January 3, 2015, the Company had forward contracts maturing through March 2016 to sell 4.3 billion yen for $39.1 million. The Company uses foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with intercompany loans. As of January 3, 2015, the Company had forward contracts to sell 4.0 billion yen for $33.4 million maturing through March 2015. Transaction gains of $4.5 million, $8.5 million and $1.0 million related to these derivative instruments for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively, were reflected within Other expense, net on the accompanying Consolidated Statements of Operations. The following table summarizes the fair value and presentation in the Consolidated Financial Statements for derivatives designated as hedging instruments and derivatives not designated as hedging instruments:

Foreign Currency Contracts Designated as Hedging Instruments Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value In thousands January 3, 2015 . . Other current assets $39,100 $3,066 Accrued expenses $ — $ — December 28, 2013 ...... Other current assets 21,050 1,317 Accrued expenses — — The following table summarizes the fair value and presentation in the Consolidated Financial Statements for derivatives not designated as hedging instruments:

Foreign Currency Contracts Not Designated as Hedging Instruments Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value In thousands January 3, 2015 . . Other current assets $33,350 $127 Accrued expenses $ — $ — December 28, 2013 ...... Other current assets 38,403 384 Accrued expenses — —

F-37 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the effect of foreign currency exchange contracts on the Consolidated Financial Statements:

Location of Gain or Amount of Gain or (Loss) Reclassified Amount of Gain or Amount of Gain or (Loss) Recognized in from Accumulated (Loss) Reclassified (Loss) Recognized in Accumulated OCI OCI into Operations from Accumulated Operations on on Derivative (Effective and OCI into Operations Derivative (Effective Portion) Ineffective Portion) (Effective Portion) (Ineffective Portion) In thousands Fiscal year ended January 3, 2015 ...... $2,854 Cost of goods sold $1,161 $ — Fiscal year ended December 28, 2013 ...... 2,911 Cost of goods sold 1,326 — Fiscal year ended December 29, 2012 ...... — Cost of goods sold — —

NOTE 13: STREAMLINING INITIATIVES 2014 Actions On January 29, 2015, the Company announced it will discontinue KATE SPADE SATURDAY as a standalone brand, including retail stores and its e-commerce website and that it will close its JACK SPADE retail stores. These actions are expected to be completed in the first half of 2015. Based on a probability weighted approach, the Company recorded non-cash asset impairment charges in 2014 and expects to incur additional asset impairment charges as well as contract termination costs and employee related costs in 2015 (see Note 23 — Subsequent Events). In connection with the sale of the Juicy Couture IP and former Lucky Brand business, the Board of Directors of the Company approved various changes to its senior management, which resulted in charges related to severance in 2014. As discussed in Note 14 — Share-Based Compensation, the Company’s Compensation Committee approved the continued vesting of unvested options and restricted stock awards without any required service period or the accelerated vesting of such awards for former employees, including former executive officers. In addition, as a result of the reduction of office space, the Company recorded charges related to contract terminations and other charges in the first quarter of 2014.

F-38 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company expects to pay approximately $7.8 million of accrued streamlining costs during 2015. In addition, the Company expects to pay $5.9 million of accrued streamlining costs related to discontinued operations in 2015. A summary rollforward and components of the Company’s streamlining initiatives were as follows:

Contract Payroll and Termination Asset In thousands Related Costs Costs Write-Downs Other Costs Total Balance at December 31, 2011 ...... $ 7,352 $ 18,012 $ — $ 30,967 $ 56,331 2012 provision ...... 9,158 2,681 27,783 3,571 43,193 2012 asset write-downs ...... — — (27,783) — (27,783) Translation difference ...... 25 49 — 9 83 2012 spending ...... (11,976) (16,499) — (18,783) (47,258) Balance at December 29, 2012 ...... 4,559 4,243 — 15,764 24,566 2013 provision(a) ...... 5,657 6 1,744 3,194 10,601 2013 asset write-downs ...... — — (1,744) — (1,744) Translation difference ...... (7) 12 — 18 23 2013 spending(a) ...... (7,173) (2,110) — (7,269) (16,552) Balance at December 28, 2013 ...... 3,036 2,151 — 11,707 16,894 2014 provision(a) ...... 33,729 1,540 6,367 316 41,952 2014 asset write-downs ...... — — (6,367) — (6,367) Translation difference ...... — — — (3) (3) 2014 spending(a) ...... (34,685) (2,704) — (5,190) (42,579) Balance at January 3, 2015(b) ...... $ 2,080 $ 987 $ — $ 6,830 $ 9,897

(a) Payroll and related costs provision and spending include $17.3 million and $2.8 million in 2014 and 2013, respectively, of non-cash share-based compensation expense. (b) The balance in other costs at January 3, 2015 includes $6.8 million for a withdrawal liability incurred in 2011 related to a multi- employer pension plan that the Company will pay through June 1, 2016. Expenses associated with the Company’s streamlining actions were primarily recorded in SG&A in the Consolidated Statements of Operations and impacted reportable segments and Corporate as follows:

Fiscal Years Ended In thousands January 3, 2015 December 28, 2013 December 29, 2012 KATE SPADE North America ...... $ 7,319 $ 791 $ 2,519 KATE SPADE International ...... 1,567 — — Adelington Design Group ...... 982 272 3,112 Other(a) ...... 32,084 9,538 37,562 Total ...... $41,952 $10,601 $43,193

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

F-39 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 14: SHARE-BASED COMPENSATION The Company issues stock options, restricted shares, restricted share units and shares with performance features to employees under share-based compensation plans, which are described herein. Compensation expense for stock options and restricted stock awards is measured at fair value on the date of grant based on the number of shares granted. The fair value of stock options is estimated based on the Binomial lattice pricing model; the fair value of restricted shares is based on the quoted market price on the date of the grant. Stock option expense is recognized using the straight-line attribution basis over the entire vesting period of the award. Restricted share, restricted share unit and performance share expense is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. Expense is recognized net of estimated forfeitures. During 2014, the Company’s Compensation Committee approved the continued vesting of unvested options and restricted stock awards without any required service period or the accelerated vesting of such awards for former employees, including former executive officers, upon their separation from the Company. Compensation expense related to the Company’s share-based payment awards totaled $37.3 million, $7.3 million and $6.9 million for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. Compensation expense included $17.3 million and $2.8 million for the years ended January 3, 2015 and December 28, 2013, respectively, that was classified as restructuring.

Stock Plans In March 1992, March 2000, March 2002, March 2005, May 2011 and May 2013 the Company adopted the ‘‘1992 Plan,’’ the ‘‘2000 Plan,’’ the ‘‘2002 Plan,’’ the ‘‘2005 Plan,’’ the ‘‘2011 Plan’’ and the ‘‘2013 Plan’’ respectively, under which options (both nonqualified options and incentive stock options) to acquire shares of common stock may be granted to officers, other key employees, consultants and outside directors, in each case as selected by the Company’s Compensation Committee (the ‘‘Committee’’). Payment by option holders upon exercise of an option may be made in cash or, with the consent of the Committee, by delivering previously acquired shares of Company common stock or any other method approved by the Committee. If previously acquired shares are tendered as payment, the shares are subject to a six-month holding period, as well as specific authorization by the Committee. To date, this type of exercise has not been approved or transacted. The Committee has the authority under all of the plans to allow for a cashless exercise option, commonly referred to as a ‘‘broker-assisted exercise.’’ Under this method of exercise, participating employees must make a valid exercise of their stock options through a designated broker. Based on the exercise and information provided by the Company, the broker sells the shares on the open market. The employees receive cash upon settlement, some of which is used to pay the purchase price. Neither the stock-for-stock nor broker-assisted cashless exercise option are generally available to executive officers or directors of the Company. Although there are none currently outstanding, stock appreciation rights may be granted in connection with all or any part of any option granted under the plans and may also be granted without a grant of a stock option. Vesting schedules will be accelerated upon a change of control of the Company. Options and stock appreciation rights generally may not be transferred during the lifetime of a holder. Awards under the 2002 and 2005 Plans may also be made in the form of dividend equivalent rights, restricted stock, unrestricted stock performance shares and restricted stock units. Exercise prices for awards under the 2000, 2002, 2005, 2011 and 2013 Plans are determined by the Committee; to date, all stock options have been granted at an exercise price not less than the closing market value of the underlying shares on the date of grant.

F-40 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Awards granted under plans no longer in use by the Company, including the 2002, 2000 and 1992 Plans, remain in effect in accordance with their terms. The 2005 Plan provides for the issuance of up to 5.0 million shares of common stock with respect to options, stock appreciation rights and other awards. The 2005 Plan expires in 2015. The 2011 Plan provides for the issuance of up to 3.0 million shares of common stock, of which no more than 1.5 million shares may be awarded pursuant to grants of restricted stock, restricted stock units, unrestricted stock and performance shares. The 2011 Plan expires in 2021. The 2013 Plan provides for the issuance of up to 9.5 million shares of common stock. The 2013 Plan expires in 2023. As of January 3, 2015, 6.8 million shares were available for future grant under the 2005, 2011 and 2013 Plans. The Company delivers treasury shares upon the exercise of stock options and vesting of restricted shares. The difference between the cost of the treasury shares and the exercise price of the options has been reflected on a first-in, first-out basis.

Stock Options The Company grants stock options to certain domestic and international employees. These options are subject to transfer restrictions and risk of forfeiture until earned by continuing employment. Stock options are issued at the current market price and have a three-year vesting period and a contractual term of 7-10 years. The Company utilizes the Binomial lattice pricing model to estimate the fair value of options granted. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates and to allow for actual exercise behavior of option holders.

Fiscal Years Ended Valuation Assumptions: December 28, 2013 December 29, 2012 Weighted-average fair value of options granted ...... $10.32 $6.04 Expected volatility ...... 59.5% 63.3% Weighted-average volatility ...... 59.5% 63.3% Expected term (in years) ...... 4.9 5.1 Dividend yield ...... — — Risk-free rate ...... 0.1% to 3.9% 0.2% to 3.8% Expected annual forfeiture ...... 12.4% 13.5% Expected volatilities are based on a term structure of implied volatility, which assumes changes in volatility over the life of an option. The Company utilizes historical optionee behavioral data to estimate the option exercise and termination rates that are used in the valuation model. The expected term represents an estimate of the period of time options are expected to remain outstanding. The expected term provided in the above table represents an option weighted-average expected term based on the estimated behavior of distinct groups of employees who received options in 2014, 2013 and 2012. The range of risk-free rates is based on a forward curve of interest rates at the time of option grant.

F-41 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of award activity under the Company’s stock option plans as of January 3, 2015 and changes therein during the fiscal year then ended are as follows:

Weighted Average Aggregate Weighted Average Remaining Intrinsic Value Shares Exercise Price Contractual Term (In thousands) Outstanding at December 28, 2013 ...... 5,166,375 $11.26 3.4 $108,498 Exercised ...... (4,010,331) 10.46 98,734 Cancelled/expired ...... (125,075) 37.21 Outstanding at January 3, 2015 ...... 1,030,969 $11.25 3.9 $ 21,613 Vested or expected to vest at January 3, 2015 ...... 1,020,053 $11.16 3.9 $ 21,477 Exercisable at January 3, 2015 ...... 537,404 $ 6.85 3.1 $ 13,628 The intrinsic value per option exercised was $24.62 and $16.46 for the fiscal years ended January 3, 2015 and December 28, 2013, respectively, and was insignificant for the fiscal year ended December 29, 2012. As of January 3, 2015, there were approximately 0.5 million nonvested stock options with a weighted average exercise price of $16.03 and there was $0.6 million of total unrecognized compensation cost related to nonvested stock options granted under the Company’s stock option plans. That expense is expected to be recognized over a weighted average period of 0.8 years. The total fair value of shares vested for the years ended January 3, 2015, December 28, 2013 and December 29, 2012 was $3.2 million, $4.9 million and $4.1 million, respectively.

Restricted Stock The Company grants restricted shares and restricted share units to certain domestic and international employees. These shares are subject to transfer restrictions and risk of forfeiture until earned by continued employment. These shares generally vest 50% on the second anniversary date from the date of grant and 50% on the third anniversary date from the date of grant. The Company grants performance shares to certain of its employees, including the Company’s executive officers. Performance shares are earned based on the achievement of certain profit or other targets aligned with the Company’s strategy. In 2014, the Company granted 1,291,487 market share units (‘‘MSUs’’) to a group of key executives with an aggregate grant date fair value of $64.9 million as staking grants (‘‘Staking Grants’’) and as part of an annual long-term incentive plan (‘‘LTIP’’). The Staking Grants have a grant date fair value of $54.8 million and vest 50% on the third anniversary of grant and 50% on the fifth anniversary of grant. The MSUs included in the LTIP represent a portion of the awards granted under that plan, have a grant date fair value of $10.1 million and vest 50% on each of the second and third anniversaries of the grant date. The MSUs issued as Staking Grants and as part of the LTIP have a minimum earnout of 30% of target. The MSUs earned will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company’s stock price over the vesting periods.

F-42 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value for the MSUs granted was calculated using the Monte Carlo simulation model. For the year ended January 3, 2015, the following assumptions were used in determining fair value:

Fiscal Year Ended Valuation Assumptions: January 3, 2015 Weighted-average fair value ...... $50.24 Expected volatility ...... 52.3% Dividend yield ...... — Risk-free rate ...... 1.68% Weighted-average expected annual forfeiture ...... 4.8% The other portion of the LTIP consists of an award of 202,541 performance shares that vests on the third anniversary of the grant date. The number of performance shares earned will vary from zero to 200% of the number of awards granted depending on the Company’s Total Shareholder Return (‘‘TSR’’) relative to the TSR of the S&P Mid-Cap 400 Index. The performance shares have a grant date fair value of $8.9 million that was calculated using a Monte Carlo simulation model. For the year ended January 3, 2015, the following assumptions were used in determining fair value:

Fiscal Year Ended Valuation Assumptions January 3, 2015 Weighted-average fair value ...... $43.93 Expected volatility ...... 44.2% Dividend yield ...... — Risk-free rate ...... 0.66% Weighted-average expected annual forfeiture ...... 4.0% In 2012, the Company granted 535,000 performance share units with a two year performance period and a three year service period, subject to a market condition adjustment, to a group of key executives. The performance criteria included certain earnings metrics for consecutive periods through December 2013. These awards were determined to be unearned by the Compensation Committee based upon the review of performance at the conclusion of fiscal 2013, and were cancelled according to their terms. Each of the Company’s non-employee Directors received an annual grant of shares of common stock with a value of $100,000 as part of an annual retainer for serving on the Board of Directors, with the exception of the Chairman of the Board, who received an annual grant of shares of common stock with a value of $150,000. Retainer shares are non-transferable until the first anniversary of the grant, with 25% becoming transferable on each of the first and second anniversary of the grant and 50% becoming transferable on the third anniversary, subject to certain exceptions.

F-43 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of award activity under the Company’s restricted stock plans as of January 3, 2015 and changes therein during the fiscal year then ended are as follows:

Weighted Average Grant Date Fair Shares Value Nonvested stock at December 28, 2013 ...... 1,035,250 $14.93 Granted ...... 1,637,778 48.05 Vested ...... (406,500) 17.01 Cancelled(a) ...... (546,954) 16.80 Nonvested stock at January 3, 2015 ...... 1,719,574 $45.39 Expected to vest as of January 3, 2015(b) ...... 1,492,428 $45.42

(a) Includes performance shares granted to a group of key executives with certain performance conditions, measured through December 2013 and a market and service condition through December 2014. These shares which were contingently issuable based on 2013 performance were deemed not earned and cancelled.

(b) Excludes the potential impact of the performance share multiplier, which will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company’s stock price over the vesting periods and zero to 200% of the number of LTIP awards granted depending on the Company’s TSR relative to the TSR of the S&P Mid-Cap 400 Index. The weighted average grant date fair value of restricted shares granted in the years ended January 3, 2015, December 28, 2013 and December 29, 2012 was $48.05, $21.79 and $11.91, respectively. As of January 3, 2015, there was $48.6 million of total unrecognized compensation cost related to nonvested stock awards granted under the restricted stock plans. That expense is expected to be recognized over a weighted average period of 2.7 years. The total fair value of shares vested during the years ended January 3, 2015, December 28, 2013 and December 29, 2012 was $6.9 million, $1.6 million and $2.3 million, respectively.

NOTE 15: PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS The Company maintains a qualified defined contribution plan for its eligible employees. This plan allows deferred arrangements under section 401(k) of the Internal Revenue Code and provides for employer- matching contributions. The plan contains provisions for a discretionary profit sharing component, although such a contribution was not made for 2014, 2013 or 2012. The Company’s aggregate 401(k)/Profit Sharing Plan contribution expense, which is included in SG&A in the accompanying Consolidated Statements of Operations, was $1.4 million, $1.3 million and $1.1 million for the fiscal years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively. The Company has a non-qualified supplemental retirement plan for certain employees whose benefits under the 401(k)/Profit Sharing Plan are expected to be constrained by the operation of certain Internal Revenue Code limitations. The supplemental plan provides a benefit equal to the difference between the contribution that would be made for an employee under the tax-qualified plan absent such limitations and the actual contribution under that plan. The supplemental plan also allows certain employees to defer up to 50% of their base salary and up to 100% of their annual bonus. The Company established an irrevocable ‘‘rabbi’’ trust to which the Company makes periodic contributions to provide a source of funds to assist in meeting its obligations under the supplemental plan. The principal of the trust, and earnings thereon, are

F-44 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) to be used exclusively for the participants under the plan, subject to the claims of the Company’s general creditors.

NOTE 16: EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings (loss) per common share:

Fiscal Years Ended In thousands, except per share data January 3, 2015 December 28, 2013 December 29, 2012 Income (loss) from continuing operations ...... $ 76,726 $(32,165) $(52,687) Income (loss) from discontinued operations, net of income taxes ...... 82,434 105,160 (21,818) Net income (loss) ...... $159,160 $ 72,995 $(74,505) Basic weighted average shares outstanding ...... 126,264 121,057 109,292 Stock options and nonvested shares(a)(b) ...... 755 — — Convertible Notes(c) ...... — — — Diluted weighted average shares outstanding ...... 127,019 121,057 109,292 Earnings (loss) per share: Basic Income (loss) from continuing operations ...... $ 0.61 $ (0.27) $ (0.48) Income (loss) from discontinued operations ..... 0.65 0.87 (0.20) Net income (loss) ...... $ 1.26 $ 0.60 $ (0.68) Diluted Income (loss) from continuing operations ...... $ 0.60 $ (0.27) $ (0.48) Income (loss) from discontinued operations ..... 0.65 0.87 (0.20) Net income (loss) ...... $ 1.25 $ 0.60 $ (0.68)

(a) Because the Company incurred a loss from continuing operations for the years ended December 28, 2013 and December 29, 2012, outstanding stock options and nonvested shares are antidilutive. Accordingly, for the years ended December 28, 2013 and December 29, 2012, approximately 5.2 million and 5.8 million outstanding stock options, respectively, and approximately 0.5 million and 0.5 million outstanding nonvested shares, respectively, were excluded from the computation of diluted loss per share. (b) Excludes approximately 0.5 million and 1.2 million nonvested shares for the years ended December 28, 2013 and December 29, 2012, respectively, for which the performance criteria were not achieved. (c) Because the Company incurred a loss from continuing operations for the years ended December 28, 2013 and December 29, 2012, approximately 1.5 million and 12.3 million, respectively, potentially dilutive shares issuable upon conversion of the Convertible Notes were considered antidilutive for such period and were excluded from the computation of diluted loss per share.

NOTE 17: ADDITIONAL FINANCIAL INFORMATION Licensing-Related Transactions In November 2011, in connection with the Company’s sale of its LIZ CLAIBORNE brand and certain rights to its MONET brand to JCPenney, the Company entered into an agreement with JCPenney to develop exclusive brands for JCPenney, which included payment to the Company of a $20.0 million refundable advance. The agreement terminated by its terms without being exercised on February 1, 2013, and the $20.0 million advance was refunded to JCPenney on February 8, 2013, pursuant to the terms of the agreement.

F-45 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Following the sale of the Liz Claiborne brand name, the Company maintains: (i) an exclusive supplier arrangement to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry; (ii) a royalty-free license through July 2020 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC through the 2009 previously existing license between the Company and QVC; and (iii) a royalty-free license through July 2020 to use the LIZWEAR brand to design, manufacture and distribute LIZWEAR-branded products to the club store channel.

Other Expense, Net Other expense, net primarily consisted of (i) foreign currency transaction (losses) gains of $(1.6) million, $(1.1) million and $1.3 million for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, respectively; and (ii) equity in earnings of investments in equity investees.

Consolidated Statements of Cash Flows Supplementary Disclosures During the years ended January 3, 2015, December 28, 2013 and December 29, 2012, net income tax refunds (payments) were $1.0 million, $2.4 million and $(1.1) million, respectively. During the years ended January 3, 2015, December 28, 2013 and December 29, 2012, the Company made interest payments of $34.1 million, $43.6 million and $38.7 million, respectively. The Company received interest payments of $4.0 million for the year ended January 3, 2015. As of January 3, 2015, December 28, 2013 and December 29, 2012, the Company accrued capital expenditures totaling $9.8 million, $13.3 million and $7.7 million, respectively. On February 3, 2014, the Company received a three-year $85.0 million note issued by Lucky Brand LLC (see Note 1 — Basis of Presentation), which is reflected in Note Receivable on the accompanying Condensed Consolidated Balance Sheet. During 2013 holders of $19.9 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 5,634,179 shares of the Company’s common stock. During 2012, holders of $49.4 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 14,197,106 shares of the Company’s common stock. During 2013, the Company received net proceeds of $4.0 million from the sale of its noncontrolling interest in Mexx Lifestyle B.V. to Gores, which is reflected as Net proceeds from disposition on the accompanying Consolidated Statement of Cash Flows. During 2014, the Company made business acquisition payments of $32.3 million related to the reacquisition of the KATE SPADE businesses in Southeast Asia (see Note 2 — Acquisitions and Note 23 — Subsequent Events). During 2012, the Company made business acquisition payments of $41.0 million related to the KSJ Buyout.

NOTE 18: SEGMENT REPORTING In conjunction with the sale of Lucky Brand and the substantial completion of the Juicy Couture wind- down in the second quarter of 2014, the Company disaggregated its former KATE SPADE reportable segment into two reportable segments, KATE SPADE North America and KATE SPADE International. The Company operates its kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands through one operating segment in North America and four operating segments internationally: Japan, Southeast Asia, Europe and Latin America. The Company’s Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company’s

F-46 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) activities for which separate financial information is available and which is utilized on a regular basis by the Company’s CODM to evaluate performance and allocate resources. In identifying the Company’s reportable segments, the Company considers its management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of its operating segments. As such, the Company configured its operations into the following three reportable segments: • KATE SPADE North America segment — consists of the Company’s kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in North America. • KATE SPADE International segment — consists of the Company’s kate spade new york, KATE SPADE SATURDAY and JACK SPADE brands in International markets (principally in Japan, Southeast Asia, Europe and Latin America). • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands; (ii) the wholesale apparel and wholesale non-apparel operations of the licensed LIZWEAR brand and other brands; and (iii) the licensed LIZ CLAIBORNE NEW YORK brand. The Company’s Chief Executive Officer has been identified as the CODM. The Company’s measure of segment profitability is Adjusted EBITDA of each reportable segment. Accordingly, the CODM evaluates performance and allocates resources based primarily on Segment Adjusted EBITDA. Segment Adjusted EBITDA excludes: (i) depreciation and amortization; (ii) charges due to streamlining initiatives, brand-exiting activities and acquisition related costs; and (iii) losses on asset disposals and impairments. The costs of all corporate departments that serve the respective segment are fully allocated. The Company does not allocate amounts reported below Operating income (loss) to its reportable segments, other than equity income (loss) in equity method investees. The Company’s definition of Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

F-47 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Depreciation and Expenditures Amortization Adjusted Segment for Long- Net Sales % to Total Expense(a) EBITDA(b) % of Sales Assets Lived Assets Dollars in thousands Fiscal Year Ended January 3, 2015 KATE SPADE North America ...... $ 891,766 78.3% $31,905 $143,009 16.0% $467,383 $ 76,707 KATE SPADE International ...... 213,582 18.8% 13,904 810 0.4% 198,677 55,038 Adelington Design Group 33,255 2.9% 887 4,092 12.3% 18,671 476 Corporate and Other .... — — 7,742 (940) — 241,607 — Totals ...... $1,138,603 100.0% $54,438 $132,221 Fiscal Year Ended December 28, 2013 KATE SPADE North America ...... $ 597,748 74.4% $23,961 $ 70,250 11.8% $377,102 $ 58,089 KATE SPADE International ...... 145,404 18.1% 8,476 (815) (0.6)% 149,395 9,139 Adelington Design Group 60,219 7.5% 625 12,008 19.9% 22,130 363 Corporate and Other .... — — 5,718 (4,334) — 428,884 — Totals ...... $ 803,371 100.0% $38,780 $ 67,591 Fiscal Year Ended December 29, 2012 KATE SPADE North America ...... $ 411,507 75.5% $21,364 $ 24,924 6.1% $ 41,885 KATE SPADE International ...... 50,418 9.3% 2,260 3,454 6.9% 47,115 Adelington Design Group 82,840 15.2% 958 17,694 21.4% 392 Corporate and Other .... — — 11,255 (4,332) — — Totals ...... $ 544,765 100.0% $35,837 $ 89,392

(a) For the years ended January 3, 2015, December 28, 2013 and December 29, 2012, $5.2 million, $3.6 million and $9.7 million, respectively, of Corporate depreciation and amortization was recorded within Interest expense, net on the accompanying Consolidated Statements of Operations. (b) Other consists of expenses principally related to distribution functions that were included in Juicy Couture and Lucky Brand historical results, but are not directly attributable to those businesses and therefore have not been included in discontinued operations.

F-48 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Fiscal Years Ended In thousands January 3, 2015 December 28, 2013 December 29, 2012 Reportable Segments Adjusted EBITDA: KATE SPADE North America ...... $143,009 $ 70,250 $ 24,924 KATE SPADE International(a) ...... 810 (815) 3,454 Adelington Design Group ...... 4,092 12,008 17,694 Other ...... (940) (4,334) (4,332) Total Reportable Segments Adjusted EBITDA ..... 146,971 77,109 41,740 Depreciation and amortization, net(b) ...... (48,441) (35,088) (25,641) Charges due to streamlining initiatives(c), brand-exiting activities, acquisition related costs, impairment of intangible assets and loss on asset disposals and impairments, net ...... (30,371) (15,716) (46,455) Share-based compensation(d) ...... (37,270) (7,269) (6,911) Equity loss included in Reportable Segments Adjusted EBITDA ...... 2,583 1,179 1,245 Operating Income (Loss) ...... 33,472 20,215 (36,022) Other expense, net(a) ...... (4,033) (2,062) (325) Impairment of cost investment ...... — (6,109) — Gain on acquisition of subsidiary ...... — — 40,065 Loss on extinguishment of debt ...... (16,914) (1,707) (9,754) Interest expense, net ...... (20,178) (47,065) (51,612) Benefit for income taxes ...... (84,379) (4,563) (4,961) Income (Loss) from Continuing Operations ..... $ 76,726 $(32,165) $(52,687)

(a) Amounts include equity in the losses of equity method investees of $2.6 million, $1.2 million and $1.2 million in 2014, 2013 and 2012, respectively. (b) Excludes amortization included in Interest expense, net. (c) See Note 13 — Streamlining Initiatives for a discussion of streamlining charges. (d) Includes share-based compensation expense of $17.3 million and $2.8 million in 2014 and 2013, respectively, that was classified as restructuring.

F-49 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GEOGRAPHIC DATA

Long-Lived Dollars in thousands Net Sales % to Total Assets Fiscal Year Ended January 3, 2015 Domestic ...... $ 899,475 79.0% $254,597 International ...... 239,128 21.0% 74,600 Total ...... $1,138,603 100.0% Fiscal Year Ended December 28, 2013 Domestic ...... $ 648,406 80.7% $211,602 International ...... 154,965 19.3% 77,258 Total ...... $ 803,371 100.0% Fiscal Year Ended December 29, 2012 Domestic ...... $ 493,556 90.6% International ...... 51,209 9.4% Total ...... $ 544,765 100.0%

NOTE 19: ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss is comprised of the effects of foreign currency translation and gains on cash flow hedging derivatives, as detailed below:

In thousands January 3, 2015 December 28, 2013 Cumulative translation adjustment, net of income taxes of $0 ...... $(32,096) $(21,862) Gains on cash flow hedging derivatives, net of income taxes of $1,168 and $602, respectively ...... 2,110 983 Accumulated other comprehensive loss, net of income taxes ...... $(29,986) $(20,879)

The following table presents the change in each component of Accumulated other comprehensive loss, net of income taxes:

Unrealized Gains on Cumulative Cash Flow Translation Hedging In thousands Adjustment Derivatives Balance as of December 29, 2012 ...... $(10,074) $ — Other comprehensive (loss) income before reclassification ...... (11,788) 1,805 Amounts reclassified from accumulated other comprehensive loss ...... — (822) Balance as of December 28, 2013 ...... (21,862) 983 Other comprehensive (loss) income before reclassification ...... (10,234) 1,847 Amounts reclassified from accumulated other comprehensive loss ...... — (720) Balance as of January 3, 2015 ...... $(32,096) $ 2,110

F-50 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 20: RELATED PARTY TRANSACTIONS In June 2011, the Company established a joint venture in China with E-Land Fashion China Holdings, Limited (‘‘E-Land’’). The joint venture is a Hong Kong limited liability company and its purpose is to market and distribute small leather goods and other fashion products and accessories in China under the kate spade brand. The joint venture operates under the name of KS China Co., Limited (‘‘KSC’’) (see Note 23 — Subsequent Events). The Company accounted for its 40.0% interest in KSC under the equity method of accounting. The Company made capital contributions to KSC of $2.4 million, $5.5 million and $5.0 million and 2014, 2013 and 2012, respectively. On November 20, 2009, the Company and Sanei established a joint venture under the name of KSJ. During the fourth quarter of 2012, the Company acquired the remaining 51.0% interest in KSJ (see Note 2 — Acquisition). Kenneth P. Kopelman (a Director of the Company) is a partner in the law firm Kramer, Levin, Naftalis & Frankel LLP, which provided legal services to the Company in 2014, 2013 and 2012. The fees for such services were not significant in such periods. The foregoing transactions between the Company and this entity were effected on an arm’s-length basis, with services provided at fair market value. The Company believes that each of the transactions described above was effected on terms no less favorable to the Company than those that would have been realized in transactions with unaffiliated entities or individuals.

NOTE 21: RECENT ACCOUNTING PRONOUNCEMENTS In April 2014, new accounting guidance on the reporting of discontinued operations was issued, which revises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. This guidance is effective for interim and annual periods beginning on or after December 15, 2014 and will be applied to future disposal transactions. In May 2014, new accounting guidance on the accounting for revenue recognition was issued, which requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for interim and annual periods beginning on or after December 15, 2016. Early adoption is not permitted. The Company is currently evaluating the impact of the adoption of the new guidance on its financial statements. In June 2014, new accounting guidance on the accounting for share-based compensation was issued, which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This guidance further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the requisite service has already been rendered. This guidance is effective for interim and annual periods beginning on or after December 15, 2015. The adoption of the new guidance is not expected to affect the Company’s financial position, results of operations or cash flows. In August 2014, new accounting guidance on the disclosure of an entity’s ability to continue as a going concern was issued, which requires disclosure regarding management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for the annual period ending after December 15, 2016, and

F-51 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) for interim and annual periods thereafter. The adoption of the new guidance is not expected to affect the Company’s financial position, results of operations or cash flows.

NOTE 22: UNAUDITED QUARTERLY RESULTS Unaudited quarterly financial information for 2014 and 2013 is set forth in the table below. Certain amounts related to the first quarter of 2014 and 2013 have been revised from those previously reported in the Company’s Quarterly Report on Form 10-Q in order to present the results of Juicy Couture as discontinued operations.

March June September December In thousands, except per share 2014 2013 2014 2013 2014 2013 2014 2013 data Net sales ...... $223,614 $156,449 $265,998 $178,881 $250,417 $192,612 $398,574 $275,429 Gross profit ...... 136,823 98,096 155,910 110,478 157,314 118,222 230,224 169,794 (Loss) income from continuing operations ...... (38,408)(b) (23,745)(c) (13,983)(d) (23,588)(e) 2,623(f) (14,165)(g) 126,494(h) 29,333(i) Income (loss) from discontinued operations, net of income taxes ...... 84,578 (28,429) 9,579 (19,549) (11,753) (2,701) 30 155,839 Net income (loss) ...... $46,170 $(52,174) $ (4,404) $(43,137) $ (9,130) $(16,866) $126,524 $185,172 Basic earnings per share:(a) (Loss) income from continuing operations .... $ (0.31) $ (0.20) $ (0.11) $ (0.20) $ 0.02 $ (0.12) $ 0.99 $ 0.24 Income (loss) from discontinued operations . . . 0.68 (0.24) 0.08 (0.16) (0.09) (0.02) — 1.27 Net income (loss) ...... $ 0.37 $ (0.44) $ (0.03) $ (0.36) $ (0.07) $ (0.14) $ 0.99 $ 1.51 Diluted earnings per share:(a) (Loss) income from continuing operations .... $ (0.31) $ (0.20) $ (0.11) $ (0.20) $ 0.02 $ (0.12) $ 0.99 $ 0.23 Income (loss) from discontinued operations . . . 0.68 (0.24) 0.08 (0.16) (0.09) (0.02) — 1.25 Net income (loss) ...... $ 0.37 $ (0.44) $ (0.03) $ (0.36) $ (0.07) $ (0.14) $ 0.99 $ 1.48 Basic weighted average shares outstanding(a) ...... 124,403 119,032 126,664 120,013 126,971 122,396 127,160 122,785 Diluted weighted average shares outstanding(a) ...... 124,403 119,032 126,664 120,013 127,610 122,396 127,741 125,219

(a) Because the Company incurred a loss from continuing operations in the first three quarters of 2013 and first two quarters of 2014, outstanding stock options and nonvested shares are antidilutive for such periods. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods. (b) Included pretax expenses related to streamlining initiatives of $28.9 million. (c) Included pretax expenses related to streamlining initiatives of $2.9 million. (d) Included pretax expenses related to streamlining initiatives of $4.9 million. (e) Included pretax expenses related to streamlining initiatives of $1.4 million. (f) Included pretax expenses related to streamlining initiatives of $1.1 million. (g) Included a pretax credit related to streamlining initiatives of $1.0 million (h) Included pretax expenses related to streamlining initiatives of $7.1 million. (i) Included pretax expenses related to streamlining initiatives of $7.3 million.

F-52 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 23: SUBSEQUENT EVENTS In the first quarter of 2015, the Company and Walton Brown agreed to form two joint ventures focused on growing the Company’s business in China and Hong Kong, Macau and Taiwan. Following the formation of the joint ventures, both Kate Spade Hong Kong, Limited, a wholly-owned subsidiary of the Company, and Walton Brown will own 50% of the shares of KSC and KS HMT Co., Limited, the holding company for the KATE SPADE businesses in Hong Kong, Macau and Taiwan. With an equal partnership structure, the Company and Walton Brown will actively manage the business together. The joint ventures each have an initial term of 10 years. To effectuate the new joint ventures, (i) the Company will acquire E-Land’s 60% interest in KSC for an aggregate payment of $36.0 million, comprised of approximately $10.0 million to acquire E-Land’s interest in KSC and approximately $26.0 million to terminate related contracts and (ii) the Company will receive approximately $21.0 million from LCJG for their interests in the joint ventures, subject to adjustments. These transactions are expected to close in the first quarter of 2015. The Company will no longer consolidate the operations for the businesses in Hong Kong, Macau and Taiwan, which had net sales of approximately $34.0 million in 2014, and will account for its investments in the joint ventures under the equity method of accounting. On January 29, 2015, the Company announced that it is focusing its business on kate spade new york. As part of this business model, the Company will be absorbing key elements of KATE SPADE SATURDAY’s success into kate spade new york and discontinuing KATE SPADE SATURDAY as a standalone business. The Company also announced a new business model for JACK SPADE to leverage the distribution network of its retail partners and expand its e-commerce platform. As part of these actions, KATE SPADE SATURDAY’s 16 Company-owned and three partnered store locations are expected to be closed during the first half of 2015. The Company will also be closing JACK SPADE’s 12 Company-owned stores during the first half of 2015. KATE SPADE SATURDAY’s e-commerce site will remain active during the wind-down phase until the label is incorporated and reintroduced into the kate spade new york brand. The Company expects total restructuring charges of $32.0 – $39.0 million relating to these actions, including: (i) estimated contract assignment and termination costs of $21.0 – $25.0 million and (ii) estimated employee-related costs (including severance) of $4.0 – $5.0 million; and (iii) non-cash asset impairment charges of $7.0 – $9.0 million.

F-53 Kate Spade & Company SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Additions Balance at Charged to Beginning Costs and Charged to Balance at In thousands of Period Expenses Other Accounts Deductions End of Period YEAR ENDED JANUARY 3, 2015 Accounts receivable — allowance for doubtful accounts ...... $ 1,800 $ 1,189 $ — $ 1,273(a) $ 1,716 Allowance for returns ...... 7,230 80,453 — 80,004 7,679 Allowance for discounts ...... 32 208 — 166 74 Deferred tax valuation allowance ...... 497,485 — — 82,312 415,173

YEAR ENDED DECEMBER 28, 2013 Accounts receivable — allowance for doubtful accounts ...... $ 1,625 $ 229 $ — $ 54(a) $ 1,800 Allowance for returns ...... 8,501 85,083 — 86,354 7,230 Allowance for discounts ...... 533 371 — 872 32 Deferred tax valuation allowance ...... 545,565 — — 48,080 497,485

YEAR ENDED DECEMBER 29, 2012 Accounts receivable — allowance for doubtful accounts ...... $ 340 $ 1,555 $ — $ 270(a) $ 1,625 Allowance for returns ...... 8,053 109,493 — 109,045 8,501 Allowance for discounts ...... 569 3,626 — 3,662 533 Deferred tax valuation allowance ...... 494,745 50,820 — — 545,565

(a) Uncollectible accounts written off, less recoveries.

F-54 EXHIBIT 31(a) SECTION 302 CERTIFICATION I, Craig A. Leavitt, certify that: 1. I have reviewed this Annual Report on Form 10-K of Kate Spade & Company (the ‘‘registrant’’); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 3, 2015 By: /s/ Craig A. Leavitt Craig A. Leavitt Chief Executive Officer EXHIBIT 31(b) SECTION 302 CERTIFICATION I, Thomas Linko, certify that: 1. I have reviewed this Annual Report on Form 10-K of Kate Spade & Company (the ‘‘registrant’’); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 3, 2015 By: /s/ Thomas Linko Thomas Linko Chief Financial Officer EXHIBIT 32(a) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Kate Spade & Company (the ‘‘Company’’) on Form 10-K for the period ending January 3, 2015 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Craig A. Leavitt, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Craig A. Leavitt Craig A. Leavitt Chief Executive Officer

Date: March 3, 2015 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-K or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to Kate Spade & Company and will be retained by Kate Spade & Company and furnished to the Securities and Exchange Commission or its staff upon request. EXHIBIT 32(b) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Kate Spade & Company (the ‘‘Company’’) on Form 10-K for the period ending January 3, 2015 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Thomas Linko, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas Linko Thomas Linko Chief Financial Officer

Date: March 3, 2015 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-K or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to Kate Spade & Company and will be retained by Kate Spade & Company and furnished to the Securities and Exchange Commission or its staff upon request. PRINCIPAL EXECUTIVES BOARD OF DIRECTORS REGISTRAR & TRANSFER AGENT Computershare Craig A. Leavitt Bernard W. Aronson 3 P.O. Box 30170 Chief Executive Oficer Managing Partner College Station, TX 77842-3170 ACON Investments LLC or 211 Quality Circle, Suite 210 George M. Carrara College Station, TX 77845 President Lawrence S. Benjamin 2, 3 Chief Operating Oficer Managing Director 1 866 828 8170 - U.S./Canada Capwell Partners LLC 1 201 680 6578 - Outside the U.S./Canada Deborah Lloyd 1 800 231 5469 - (Hearing Impaired – Chief Creative Oficer Raul J. Fernandez 1, 2 TDD Phone) Chairman of the Board Website: www.computershare.com/investor Thomas Linko ObjectVideo, Inc. Senior Vice President Send Certiicates for Transfer and Address Changes to: Chief Financial Oficer Kenneth B. Gilman 1, 2 Retired Chief Executive Oficer Computershare Mary Beech Asbury Automotive Group P.O. Box 30170 Senior Vice President College Station, TX 77842-3170 Chief Marketing Oficer Nancy J. Karch 1, 3 Chairman INDEPENDENT REGISTERED Roy Chan Kate Spade & Company PUBLIC ACCOUNTING FIRM Senior Vice President Director Emeritus Deloitte & Touche LLP International McKinsey & Co. 30 Rockefeller Plaza New York, NY 10112

Christopher Di Nardo Kenneth P. Kopelman Senior Vice President Partner in the New York City law irm of FORM 10-K General Counsel Kramer, Levin, Naftalis & Frankel LLP A copy of the Company’s Annual Report Corporate Secretary on Form 10-K as iled with the Securities and Exchange Commission (SEC) is Kay Koplovitz 2, 3 William Higley Principal available to stockholders without charge Senior Vice President Koplovitz & Co. LLC upon written request to: Kate Spade & Human Resources Company, Investor Relations Department, Craig A. Leavitt 5901 West Side Avenue, North Bergen, Linda Yanussi Chief Executive Oficer New Jersey 07047, or by visiting www. Senior Vice President Kate Spade & Company katespadeandcompany.com. Information Technology and Global Operations Deborah Lloyd CERTIFICATIONS Chief Creative Oficer The Company has iled with the SEC Michael Rinaldo Kate Spade & Company all required certiications of the Chief Vice President Executive Oficer and Chief Financial Corporate Controller Douglas Mack Oficer regarding the quality of its public Chief Accounting Oficer Chief Executive Oficer disclosure for the period ended January Fanatics, Inc. 3, 2015. In addition, the Company’s Chief Executive Oficer provided the New York INVESTOR RELATIONS Stock Exchange (NYSE) the annual Doreen A. Toben 1, 2 Retired Chief Financial Oficer certiication of the Chief Executive Priya Trivedi and Executive Vice President Oficer regarding its compliance with Vice President Verizon Communications, Inc. the NYSE’s corporate governance listing Finance and Treasurer standards.

ANNUAL MEETING 1 Member, Audit Committee The Annual Meeting of Stockholders 2 Member, Compensation Committee will be held at 10:00 a.m., local time, on 3 Member, Nominating and Governance Committee Tuesday, May 19, 2015 at 5901 West Side Avenue, North Bergen, New Jersey.

Please recycle this document and help to preserve our environment. 2 Park Avenue New York NY 10016 katespadeandcompany.com ©2015 Kate Spade & Company Exhibit 211

Annual Report 2015

Specialty Shop: Regent Street, London

Product category highlights announced or launched in 2015 CONSOLIDATED FINANCIAL HIGHLIGHTS: KATE SPADE & COMPANY

Kate Spade & Company (NYSE: KATE) operates principally under two global, multichannel lifestyle brands: kate spade new york and Jack Spade. The Company’s four category pillars – women’s, men’s, children’s and home – span demographics, genders and geographies. Known for crisp color, graphic prints and playful sophistication, kate spade new york aims to inspire a more interesting life. The kate spade new york collection includes the Madison Avenue, Broome Street and on purpose labels. Jack Spade offers a timeless and versatile assortment of bags, sportswear and tailored clothing founded on the aesthetic of simple, purposeful design. The Company also owns Adelington Design Group, a private brand jewelry design and development group.

(Amounts in thousands, except per common share data) 2015 2014 2013

NET SALES $ 1,242,720 $ 1,138,603 $ 803,371 GROSS PROFIT 754,107 680,271 496,590 OPERATING INCOME 66,398 33,472 20,215 INCOME (LOSS) FROM CONTINUING OPERATIONS (1)(2) 21,708 76,726 (32,165) NET INCOME (2) 17,087 159,160 72,995 PER COMMON SHARE DATA: BASIC INCOME (LOSS) FROM CONTINUING OPERATIONS 0.17 0.61 (0.27) NET INCOME 0.13 1.26 0.60 DILUTED INCOME (LOSS) FROM CONTINUING OPERATIONS 0.17 0.60 (0.27) NET INCOME 0.13 1.25 0.60 WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC 127,634 126,264 121,057 WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED (3) 128,222 127,019 121,057 WORKING CAPITAL 354,538 221,705 206,473 NET DEBT (4) 103,706 226,699 263,979

NET SALES ($ MILLIONS)

2015 $1,243

2014 $1,139

2013 $803

WORKING CAPITAL ($ MILLIONS)

2015 $355

2014 $222

2013 $206

NET DEBT ($ MILLIONS) (4)

2015 $104

2014 $227

2013 $264

For further information, see Item 6 – Selected Financial Data and the Consolidated Financial Statements and notes thereto, which are included within the body of the accompanying report.

For further information on net sales, Adjusted EBITDA and Adjusted EBITDA margin, each excluding wind-down operations, please refer to the Company’s fourth quarter 2015 earnings release posted to the Investor Relations section of the Company website at www.katespadeandcompany.com.

(1) During 2015, 2014 and 2013, we recorded pretax charges of $35.4 million, $42.0 million and $10.6 million, respectively, related to our streamlining initiatives, which are discussed in Note 13 of Notes to Consolidated Financial Statements.

During 2015, we recorded a pretax charge of $26.0 million to terminate contracts with our former joint venture partner in China.

During 2013, we recorded a pretax non-cash impairment charge of $6.1 million related to our former investment in the Mexx business.

During 2014 and 2013, we recorded pretax non-cash impairment charges of $1.5 million and $3.3 million, respectively, in our Adelington Design Group segment related to the TRIFARI trademark.

(2) During 2014, we recorded a net beneit of $87.4 million resulting from the reversal of reserves for uncertain tax positions due to the expiration of the related statutes of limitations.

(3) Because we incurred losses from continuing operations in 2013, outstanding stock options, nonvested shares and potentially dilutive shares issuable upon conversion of the Convertible Notes are antidi- lutive. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods.

(4) Total debt less cash and cash equivalents and marketable securities. Dear Fellow Stockholders:

Kate Spade & Company became a stronger, refocused company in 2015 with a retail footprint of nearly $2 billion as we continued to successfully transform into a global, multichannel lifestyle brand. We are a very different company today than we were one year ago, and our achievements speak to our powerful momentum. In 2015, we streamlined our business model to unleash the power of our core kate spade new york brand. We launched two new category pillars – children’s and home – and reached more customers by thoughtfully opening new doors, expanding our wholesale presence and growing our eCommerce business signiicantly. We also made important progress along our two axes of growth, product category and geographic expansion. As we enter 2016, we are well-positioned for sustainable, long-term growth.

Continuing our powerful momentum to drive sustainable, long-term growth

In 2015, Kate Spade & Company continued topline expansion with net sales of $1.2 billion, a signiicant 21% increase on a pro forma basis compared to 2014. Our industry-leading direct-to-consumer comparable sales growth of 13 percent relects our meaningful customer engagement. In addition, we generated full-year Adjusted EBITDA, excluding wind-down operations of $203 million, and robust Adjusted EBITDA margin expansion of 380 basis points, driven by both stronger gross margins and greater expense leverage.

Strengthening our diverse business model to diferentiate Kate Spade & Company

We are focused on building a sustainable, diverse business model that sets our Company apart and supports our long-term growth as a global lifestyle brand.

First, we signiicantly expanded our product offering in 2015, introducing 14 new product categories across our four category pillars – women’s, men’s, children’s and home – including baby and layette, athleisure, sleepwear, outerwear, kitchen, bedding, furniture, rugs and lighting, among others. These new product categories proved to be successful customer acquisition vehicles, while delivering on our lifestyle brand vision and underpinning our growth. In fact, 30 to 50 percent of customers who are making purchases in many of these new categories are irst-time purchasers to our brand.

Second, our partnered approach to geographic and product category expansion allowed us to grow our operating margin, build scale and offer customers access to our collections across markets. We entered eight new countries in 2015 using this partnered approach and expanded in Latin America and greater China to diversify our footprint. We also entered into a new distribution agreement in early 2016 to open standalone stores in major Indian cities to build brand equity and engagement in the region. We are focused not only on where business is transacted, but also on the importance of consumer origin for transactions in all markets around the world.

Third, our channel-agnostic approach allows us to blur distribution lines to reach our customers wherever and whenever they want. Our digital prowess continues to give us an advantage, as the online experience is an increasingly important component of the decision-making process, regardless of where consumers ultimately purchase. Our eCommerce channel, which represents approximately 20 percent of our reported net sales, continued to exceed our expectations in 2015, with double-digit growth on our lagship eCommerce site. This site continues to serve as an effective way to communicate our brand story and establish an emotional connection with our customers.

Fourth, we have controlled points of distribution, utilizing our strategic, deliberate approach to expansion to maintain brand equity, avoid ubiquity and drive a sense of urgency for consumer purchases.

Fifth, we are focused on our direct-to-consumer business, with penetration at approximately 75 percent of sales, and we carefully control wholesale distribution with a select group of strong retail partners. This strategic focus allows us to directly foster customer engagement and share our brand story.

And inally, we are relentlessly focused on protecting our quality of sale to foster aspiration, drive demand and help maintain gross margin over the long term. We continued to grow and delivered industry-leading results despite the deliberate pullback on a range of promotional events in 2015.

Looking ahead – expanding as a powerful, global multichannel lifestyle brand

In 2016, our powerful momentum is helping fuel our growth and creativity as we continue to focus on maximizing proitability and delivering shareholder value. Our successful ongoing transformation into a global, multichannel lifestyle brand differentiates us from our competitors and uniquely positions us to reach and engage with customers in all facets of their lives.

We are still early in our journey as Kate Spade & Company and are energized by the opportunity ahead. Thank you for your continued support.

Sincerely,

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

FORM 10-K (Mark One) ፼ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 2, 2016 or អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 1-10689 KATE SPADE & COMPANY (Exact name of registrant as specified in its charter)

Delaware 13-2842791 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 2 Park Avenue, New York, New York 10016 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 212-354-4900 Securities registered pursuant to Section 12(b) of the Act: Title of class Name of each exchange on which registered Common Stock, par value $1.00 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ፼ No អ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the ‘‘Act’’). Yes អ No ፼ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ፼ No អ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ፼ No អ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ፼ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer ፼ Accelerated filer អ Non-accelerated filer អ Smaller reporting company អ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes អ No ፼ Based upon the closing sale price on the New York Stock Exchange on July 2, 2015, the last business day of the registrant’s most recently completed second fiscal quarter, which quarter ended July 4, 2015, the aggregate market value of the registrant’s Common Stock, par value $1.00 per share, held by non-affiliates of the registrant on such date was approximately $2,717,450,000. For purposes of this calculation, only executive officers and directors are deemed to be the affiliates of the registrant. Number of shares of the registrant’s Common Stock, par value $1.00 per share, outstanding as of February 19, 2016: 128,107,176 shares. Documents Incorporated by Reference: Registrant’s Proxy Statement relating to its Annual Meeting of Stockholders to be held on May 19, 2016-Part III. TABLE OF CONTENTS

Page PART I Item 1 Business ...... 6 Item 1A Risk Factors ...... 17 Item 1B Unresolved Staff Comments ...... 29 Item 2 Properties ...... 29 Item 3 Legal Proceedings ...... 30 Item 4 Mine Safety Disclosures ...... 31

PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...... 32 Item 6 Selected Financial Data ...... 35 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 36 Item 7A Quantitative and Qualitative Disclosures About Market Risk ...... 60 Item 8 Financial Statements and Supplementary Data ...... 61 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...... 61 Item 9A Controls and Procedures ...... 61 Item 9B Other Information ...... 61

PART III Item 10 Directors, Executive Officers and Corporate Governance ...... 62 Item 11 Executive Compensation ...... 62 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...... 62 Item 13 Certain Relationships and Related Transactions, and Director Independence ...... 63 Item 14 Principal Accounting Fees and Services ...... 63

PART IV Item 15 Exhibits and Financial Statement Schedules ...... 63 Signatures ...... 69 Index to Consolidated Financial Statements and Schedule ...... F-1

2 STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Statements contained in, or incorporated by reference into, this Annual Report on Form 10-K, future filings by us with the Securities and Exchange Commission (‘‘SEC’’), our press releases, and oral statements made by, or with the approval of, our authorized personnel, that relate to our future performance or future events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements are indicated by words or phrases such as ‘‘intend,’’ ‘‘anticipate,’’ ‘‘plan,’’ ‘‘estimate,’’ ‘‘target,’’ ‘‘aim,’’ ‘‘forecast,’’ ‘‘project,’’ ‘‘expect,’’ ‘‘believe,’’ ‘‘we are optimistic that we can,’’ ‘‘current visibility indicates that we forecast,’’ ‘‘contemplation’’ or ‘‘currently envisions’’ and similar phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control, which could cause actual results to differ materially from those suggested by the forward-looking statements, including, without limitation: • our ability to successfully implement our long-term strategic plans; • general economic conditions in the United States, Asia, Europe, Canada and other parts of the world; • our exposure to currency fluctuations; • levels of consumer confidence, consumer spending and purchases of discretionary items, including fashion apparel and related products such as ours; • changes in the cost of raw materials, occupancy, labor, advertising and transportation which could impact prices of our products; • our ability to expand into markets outside of the United States, including our ability to promote brand awareness in our international markets, find suitable partners in certain of those markets and hire and retain key employees for those markets; • our ability to maintain targeted profit margins and levels of promotional activity; • our ability to optimize our product offerings in order to anticipate and timely respond to constantly changing consumer demands, tastes and fashion trends, across multiple brands, product lines, shopping channels and geographies; • the impact of the highly competitive nature of the markets within which we operate, both within the United States and abroad; • issues related to our current level of debt, including an inability to pursue certain business strategies because of the restrictive covenants in the agreements governing our debt and our potential inability to obtain the capital resources needed to operate and grow our business; • restrictions in the credit and capital markets, which would impair our ability to access additional sources of liquidity, if needed; • our ability to expand our retail footprint with profitable store locations; • our ability to implement operational improvements and realize economies of scale in finished product and raw material costs in connection with growth in our business; • our ability to expand into new product categories; • our ability to successfully implement our marketing initiatives;

3 • our dependence on a limited number of large United States department store customers, and the risk of consolidations, restructurings, bankruptcies and other ownership changes in the retail industry and financial difficulties at our larger department store customers; • risks associated with material disruptions in our information technology systems, both owned and licensed, and with our third party e-commerce platforms and operations; • risks associated with data security, including privacy breaches; • risks associated with credit card fraud and identity theft; • our ability to attract and retain talented, highly qualified executives, and maintain satisfactory relationships with our employees; • our ability to adequately establish, defend and protect our trademarks and other proprietary rights; • our reliance on independent foreign manufacturers, including the risk of their failure to comply with legal requirements or our policies regarding applicable safety standards or labor practices; • risks associated with having a buying/sourcing agreement which results in a single third party foreign buying/sourcing agent for a significant portion of our apparel products and transitioning buying/ sourcing activities for our non-apparel products to an in-house model; • risks associated with our arrangement to operate our leased Ohio distribution facility with a third party operations and labor management company that provides distribution operations services, including risks related to increased operating expenses and operating under a third party arrangement; • risks associated with the various businesses we have disposed; • risks associated with severe weather, natural disasters, public health crises, war, terrorism or other catastrophic events; • a variety of legal, regulatory, political, labor and economic risks, including risks related to the importation and exportation of product, tariffs and other trade barriers; • our ability to adapt to and compete effectively in the current quota environment in which general quota has expired on apparel products, but political activity seeking to re-impose quota has been initiated or threatened; • risks associated with third party service providers, both domestic and overseas, including service providers in the area of e-commerce; • limitations on our ability to utilize all or a portion of our United States deferred tax assets if we experience an ‘‘ownership change’’; and • the outcome of current and future litigation and other proceedings in which we are involved. The list of factors above is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All subsequent written and oral forward-looking statements concerning the matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are qualified by these cautionary statements. Forward-looking statements are based on current expectations only and are not guarantees of future performance, and are subject to certain risks, uncertainties and assumptions, including those described in this Annual Report on Form 10-K in ‘‘Item 1A — Risk Factors.’’ We may change our intentions, beliefs or expectations at any time and without notice, based upon any change in our assumptions or otherwise. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. In addition,

4 some factors are beyond our control. We undertake no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as required by law.

WEBSITE ACCESS TO COMPANY REPORTS Our investor website can currently be accessed at www.katespadeandcompany.com under ‘‘Investor Relations.’’ Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements, Registration Reports on Form S-3, Current Reports on Form 8-K, Specialized Disclosure Reports on Form SD and amendments to those reports filed or furnished to the SEC pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our investor website under the caption ‘‘Financial Reports — SEC Filings’’ promptly after we electronically file such materials with, or furnish such materials to, the SEC. No information contained on any of our websites is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. Information relating to corporate governance at our Company, including our Corporate Governance Guidelines, our Code of Ethics and Business Practices for all directors, officers, and employees, and information concerning our directors, Committees of the Board, including Committee charters, and transactions in Company securities by directors and executive officers, is available at our investor website under the captions ‘‘Corporate Governance’’ and ‘‘Financial Reports — SEC Filings.’’ Paper copies of these filings and corporate governance documents are available to stockholders free of charge by written request to Investor Relations, Kate Spade & Company, 2 Park Avenue, New York, New York 10016. Documents filed with the SEC are also available on the SEC’s website at www.sec.gov. We were incorporated in January 1976 under the laws of the State of Delaware. In this Annual Report on Form 10-K, unless the context requires otherwise, references to ‘‘our,’’ ‘‘us,’’ ‘‘we’’ and ‘‘the Company’’ mean Kate Spade & Company and its consolidated subsidiaries. Our fiscal year ends on the Saturday closest to January 1. All references to ‘‘2015’’ represent the 52 week fiscal year ended January 2, 2016. All references to ‘‘2014’’ represent the 53 week fiscal year ended January 3, 2015. All references to ‘‘2013’’ represent the 52 week fiscal year ended December 28, 2013.

5 PART I Item 1. Business. OVERVIEW AND NARRATIVE DESCRIPTION OF BUSINESS General Kate Spade & Company operates principally under two global, multichannel lifestyle brands: kate spade new york and JACK SPADE. The Company’s four category pillars — women’s, men’s, children’s and home — span demographics, genders and geographies. In addition, the Adelington Design Group, a private brand jewelry design and development group, markets brands through department stores and serves J.C. Penney Corporation, Inc. (‘‘JCPenney’’) via exclusive supplier agreements for the LIZ CLAIBORNE and MONET jewelry lines.

Business Segments We operate our kate spade new york and JACK SPADE brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. Our Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent activities for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker to evaluate performance and allocate resources. In identifying our reportable segments, we considered our management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of our operating segments. As such, we configured our operations into the following three reportable segments: • KATE SPADE North America segment — consists of our kate spade new york and JACK SPADE brands in North America. • KATE SPADE International segment — consists of our kate spade new york and JACK SPADE brands in International markets (principally in Japan, Asia (excluding Japan), Europe and Latin America). • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands and (ii) the licensed LIZWEAR and LIZ CLAIBORNE NEW YORK brands. We, as licensor, also license to third parties the right to produce and market products bearing certain Company-owned trademarks. See Notes 1 and 18 of Notes to Consolidated Financial Statements and ‘‘Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’

Recent Initiatives and Business Strategy During 2015, we continued to pursue transactions and initiatives with a focus on the long-term growth of the kate spade new york brand and we: • acquired the 60.0% interest in KS China Co., Limited (‘‘KSC’’) owned by E-Land Fashion China Holdings, Limited (‘‘E-Land’’) for $36.0 million, including a contract termination payment of $26.0 million; • converted the reacquired businesses in Hong Kong, Macau and Taiwan and the KATE SPADE business in China into 50.0% owned joint ventures with Walton Brown, a subsidiary of The Lane Crawford Joyce Group (‘‘LCJG’’), a leading luxury retail, brand management and distribution company in Asia, and received a net $19.7 million from LCJG for their interests in the joint ventures, subject to adjustments;

6 • entered a global licensing agreement with Fossil Group, Inc. (‘‘Fossil’’) for the design, development and distribution of kate spade new york watches through 2025, with the first collection of watches designed, developed and distributed in collaboration with us to launch in 2016. Accordingly, we now earn royalty income under the agreement with Fossil and no longer sell watches through our wholesale channel; • signed a distribution agreement for our operations in Latin America, including in Brazil, which is designed to leverage the network of our distribution partner. As part of these actions, we closed our Company-operated stores in Brazil during the third quarter of 2015 and no longer operate directly in Brazil; • discontinued KATE SPADE SATURDAY as a standalone business and announced a new business model for JACK SPADE to leverage the distribution network of its retail partners and expand its e-commerce platform; • enhanced efficiencies in our supply chain, including re-platforming our West Chester, OH distribution center (the ‘‘Ohio Facility’’) and began the migration of sourcing for our accessories categories from Li & Fung Limited (‘‘Li & Fung’’) to an in house model; • launched new licensed categories, including a Yoga collaboration with Beyond Yoga, our kate spade new york kitchen houseware collection, and a new children’s wear license in Japan, while expanding existing categories within children’s, bridal and gifting; and • launched KATE SPADE e-commerce websites in France, Germany, Italy, Spain and the Netherlands. We are focusing on initiatives that drive margin improvement and continue to grow the kate spade new york brand through product category and geographic expansion across our four category pillars: women’s, men’s, children’s and home. We have established the following operating and financial goals around that framework to further develop kate spade new york into a global lifestyle brand: • driving top line growth by: (i) opening kate spade new york retail locations in North America; (ii) expanding product categories within our existing network as well as new channels, continuing e-commerce expansion and entering into local licenses to meet customer needs in Japan; (iii) focusing on our e-commerce site as a global flagship to influence purchases both online and in our retail stores; and (iv) expanding our presence in selected geographies through a partnered approach that requires little capital and is expected to be accretive to operating margins; • driving quality of sale initiatives with continued moderation of promotions across channels and increased marketing that leverages customer relationship management (‘‘CRM’’) capability and focuses on acquiring full price customers to support those efforts; • delivering the world of kate spade new york to our customer seamlessly across channels through a channel-agnostic approach, while leveraging our e-commerce site as a global flagship, offering our broadest product assortment across our category pillars and improving delivery speed to our consumer through a buy anywhere, receive anywhere model; • increasing product accessibility and improving our speed-to-market capabilities through micro- assorting and localization at the store level, focusing on regional product, volume and climate to better assort by market taste and provide our consumer what she wants, when she wants it; • enhancing customer experience and engagement through storytelling, focusing on our ‘‘Guest Journey’’ initiative in our retail stores and streamlining the online checkout process; • driving product category expansion and growing margins through licensing partners for new categories; and

7 • accelerating growth through existing joint ventures in China and Hong Kong, Macau and Taiwan. Macroeconomic challenges and uncertainty continue to persist in the primary markets in which we operate. Therefore, we continue to focus on the careful execution of our strategic plans and seek opportunities to improve our productivity and profitability. We remain focused on driving operating cash flow generation, managing liquidity and the efficient use of working capital.

Our Brands kate spade new york Our kate spade new york brand offers fashion products for women and children, as well as home products, under the kate spade new york trademark. The kate spade new york brand product line includes handbags, small leather goods, fashion accessories, jewelry, fragrances and apparel along with licensed products including footwear, swimwear, watches, children’s wear, optics, tabletop products, legwear, electronics cases, furniture, bedding and stationery. These products are sold primarily: (i) in the United States and Canada through wholly-owned specialty retail and outlet stores and select specialty retail and upscale department stores; (ii) through wholly-owned concession, specialty retail and outlet operations and licensed children’s wear partner-operated stores in Japan; (iii) through wholly-owned specialty retail, outlet and concession stores and select upscale wholesale accounts in Europe; (iv) through our kate spade new york e-commerce websites; (v) through joint ventures in China and Hong Kong, Macau and Taiwan; and (vi) through a network of distributors in Latin America, Singapore, Malaysia, Indonesia, Philippines, India and Thailand.

JACK SPADE Our JACK SPADE brand offers fashion products for men, including briefcases, travel bags, small leather goods, fashion accessories and apparel under the JACK SPADE trademark. JACK SPADE products are sold primarily: (i) via our JACK SPADE e-commerce website and (ii) through department stores.

ADELINGTON DESIGN GROUP The operations within our Adelington Design Group segment consist principally of: • Exclusive supplier arrangements to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry; • A royalty-free license through December 2016 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC, Inc. (‘‘QVC’’); and • LIZWEAR, women’s apparel available through the club store channel.

SALES AND MARKETING Domestic direct-to-consumer sales are made through our own specialty retail and outlet stores and e-commerce websites. Our domestic wholesale sales are made primarily to department store chains and specialty retail store customers. Wholesale sales are also made to international customers, military exchanges and to other channels of distribution. In Japan, we distribute our products mainly through department store concessions, retail stores and e-commerce. In Asia (excluding Japan), we have wholesale distribution agreements in Singapore, Malaysia, Indonesia, Philippines, India and Thailand and joint ventures in China and Hong Kong, Macau and Taiwan. In Europe, direct-to-consumer sales are made through our own specialty retail and outlet stores, concession stores within department store locations and e-commerce. In Canada, direct-to-consumer sales are made through our own specialty retail, outlet stores and e-commerce. In other

8 international markets, including the Middle East, Australia and Latin America, we operate principally through third party distributors, virtually all of which purchase products from us for re-sale at freestanding retail stores and dedicated department store shops they operate. We continually monitor retail sales in order to directly assess consumer response to our products. During 2015, we continued our domestic in-store sales, marketing and merchandising programs designed to encourage multiple item regular price sales, build one-on-one relationships with consumers and maintain our merchandise presentation standards. These programs train sales associates on suggested selling techniques, product, merchandise presentation and client development strategies. Our kate spade new york retail stores reflect the distinct personality of the brand and accent our customers’ interesting lives, offering a unique shopping experience and exclusive merchandise. We plan to use more targeted communication to customers and evolve the customer shopping experience via: (i) our improved CRM capabilities; (ii) our ‘‘Guest Journey’’ experience in our specialty retail stores; (iii) the use of our kate spade new york e-commerce site as a global flagship containing all merchandise collections; and (iv) the use of electronic clientele software-as-a-service platform to cultivate customer relationships, both in-store and online.

Specialty Retail Stores, Outlet Stores and Concessions: We operate specialty retail stores under the kate spade new york trademark, consisting of retail stores within the US and outside the US (primarily in Japan, Europe and Canada). We also operate outlet stores under the kate spade new york trademark, consisting of outlet stores within the US and outside the US. Outside of North America (primarily in Japan and Europe), we operate concession stores in select retail stores, which are either owned or leased by a third party department store or specialty store retailer. The following tables set forth select information, as of January 2, 2016, with respect to our kate spade new york specialty retail stores, outlet stores and concessions:

Approximate Number of Average Store Stores Size (Square Feet) US Specialty Retail Stores ...... 104 2,100 Foreign Specialty Retail Stores ...... 22 1,300 US Outlet Stores ...... 64 2,500 Foreign Outlet Stores ...... 13 1,800 Concessions ...... 52 500

9 E-commerce: Our products are sold on a number of branded websites. E-commerce continued to be an important business driver in 2015. The following table sets forth select information concerning our websites:

Information and Direct to Website Information Only Consumer Sales surprise.katespade.com ...... ឡ surplus.jackspade.com ...... ឡ www.jackspade.com ...... ឡ www.katespade.cn ...... ឡ www.katespade.co.uk ...... ឡ www.katespade.com ...... ឡ www.katespade.jp ...... ឡ www.katespadenewyork.fr ...... ឡ www.katespade.de ...... ឡ www.katespadenewyork.nl ...... ឡ www.katespade.es ...... ឡ www.katespade.it ...... ឡ www.katespadeandcompany.com(a) ...... ឡ www.worldofkatespade.com ...... ឡ

(a) This website offers investors information concerning the Company. We continue to evolve our direct-to-consumer marketing and distribution activities by enhancing our omni-channel capabilities. Our goal is to create a seamless consumer buying experience across direct-to-consumer sub-channels by allowing fulfillment of e-commerce orders from substantially all retail stores and fulfillment of retail store sales with e-commerce inventory when the merchandise is not initially available in the respective sub-channel. Consumers also have the ability to place e-commerce orders through point of sale kiosks located within our retail stores. During 2015, we also continued our partnership with eBay Enterprise and mobile-enabled webstores using the DemandWare platform.

Wholesale: No single customer accounted for more than 10.0% of net sales for 2015. Sales to our domestic and international department and specialty retail store customers are made primarily through our New York City showrooms. Orders from our wholesale customers generally precede the related shipping periods by several months. Our largest customers discuss with us retail trends and their plans regarding their anticipated levels of total purchases of our products for future seasons. These discussions are intended to assist us in planning the production and timely delivery of our products. We utilize in-stock reorder programs to enable customers to reorder certain items through electronic means for quick delivery, as discussed below in the section entitled ‘‘Buying/Sourcing.’’ Many of our wholesale customers participate in our in-stock reorder programs through their own internal replenishment systems.

Licensing: We license many of our products to third parties with expertise in certain specialized products and/or market segments, thereby extending each licensed brand’s market presence. As of January 2, 2016, we had 25 license arrangements, pursuant to which third party licensees produce merchandise using Company-

10 owned trademarks in accordance with designs furnished or approved by us, the present terms of which (not including renewal terms) expire at various dates through 2025. Our licenses cover a broad range of lifestyle product categories, including but not limited to, tech accessories, footwear, stationery and paper goods, hosiery, optics and sunglasses, watches, tabletop products, table linen products, children’s wear, swimwear, cold weather accessories, loungewear and sleepwear, indoor and outdoor fabrics and wall coverings, furniture, rugs, lighting and bedding. Such licenses earn revenue based on a percentage of the licensee’s sales of the licensed products against a guaranteed minimum royalty, which generally increases over the term of the agreement. Income from our licensing operations is included in net sales for the segment under which the license resides. In November 2011, we sold the global trademark rights for the LIZ CLAIBORNE family of brands and the trademark rights in the US and Puerto Rico for the MONET brand to JCPenney. The LIZWEAR trademark is licensed back to us on a royalty-free basis through July 2020. In October 2009, we also entered into a multi-year license agreement with QVC, granting rights (subject to pre-existing licenses) to certain trademarks and other intellectual property rights. QVC has the rights to use the LIZ CLAIBORNE NEW YORK brand with Isaac Mizrahi as creative director on any apparel, accessories, or home categories in the US and certain international markets. QVC merchandises and sources the product and we provide brand management oversight. The agreement provides for the payment to us of a royalty based on net sales of licensed products by QVC. QVC elected to terminate the agreement as of August 2016. We will continue to receive royalties as QVC winds down the business through December 31, 2016. Pursuant to the November 2011 sale transaction discussed above, our royalty-free license from JCPenney to continue to sublicense the LIZ CLAIBORNE NEW YORK trademark will expire simultaneously with the expiration of the QVC license as of December 31, 2016.

Marketing: Marketing for our brands is focused on reinforcing brand relevance, increasing awareness, engaging consumers and guiding them to our retail stores and e-commerce sites. We use a variety of marketing strategies to enhance our brand equity and promote our brands. These initiatives include direct mail, in-store events and internet marketing, including the use of social media. We incurred expenses of $56.0 million, $56.9 million and $42.8 million for advertising, marketing and promotion for all brands in 2015, 2014 and 2013, respectively. In 2015, we continued our in-store shop and fixture programs, which are designed to enhance the presentation of our products on department store selling floors generally through the use of proprietary fixturing, merchandise presentations and graphics. In-store shops operate under the kate spade new york and JACK SPADE brand names. In 2015, we installed an aggregate of 35 domestic and international in-store shops. For further information concerning our domestic and international sales, see Note 18 of Notes to Consolidated Financial Statements.

BUYING/SOURCING Pursuant to a buying/sourcing agency agreement, Li & Fung acts as the primary global apparel and accessories buying/sourcing agent, with the exception of our jewelry product lines. On March 24, 2015, we modified this arrangement in order to, among other things, transition our buying/sourcing activities for our accessories products to an in-house model, beginning with our Spring 2016 collection. We pay Li & Fung an agency commission based on the cost of our product purchases through Li & Fung. We are obligated to use Li & Fung as our primary buying/sourcing agent for our ready-to-wear apparel products and we may use Li & Fung as a buying/sourcing agent with respect to our 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. Our agreement with Li & Fung is not exclusive.

11 Products produced in Asia represent a substantial majority of our purchases. We also source product in the US and other regions. During 2015, approximately 91 suppliers located in 12 countries manufactured our products, with the largest finished goods supplier accounting for approximately 16.1% of the total of finished goods we purchased. Purchases from our suppliers are processed utilizing individual purchase orders specifying the price and quantity of the items to be produced. Most of our products are purchased as completed product ‘‘packages’’ from our manufacturing contractors, where the contractor purchases all necessary raw materials and other product components, according to our specifications. When we do not purchase ‘‘packages’’, we obtain fabrics, trimmings and other raw materials in bulk from various foreign and domestic suppliers, which are delivered to our manufacturing contractors for use in our products. We do not have any long-term, formal arrangements with any supplier of raw materials. To date, we have experienced little difficulty in satisfying our raw material requirements and consider our sources of supply adequate. We operate under substantial time constraints in producing each of our collections. In order to deliver, in a timely manner, merchandise that reflects our consumers’ current tastes, we attempt to schedule a substantial portion of our materials and manufacturing commitments relatively late in the production cycle, thereby favoring suppliers able to make quick adjustments in response to changing production needs and in time to take advantage of favorable (cost effective) shipping alternatives. However, in order to secure necessary materials and to schedule production time at manufacturing facilities, we must make substantial advance commitments prior to the receipt of firm orders from customers for the items to be produced. These advance commitments may have lead times in excess of five months. We continue to seek to reduce the time required to move products from design to the customer. If we misjudge our ability to sell our products, we could be faced with substantial outstanding fabric and/or manufacturing commitments, resulting in excess inventories. See ‘‘Item 1A — Risk Factors.’’ Our buying/sourcing arrangements with Li & Fung and with our foreign suppliers are subject to the risks of doing business abroad, including currency fluctuations and revaluations, restrictions on the transfer of funds, terrorist activities, pandemic disease and, in certain parts of the world, political, economic and currency instability. Our buying/sourcing arrangements with Li & Fung and with our foreign suppliers have not been materially affected by any such factors to date. However, due to the very substantial portion of our products that are produced abroad, any substantial disruption of our relationships with our foreign suppliers could adversely affect our operations. In addition, as Li & Fung is the buying/sourcing agent for a significant portion of our apparel products, we are subject to the risk of having to rebuild such buying/ sourcing capacity or find another agent or agents to replace Li & Fung in the event the agreement with Li & Fung terminates, or if Li & Fung is unable to fulfill its obligations under the agreement. In addition, as we rely on independent manufacturers, a manufacturer’s failure to ship product to us in a timely manner, or to meet quality or safety standards, could cause us to miss delivery dates to our retail stores or our wholesale customers. Failure to make deliveries on time could cause our retail customers to expect more promotions and our wholesale customers to seek reduced prices, cancel orders or refuse deliveries, all of which could have a material adverse effect on us. We maintain internal staff responsible for overseeing product safety compliance, irrespective of our agency agreement with Li & Fung. Additionally, we are a certified and validated member of the United States Customs and Border Protection’s Customs-Trade Partnership Against Terrorism (‘‘C-TPAT’’) program and expect all of our suppliers shipping to the United States to adhere to our C-TPAT requirements, including standards relating to facility security, procedural security, personnel security, cargo security and the overall protection of the supply chain. In the event a supplier does not comply with our C-TPAT requirements, or if we determine that the supplier will be unable to correct a deficiency, we may terminate our business relationship with the supplier.

12 IMPORTS AND IMPORT RESTRICTIONS Virtually all of our merchandise imported into the United States, Asia, Canada and Europe is subject to duties. The United States may unilaterally impose additional duties in response to a particular product being imported (from China or other countries) in such increased quantities as to cause (or threaten) serious damage to the relevant domestic industry (generally known as ‘‘anti-dumping’’ actions). Furthermore, additional duties, generally known as countervailing duties, can also be imposed by the US Government to offset subsidies provided by a foreign government to foreign manufacturers if the importation of such subsidized merchandise injures or threatens to injure a US industry. Legislative proposals have been put forward which, if adopted, would treat a manipulation by China of the value of its currency as actionable under the anti-dumping or countervailing duty laws. We are also subject to other international trade agreements and regulations, such as the North American Free Trade Agreement, the Central American Free Trade Agreement and the Caribbean Basin Initiative and other ‘‘special trade programs.’’ Each of the countries in which our products are sold has laws and regulations covering imports. Because the US and the other countries into which our products are imported and sold may, from time to time, impose new duties, tariffs, surcharges or other import controls or restrictions, including the imposition of ‘‘safeguard provisions,’’ ‘‘safeguard duties,’’ or adjust presently prevailing duty or tariff rates or levels on products being imported from other countries, we monitor import restrictions and opportunities. The sourcing of imported merchandise is also potentially subject to political developments in the countries of production. We strive to reduce our potential exposure to import related risks through, among other things, adjustments in product design and fabrication and shifts of production among countries and manufacturers. In light of the fact that a substantial portion of our products is manufactured by foreign suppliers, the enactment of new legislation or the administration of current international trade regulations, executive action affecting trade agreements, or changes in buying/sourcing patterns or quota provisions, could adversely affect our operations. The implementation of any ‘‘safeguard provisions,’’ ‘‘countervailing duties,’’ any ‘‘anti-dumping’’ actions or any other actions impacting international trade could result in cost increases for certain categories of products and in disruption of the supply chain for certain product categories. See ‘‘Item 1A — Risk Factors.’’ Apparel and other products sold by us are also subject to regulation in the US and other countries by other governmental agencies, including, in the US, the Federal Trade Commission, the US Fish and Wildlife Service and the Consumer Products Safety Commission. These regulations relate principally to product labeling, content and safety requirements, licensing requirements and flammability testing. We believe that we are in substantial compliance with those regulations, as well as applicable federal, state, local, and foreign regulations relating to the discharge of materials hazardous to the environment. We do not estimate any significant capital expenditures for environmental control matters either in the current year or in the near future. Our licensed products, licensing partners and buying/sourcing agents are also subject to regulation. Our agreements require our licensing partners and buying/sourcing agents to operate in compliance with all laws and regulations and we are not aware of any violations which could reasonably be expected to have a material adverse effect on our business or financial position, results of operations, liquidity or cash flows. Although we have not suffered any material inhibition from doing business in desirable markets in the past, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce trademarks to new markets.

DISTRIBUTION We distribute our products through leased facilities. On February 5, 2013, we entered into a contract with a third party facility operations and labor management company to provide distribution operations services at our Ohio Facility under a variable cost structure. In July 2013, we completed a sale-leaseback agreement

13 for the Ohio Facility. We received net proceeds of $20.3 million, and we entered into a sale-leaseback arrangement with the buyer for a 10-year term.

BACKLOG On February 5, 2016, our order book reflected unfilled customer orders for approximately $111.5 million of merchandise, as compared to approximately $98.8 million at February 6, 2015. These orders represent our order backlog. The amounts indicated include both confirmed and unconfirmed orders, which we believe, based on industry practice and our past experience, will be confirmed. We expect that substantially all such orders will be filled within the 2016 fiscal year. We note that the amount of order backlog at any given date is materially affected by a number of factors, including, among others, seasonality, the mix of product, the timing of the receipt and processing of customer orders and scheduling of the manufacture and shipping of the product, which in some instances is dependent on the desires of the customer. Accordingly, order book data should not be taken as providing meaningful period-to-period comparisons.

TRADEMARKS The following table summarizes the principal trademarks we own and/or use in connection with our businesses and products:

Company Owned Trademarks

AXCESS KATE SPADE SATURDAY JACK SPADE MARVELLA KATE SPADE MONET(a) kate spade new york TRIFARI Third Party Owned Trademarks

LIZ CLAIBORNE(b) LIZWEAR(d) LIZ CLAIBORNE NEW YORK(c)(d) MONET(b)(e)

(a) International rights only. (b) The Company provides jewelry for these brands under exclusive supplier arrangements. (c) As discussed above, QVC is the exclusive specialty retailer for LIZ CLAIBORNE NEW YORK merchandise in the product categories covered by the QVC license agreement (which is subject to pre-existing license agreements) in the US. (d) Licensed to the Company by JCPenney on a royalty-free basis. (e) Domestic rights only. In addition, we own and/or use many other logos and trademarks associated with the above mentioned trademarks. We have registered, or applied for registration of, a multitude of trademarks throughout the world, including those referenced above, for use on a variety of apparel and other products, including fashion accessories, home furnishings, fragrance and cosmetics, jewelry, watches, hosiery, optics and sunglasses, tech accessories, stationery and paper goods, tabletop products, table linen products, children’s wear, swimwear, cold weather accessories, loungewear and sleepwear, indoor and outdoor fabrics and wall coverings and bedding, as well as for retail services. We regard our trademarks and other proprietary rights as valuable assets and believe that they have significant value in the marketing of our products. We vigorously protect our trademarks and other intellectual property rights against infringement on a worldwide basis.

14 In general, trademarks remain valid and enforceable as long as the marks are used in connection with the related products and services and the required registration renewals are filed. We regard the license to use the trademarks and our other proprietary rights in and to the trademarks as valuable assets in marketing our products. As a result of the appeal of our brands, our products have from time to time been the object of counterfeiting. We have an established and aggressive enforcement program, which we believe has been generally effective in controlling the sale of counterfeit products in the US and in major markets abroad. In markets outside of the US, our rights to some or all of our trademarks may not be clearly established. In the course of our international expansion, we have experienced conflicts with various third parties who have acquired ownership rights in certain trademarks, which would impede our use and registration of some of our principal trademarks. While such conflicts are common and may arise again from time to time as we continue our international expansion, we have generally successfully resolved such conflicts in the past through both legal action and negotiated settlements with third party owners of the conflicting marks. Although we have not in the past suffered any material restraints or restrictions on doing business in desirable markets or in new product categories, we cannot assure that significant impediments will not arise in the future as we expand product offerings and introduce new and additional brands, both in the US and in other markets.

COMPETITION We are subject to intense competition as the apparel and accessories related product markets are highly competitive, both within the US and abroad. We compete with numerous retailers, designers and manufacturers of apparel and accessories, both domestic and foreign. We compete primarily on the basis of fashion, quality, customer service, price, brand prestige and recognition. Our ability to compete successfully depends upon a variety of factors, including, among other things, our ability to: • anticipate and respond to changing consumer demands in a timely manner; • develop quality and differentiated products that appeal to consumers; • appropriately price products; • establish and maintain favorable brand name and recognition; • maintain and grow market share; • establish and maintain acceptable relationships with our retail customers; • appropriately determine the size and identify the location of our retail stores and department store selling space; • provide appropriate service and support to retailers; • provide effective marketing support and brand promotion; • protect our intellectual property; and • optimize our retail and supply chain capabilities. See ‘‘Item 1A — Risk Factors.’’ Our principal competitors for kate spade new york include Burberry, Coach, Marc by Marc Jacobs, Michael Kors, Ralph Lauren and Tory Burch.

EMPLOYEES On January 2, 2016, we had approximately 3,600 full-time employees worldwide, as compared to approximately 3,500 full-time employees on January 3, 2015.

15 We no longer have any union agreements; however, we continue to have an obligation to the National Retirement Fund due to our cessation of contributions to a multi-employer defined benefit pension fund pursuant to a collective bargaining agreement covering former union employees, which is regulated by the Employee Retirement Income Security Act of 1974, as amended (‘‘ERISA’’). We expect the final payment to be made in the second quarter of 2016. See Note 13 of Notes to Consolidated Financial Statements. Our relations with our employees are satisfactory and to date we have not experienced any interruption of our operations due to employee issues.

CORPORATE SOCIAL RESPONSIBILITY We are committed to responsible corporate citizenship and giving back to our communities through a variety of avenues. We have several programs in place that support this commitment.

Monitoring Global Working Conditions We are committed to taking the actions we believe are necessary to ensure that our products are made in contracted factories with fair and decent working conditions. We continue this commitment as we operate under our buying/sourcing arrangement with Li & Fung, collaborating with Li & Fung to develop mutually acceptable audit documents and processes, training the Li & Fung audit staff on our compliance program and communicating our standards to Li & Fung suppliers and their workers. The major components of our compliance program are: (i) communicating our standards of engagement to workers, suppliers and associates; (ii) auditing and monitoring against those standards; (iii) providing workers with a confidential reporting channel; (iv) working with non-governmental organizations regarding issues impacting workers; and (v) working closely with factory management to develop sustainable compliance programs. Suppliers are required to post our standards of engagement in the workers’ native language at all factories where our merchandise is being manufactured. The standards of engagement, along with detailed explanations of each standard, are included on our suppliers’ websites. All new suppliers must acknowledge our standards and agree to our monitoring requirements. We audit factories using both internal and independent monitors and look for ways to develop direct communication channels with workers to ensure that they are aware of their rights. More information about our monitoring program is available on our website. As of January 2, 2016, we had approximately 86 active factories on our roster, of which 79 were audited by Li & Fung auditors, third party auditors and our internal compliance team. Additionally, there were 76 follow-up audits. In many cases, we rely on our agents’ audit reports. As such, we continue to conduct shadow audits to confirm that audit protocols and findings are consistent. We also contractually obligate all of our licensees to comply with and to assure that all of their affiliates, subcontractors, suppliers and distributors comply with our standards of engagement as well as all applicable laws. Our license agreements generally also provide that we have the right to inspect all facilities used by our licensees and their distributors, subcontractors, suppliers, agents and representatives to assure compliance with our standards. We are aware that auditing only confirms compliance at the time of the audit, and we continue to look for ways to improve our monitoring program and work with suppliers to create sustainable compliance at their factories. Creating workers’ awareness and establishing a channel of communication for reporting issues of non-compliance are two important strategies. We encourage all factories to establish internal grievance procedures and give workers the opportunity to report their concerns directly to the Company. This year we have provided supplier training covering best practices, social compliance requirements and review of our standards and policies.

16 Philanthropic Programs We have a number of philanthropic programs that support the nonprofit sector in our major operating communities. • The Kate Spade & Company Foundation (the ‘‘Foundation’’), established as the Liz Claiborne Foundation in 1981, is a separate nonprofit legal entity supporting nonprofit organizations working with women transforming communities. The Foundation supports programs in and around the New York City metropolitan area, where our primary offices are located, that offer training and increase access to tools that help women become economically empowered. The mission of the Foundation remains focused on women’s economic empowerment. • For more than ten years, we have been committed to creating opportunities for our associates to volunteer and give back to nonprofit organizations in our major operating communities. In 2015, we continued to support our associate volunteering program to create opportunities that reflected our charitable strategies. Furthermore, we continue to create Company-wide events that complement our philanthropy supporting women’s economic empowerment, including our On Purpose program. • On Purpose is our trade initiative through which we are teaching a group of women in Masoro, Rwanda to become an independent, sustainable and profitable supplier to Kate Spade & Company and other global fashion brands. • The Merchandise Donation Program provides direct charitable support to meet community needs and support the charitable interests of our associates. When available, we donate product to several types of organizations, including programs for women. In addition, every associate is afforded the opportunity of making one merchandise donation each year to the charitable organization of their choice. • The Matching Gift Program supports and encourages the charitable interests of our associates. Our flexible program matches associates’ gifts at a rate of one-to-one in the areas of arts, health and safety, education, human services and the environment. Contributions to organizations where associates serve as voluntary board members are matched at a rate of two-to-one.

Environmental Initiatives We are committed to a long-term sustainable approach to caring for and safeguarding the environment. As such, we endeavor to balance environmental considerations and social responsibility with our business goals by evolving and implementing our corporate environmental policy, in addition to complying with environmental laws and regulations. Our current sustainability policy focuses on three major components — reducing waste, reusing and recycling — to help minimize our impact on the environment.

Item 1A. Risk Factors. You should carefully consider the following risk factors, in addition to other information included in this Annual Report on Form 10-K and in other documents we file with the SEC, in evaluating us and our business. If any of the following risks occur, our business, financial condition, liquidity and results of operations could be materially adversely affected. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks emerge from time to time. Management cannot predict such new risk factors, nor can we assess the impact, if any, of such new risk factors on our business or the extent to which any factor or combination of factors may impact our business.

17 Our business strategy is centered on the kate spade new york brand. We cannot assure the successful implementation and results of our long-term strategic plans, including our ability to operate as a mono-brand based company. Our ability to execute our long-term growth plan and achieve our projected results is subject to a variety of risks, including the following: • We are exposed to additional risk from lack of diversification that did not affect our prior multi- brand business strategy as significantly. Our business prospects and results of operations will depend substantially on our ability to successfully maintain and develop the brand image and brand equity of the kate spade new york brand. • The kate spade new york brand could be negatively affected by changes in consumer preferences, brand awareness and fashion trends, and any such changes or other adverse events could have a more significant impact on a single brand than a portfolio of multiple brands. • We may be unable to successfully acquire new full-price customers through our marketing and CRM initiatives. • We may not be able to maintain and improve our operating margins and control promotional activity. • We may not be able to achieve our revenue growth targets because of local, regional, national and worldwide macroeconomic factors that may reduce demand for our products. • We may be unable to grow our revenues through retail expansion because of risks associated with selecting suitable locations for stand-alone retail stores and appropriate department store locations. • We may not be able to expand internationally, including in Japan, Asia, Europe, Canada and Latin America because of local and regional risks associated with those markets, including currency risks, political climate and other similar risks. Our current joint ventures may not succeed in expanding our business in China, Hong Kong, Macau and Taiwan. • We may not be able to successfully introduce new product categories under the kate spade new york brand. • Our e-commerce expansion is subject to risks associated with a material disruption in our information technology systems and e-commerce operations, including in markets outside of the United States, any of which could significantly affect our ability to operate and substantially harm our e-commerce business. We may not be successful in implementing our long-term growth plan, and our inability to successfully expand our retail business could have a material adverse effect on our business, financial condition, liquidity and results of operations.

General economic conditions in the United States, Asia, Europe, Canada and other parts of the world, including a continued weakening or instability of such economies, restricted credit markets and lower levels of consumer spending, can affect consumer confidence and consumer purchases of discretionary items, including fashion apparel and related products, such as ours. Our results are dependent on a number of factors impacting consumer spending, both in the United States and abroad, including, but not limited to: (i) general economic and business conditions; (ii) consumer confidence; (iii) wages and current and expected employment levels; (iv) the housing market; (v) consumer debt levels; (vi) availability of consumer credit; (vii) credit and interest rates; (viii) fluctuations in foreign currency exchange rates; (ix) fuel and energy costs; (x) energy shortages; (xi) the performance of the financial, equity and credit markets; (xii) taxes; (xiii) general political conditions; and (xiv) the level of customer traffic within department stores, malls and other shopping and selling environments.

18 Global economic conditions over the past few years have included significant recessionary pressures and declines or stagnation in employment levels, disposable income and actual and/or perceived wealth and declines in consumer confidence and economic growth. The current negative economic environment has been characterized by stagnation in consumer discretionary spending and has disproportionately affected retailers and sellers of consumer goods, particularly those whose goods represent discretionary purchases, including fashion apparel and related products such as ours. While the decline in consumer spending has recently moderated, these economic conditions could still lead to additional declines or stagnation in consumer spending over the foreseeable future and may have resulted in a resetting of consumer spending habits that makes it unlikely that such spending will return to prior levels for the foreseeable future. A number of our markets continue to suffer particularly severe downturns. While we have seen intermittent signs of stabilization in North America, volatility persists in the European markets as well as in China and there are no assurances that the global economy will continue to recover. If the global economy continues to be weak or deteriorates further, there will likely be a negative effect on our revenues, operating margins and earnings across all of our segments. In particular, the Chinese economy is undergoing a transition from an investment and export-driven economy to one driven by internal consumption and has recently experienced instability that has been characterized by slowing growth rates and volatility in the commodities and stock markets. Concerns about the Chinese economy have had a significant impact on the global financial markets. As a result, the condition of the Chinese economy could have a negative impact on our business and growth prospects within China, greater Asia and worldwide. Economic conditions have also led to a highly promotional environment and strong discounting pressure from both our wholesale and retail customers, which have had a negative effect on our revenues and profitability. This promotional environment may likely continue even after economic growth returns, as we expect that consumer spending trends are likely to remain at depressed levels for the foreseeable future. The domestic and international political situation also affects consumer confidence. The threat, outbreak or escalation of terrorism, military conflicts or other hostilities could lead to further decreases in consumer spending. The uncertain outlook in the global economy will likely continue to have a material adverse impact on our business, financial condition, liquidity and results of operations. Fluctuations in the price, availability and quality of the fabrics or other raw materials used to manufacture our products, as well as the price for labor, marketing and transportation, could have a material adverse effect on our cost of sales or our ability to meet our customers’ demands. The prices for such fabrics depend largely on the market prices for the raw materials used to produce them. Such factors may be exacerbated by legislation and regulations associated with global climate change. The price and availability of such raw materials may fluctuate significantly, depending on many factors. In the future, we may not be able to pass all or a portion of such higher prices on to our customers.

Our business and balance sheets are exposed to domestic and foreign currency fluctuations. While we generally purchase our products in US dollars, we source most of our products overseas. As a result, the cost of these products may be affected by changes in the value of the relevant currencies, including currency devaluations. Changes in currency exchange rates may also affect the US dollar value of the foreign currency denominated prices at which our international businesses sell products. Our international sales, as well as our international businesses’ inventory and accounts receivable levels, could be affected by currency fluctuations. In addition, with expected international expansion, we may increase our exposure to such fluctuations. Although from time to time we hedge a portion of our exposures to changes in foreign currency exchange rates arising in the ordinary course of business, we cannot assure that foreign currency fluctuations will not have a material adverse impact on our business, financial condition, liquidity or results of operations.

19 The success of our business depends on our ability to optimize our product offerings in order to anticipate and timely respond to constantly changing consumer demands and tastes and fashion trends, across multiple brands, product lines, shopping channels and geographies. The apparel and accessories industries have historically been subject to rapidly changing consumer demands and tastes and fashion trends and to levels of discretionary spending, especially for fashion apparel and related products, which levels are currently weak. These industries are also subject to the difficulties encountered when trying to expand business to growing markets worldwide. We believe that our success is largely dependent on our ability to effectively anticipate, gauge and respond to changing consumer demands and tastes across multiple product lines, shopping channels and geographies, in the design, pricing, styling and production of our products and in the merchandising and pricing of products in our retail stores, and in the business model employed, and partners we select to work with, in new and growing markets worldwide. Our brands and products must appeal to a broad range of consumers whose preferences cannot be predicted with certainty and are subject to constant change. Also, we must maintain and enhance favorable brand recognition, which may be affected by consumer attitudes towards the desirability of fashion products bearing a ‘‘mega brand’’ label and which are widely available at a broad range of retail stores. Our success is also dependent on our ability to successfully extend our businesses into new territories and markets, such as Asia, Europe, Canada and Latin America. We attempt to schedule a substantial portion of our materials and manufacturing commitments relatively late in the production cycle. However, in order to secure necessary materials and ensure availability of manufacturing facilities, we must make substantial advance commitments, which may be up to five months or longer, prior to the receipt of firm orders from customers for the items to be produced. We need to translate market trends into appropriate, saleable product offerings relatively far in advance, while minimizing excess inventory positions, and correctly balance the level of our fabric and/or merchandise commitments with actual customer orders. We cannot assure that we will be able to continue to develop appealing styles and brands or successfully meet changing customer and consumer demands in the future. In addition, we cannot assure that any new products or brands that we introduce will be successfully received and supported by our wholesale customers or consumers. Our failure to gauge consumer needs and fashion trends and respond appropriately, or to appropriately forecast our ability to sell products, could adversely affect retail and consumer acceptance of our products and leave us with substantial outstanding fabric and/or manufacturing commitments, resulting in increases in unsold inventory or missed opportunities. If that occurs, we may need to employ markdowns or promotional sales to dispose of excess inventory, which may harm our business and results. At the same time, our focus on inventory management may result, from time to time, in our not having a sufficient supply of products to meet demand and may cause us to lose potential sales.

The markets in which we operate are highly competitive, both within the United States and abroad. We face intense competitive challenges from other domestic and foreign fashion apparel and accessories producers and retailers. Competition is based on a number of factors, including the following: • anticipating and responding to changing consumer demands in a timely manner; • establishing and maintaining a favorable brand name and recognition; • product quality; • maintaining and growing market share; • exploiting markets outside of the United States, including growth markets such as Asia, Europe, Canada and Latin America; • developing quality and differentiated products that appeal to consumers;

20 • establishing and maintaining acceptable relationships with our retail customers; • pricing products appropriately; • providing appropriate service and support to retailers; • optimizing our retail and supply chain capabilities; • size and location of our retail stores and department store selling space; and • protecting our intellectual property. In addition, some of our competitors may be significantly larger and more diversified than us and may have significantly greater financial, technological, manufacturing, sales, marketing and distribution resources than we do. Their diversification and/or greater capabilities in these areas may enable them to better withstand periodic downturns in the accessories, footwear and apparel industries, compete more effectively on the basis of price and production and/or more quickly develop new products. The general availability of manufacturing contractors and agents also allows new entrants easy access to the markets in which we compete, which may increase the number of our competitors and adversely affect our competitive position and our business. Any increased competition, or our failure to adequately address these competitive factors, could result in reduced sales or prices, or both, which could have a material adverse effect on us. We also believe there is an increasing focus by the department stores to concentrate an increasing portion of their product assortments within their own private label products. These private label lines compete directly with our product lines and may receive prominent positioning on the retail floor by department stores. Finally, in the current economic environment, which is characterized by softening demand for discretionary items, such as apparel and related products, there has been a consistently increased level of promotional activity, both at our retail stores and at department stores, which has had an adverse effect on our revenues and profitability.

Our current level of debt could adversely affect our business, financial condition or results of operations and prevent us from fulfilling our debt-related obligations. As of January 2, 2016, the total principal amount of our term loan credit facility due April 2021 (the ‘‘Term Loan Credit Agreement’’) was $395.0 million. Our current level of debt could have important consequences for the holders of our common stock, including: (i) making it more difficult for us to satisfy our obligations with respect to our debt or to our trade or other creditors; (ii) increasing our vulnerability to adverse economic or industry conditions; (iii) limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is limited; (iv) requiring a substantial portion of our cash flows from operations and the proceeds of any capital markets offerings for the payment of interest on our debt and reducing our ability to use our cash flows to fund working capital, capital expenditures, acquisitions and general corporate requirements; (v) limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and (vi) placing us at a competitive disadvantage relative to less leveraged competitors. There is no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available to us through capital markets financings or under our amended and restated revolving credit facility (as amended to date, the ‘‘ABL Facility’’) or otherwise in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, on or before its maturity. We may be unable to refinance any of our indebtedness on commercially reasonable terms or at all. In addition, we may incur additional indebtedness in order to finance our operations or to repay existing indebtedness. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional debt or equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would be advantageous to our stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements.

21 Restrictive covenants in our ABL Facility and Term Loan Credit Agreement may restrict our ability to pursue our business strategies. Our ABL Facility and Term Loan Credit Agreement limit our ability, and the terms of any future indebtedness may limit our ability, among other things, to: • incur or guarantee additional indebtedness; • make certain investments; • pay dividends or make distributions on our capital stock; • sell assets, including capital stock of restricted subsidiaries; • agree to restrictions on distributions, transfers or dividends affecting our restricted subsidiaries; • consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; • enter into transactions with our affiliates; • incur liens; and • designate any of our subsidiaries as unrestricted subsidiaries. In addition, our ABL Facility (i) provides for a decrease in fees and interest rates compared to our previous asset-based revolving loan facility (including eurocurrency spreads of 1.50% to 2.00% over LIBOR, depending on the level of aggregate availability); (ii) requires us to maintain pro forma compliance with a fixed charge coverage ratio of 1.0:1.0 on a trailing four-quarter basis if availability under the ABL Facility for three consecutive business days falls below the greater of $15.0 million and 10.0% of the lesser of the aggregate commitments and the borrowing base and (iii) 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 restrictions contained in the Term Loan Credit Agreement and our ABL Facility could also limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions or otherwise restrict our activities or business plans.

We may require additional capital in the future and may not be able to secure adequate funds on terms acceptable to us. Our primary ongoing cash requirements are to: (i) fund seasonal working capital needs (primarily accounts receivable and inventory); (ii) fund capital expenditures related to the opening and refurbishing of our specialty retail and outlet stores and normal maintenance activities; (iii) invest in our information systems; (iv) fund general operational and contractual obligations, including remaining efforts associated with our streamlining initiatives; and (v) potentially repurchase or retire debt obligations. The expansion and development of our business may also require significant capital, which we may be unable to obtain, to fund our capital expenditures and operating expenses, including working capital needs. Our ABL Facility matures in May 2019. Availability under the ABL Facility is the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of our 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 facility provided under the ABL Facility of 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 eurocurrency rates and a second borrowing option with interest rates based on the alternate base

22 rate, as defined in the ABL Facility, with a spread based on the aggregate availability under the ABL Facility. During the next 12 months, we expect to meet our cash requirements with existing cash and cash equivalents, cash flow from operations and borrowings under our ABL Facility. We may fail to generate sufficient cash flow from such sources to meet our cash requirements. Further, our capital requirements may vary materially from those currently planned if, for example, our revenues do not reach expected levels or we have to incur unforeseen capital expenditures and make investments to maintain our competitive position. If this is the case, we may require additional financing sooner than anticipated or we may have to delay or abandon some or all of our development and expansion plans or otherwise forego market opportunities. To a large extent, our cash flow generation ability is subject to general economic, financial, competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs. As a result, we may need to refinance all or a portion of our indebtedness, on or before its maturity, or obtain additional equity or debt financing. We cannot assure you that we will be able to do so on commercially reasonable terms, if at all. Any inability to generate sufficient cash flow, refinance our indebtedness or incur additional indebtedness on commercially reasonable terms could adversely affect our financial condition and could cause us to be unable to service our debt and may delay or prevent the expansion of our business.

Our success will depend on our ability to successfully develop or acquire new product lines and enter new markets or product categories. Product category expansion is an important part of our strategy, and therefore we have acquired or developed, and expect to continue to acquire or develop new product lines, enter new markets or product categories, including through licensing arrangements, and/or implement new business models. Such activities are accompanied by a variety of risks inherent in any such new business venture, including the following: • our ability to identify appropriate business development opportunities, including new product lines and new markets, including important growth markets such as Asia, Europe, Canada and Latin America; • new businesses, business models, product lines or market activities may require methods of operations, investments and marketing and financial strategies different from those employed in our other businesses, and may also involve buyers, store customers and/or competitors different from our historical buyers, store customers and competitors; • consumer acceptance of the new products or lines, and the impact on existing businesses given the new products or lines, including the pricing of such lines; • we may not be able to generate projected or satisfactory levels of sales, profits and/or return on investment for a new business or product line, and may also encounter unanticipated events and unknown or uncertain liabilities that could materially impact our business; • we may experience possible difficulties, delays and/or unanticipated costs in integrating the business, operations, personnel and/or systems of an acquired business and may also not be able to retain and appropriately motivate key personnel of an acquired business; • risks related to complying with different laws and regulations in new markets or applicable to new product lines;

23 • we may not be able to maintain existing product licenses or enter into new licenses to enable us to launch new products and lines on favorable or acceptable terms and conditions; and • with respect to a business where we are not the brand owner, but instead act as an exclusive licensee or an exclusive supplier, such as the arrangements within our Adelington Design Group discussed above for the LIZ CLAIBORNE and MONET brands with respect to jewelry products, there are a number of inherent risks, including, without limitation, compliance with terms set forth in the applicable agreements, the level of orders placed by our business partners and the public perception and/or acceptance of our business partners, the brands or other product lines, which are not within our control.

Our wholesale business is dependent to a significant degree on sales to a limited number of large United States department store customers, and our business could suffer as a result of consolidations, restructurings, bankruptcies, other ownership changes in the retail industry and/or financial difficulties at our large department store customers. Many major department store groups make centralized buying decisions. Accordingly, any material change in our relationship with any such group could have a material adverse effect on our operations. We expect that our largest customers will continue to account for a significant percentage of our wholesale sales. Successfully managing our wholesale business with our continued partial dependence on sales to a limited number of large United States department store customers is subject to our ability to respond effectively to, among other things: (i) these customers’ buying patterns, including their purchase and retail floor space commitments for apparel in general (compared with other product categories they sell) and our products specifically (compared with products offered by our competitors, including with respect to customer and consumer acceptance, pricing and new product introductions); (ii) these customers’ strategic and operational initiatives, including their continued focus on further development of their ‘‘private label’’ products; (iii) these customers’ desire to have us provide them with exclusive and/or differentiated designs and product mixes; (iv) these customers’ requirements for vendor margin support; (v) any credit risks presented by these customers, especially given the significant proportion of our accounts receivable they represent; and (vi) the effect of any potential consolidation among these larger customers. We do not enter into long-term agreements with any of our wholesale customers. Instead, we enter into a number of purchase order commitments with our customers for each of our lines every season. A decision by the controlling owner of a group of stores or any other significant customer, whether motivated by competitive conditions, financial difficulties and/or otherwise, to decrease or eliminate the amount of merchandise purchased from us or to change their manner of doing business with us could have a material adverse effect on our business, financial condition, liquidity and results of operations. As a result of the recent unfavorable economic environment, we have experienced a softening of demand from a number of wholesale customers, such as large department stores, that have been highly promotional and have aggressively marked down all of their merchandise, including our products. Any promotional pricing or discounting in response to softening demand may also have a negative effect on brand image and prestige, which may be difficult to counteract as the economy improves. Furthermore, this promotional activity may lead to requests from those customers for increased markdown allowances at the end of the season. Promotional activity at our wholesale customers will also often result in promotional activity at our retail stores, further eroding revenues and profitability. When we sell to our wholesale customers, we extend credit based on an evaluation of each customer’s financial condition, usually without requiring collateral. However, the financial difficulties of a customer could cause us to curtail or eliminate business with that customer but we may not be able to appropriately reduce the credit risk relating to our receivables from that customer. Our inability to collect on our trade accounts receivable from any of our largest customers could have a material adverse effect on our business, financial condition, liquidity and results of operations. Moreover, the difficult macroeconomic conditions

24 and uncertainties in the global credit markets could negatively impact our customers and consumers which, in turn, could have an adverse impact on our business, financial condition, liquidity and results of operations.

A material disruption in our information technology systems and e-commerce operations could adversely affect our business or results of operations. We rely extensively on our information technology (‘‘IT’’) systems to track inventory, manage our supply chain, record and process transactions, manage customer communications, summarize results and manage our business. The failure of our IT systems to operate properly or effectively, problems with transitioning to upgraded or replacement systems or difficulty in integrating new systems could adversely impact our business. In addition, our IT systems may be subject to damage and/or interruption from power outages, computer, network and telecommunications failures, computer viruses, hackers, security breaches and usage errors by our employees and harmful acts by our website visitors. If our IT systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data (including customer data) and interruptions or delays in our operations in the interim. Any significant disruption in our IT systems could harm our reputation and credibility and could adversely affect our business, financial condition or results of operations.

Privacy breaches and liability for online content could negatively affect our reputation, credibility and business. We rely on third party computer hardware, software and fulfillment operations for our e-commerce operations and for the various social media tools and websites we use as part of our marketing strategy. There is a growing concern over the security of personal information transmitted over the internet, consumer identity theft and user privacy. Despite the implementation of reasonable security measures by us and our third party providers, these sites and systems may be susceptible to electronic or physical computer break-ins and security breaches. Any perceived or actual unauthorized disclosure of personally- identifiable information regarding our customers or website visitors could harm our reputation and credibility, reduce our e-commerce and/or brick and mortar related net sales, impair our ability to attract website or retail store visitors and reduce our ability to attract and retain customers. Additionally, as the number of users of forums and social media features on our websites increases, we could be exposed to liability in connection with material posted on our websites by users and other third parties. Finally, we could incur significant costs in complying with the multitude of state, federal and foreign laws regarding unauthorized disclosure of personal information and, if we fail to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these laws, we could be subject to potential claims for damages and other remedies.

We may be exposed to risks and costs associated with credit card fraud and identity theft. A growing portion of our customer orders are placed through our e-commerce websites. In addition, a significant portion of our direct-to-consumer sales require us and other parties involved in processing transactions to collect and to securely transmit certain customer data, such as credit card information, over public networks. Third parties may have the ability to breach the security of customer transaction data. Although we take the security of our systems and the privacy of our customers’ confidential information seriously, there can be no assurance that our security measures will effectively prevent others from obtaining unauthorized access to our information and our customers’ information. Any security breach could cause consumers to lose confidence in the security of our website or stores and choose not to purchase from us. Any security breach could also expose us to risks of data loss, litigation and liability and could seriously disrupt our operations and harm our reputation, any of which could harm our business.

25 We cannot assure that we can attract and retain talented, highly qualified executives, or maintain satisfactory relationships with our employees. Our success depends, to a significant extent, both upon the continued services of our executive management team, as well as our ability to attract, hire, motivate and retain additional talented and highly qualified management in the future, including in the areas of design, merchandising, sales, supply chain, marketing, production and systems, as well as our ability to hire and train qualified retail management and associates. In addition, we will need to provide for the succession of senior management. The loss of key members of management and our failure to successfully plan for succession could disrupt our operations and our ability to successfully operate our business and execute our strategic plan.

Our business could suffer if we cannot adequately establish, defend and protect our trademarks and other proprietary rights. We believe that our trademarks and other proprietary rights are critical to our success and competitive position. Accordingly, we devote substantial resources to the establishment and protection of our trademarks and anti-counterfeiting activities. Counterfeiting of our products, particularly our kate spade new york brand, continues, however, and in the course of our international expansion we have experienced conflicts with various third parties that have acquired or claimed ownership rights in some of our trademarks or otherwise have contested our rights to our trademarks. We have, in the past, resolved certain of these conflicts through both legal action and negotiated settlements, none of which, we believe, has had a material impact on our financial condition, liquidity or results of operations. However, the actions taken to establish and protect our trademarks and other proprietary rights might not be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as a violation of their trademarks and proprietary rights. Moreover, in certain countries others may assert rights in, or ownership of, our trademarks and other proprietary rights or we may not be able to successfully resolve such conflicts, or resolving such conflicts may require us to make significant monetary payments. In addition, the laws of certain foreign countries may not protect proprietary rights to the same extent as do the laws of the United States. The loss of such trademarks and other proprietary rights, or the loss of the exclusive use of such trademarks and other proprietary rights, could have a material adverse effect on us. Any litigation regarding our trademarks or other proprietary rights could be time consuming and costly.

Our reliance on independent foreign manufacturers could cause delay and loss and damage our reputation and customer relationships. Also, there are risks associated with having a buying/sourcing agreement, which results in a single foreign buying/sourcing agent for a significant portion of our apparel products and transitioning buying/ sourcing activities for our non-apparel products to an in-house model. We do not own any product manufacturing facilities; all of our products are manufactured in accordance with our specifications through arrangements with independent suppliers. Products produced in Asia represent a substantial majority of our sales. We also source product in the United States and other regions from approximately 91 suppliers manufacturing our products. At the end of 2015, such suppliers were located in 12 countries, with the largest finished goods supplier at such time accounting for approximately 16.1% of the total of finished goods we purchased in 2015. A supplier’s failure to manufacture and deliver products to us in a timely manner or to meet our quality standards could cause us to miss the delivery date requirements of our customers for those items. The failure to make timely deliveries may drive customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us and our reputation in the marketplace. Also, a manufacturer’s failure to comply with safety and content regulations and standards, including with respect to children’s product and fashion jewelry, could result in substantial liability and damage to our reputation. While we provide our manufacturers with standards, and we employ independent testing for safety and content issues, we might not be able to prevent or detect all failures of our manufacturers to comply with such standards and regulations.

26 Additionally, we require our independent manufacturers (as well as our licensees) to operate in compliance with applicable laws and regulations. While we believe that our internal and vendor operating guidelines promote ethical business practices and our staff periodically visits and monitors the operations of our independent manufacturers, we do not control these manufacturers or their labor practices. The violation of labor or other laws by an independent manufacturer used by us (or any of our licensees), or the divergence of an independent manufacturer’s (or licensee’s) labor practices from those generally accepted as ethical in the United States, could interrupt, or otherwise disrupt the shipment of finished products to us or damage our reputation. Any of these, in turn, could have a material adverse effect on our business, financial condition, liquidity and results of operations. On February 23, 2009, we entered into a long-term, buying/sourcing agency agreement with Li & Fung, pursuant to which Li & Fung acted as the primary global apparel and accessories buying/sourcing agent, with the exception of our jewelry product lines. On March 24, 2015, we modified this arrangement in order to, among other things, transition our buying/sourcing activities for our accessories products to an in-house model, beginning with our Spring 2016 collection. We pay to Li & Fung an agency commission based on the cost of our product purchases through Li & Fung. We are obligated to use Li & Fung as our primary buying/sourcing agent for our ready-to-wear apparel products and we may use Li & Fung as a buying/ sourcing agent with respect to our 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. Our agreement with Li & Fung is not exclusive. Our arrangements with foreign suppliers and with our foreign buying/sourcing agents are subject generally to the risks of doing business abroad, including currency fluctuations and revaluations, restrictions on the transfer of funds, terrorist activities, labor disputes, pandemic disease and, in certain parts of the world, political, economic and currency instability. Our operations have not been materially affected by any such factors to date. However, due to the very substantial portion of our products that are produced abroad, any substantial disruption of our relationships with our foreign suppliers could adversely affect our operations. Moreover, difficult macroeconomic conditions and uncertainties in the global credit markets could negatively impact our suppliers, which in turn, could have an adverse impact on our business, financial position, liquidity and results of operations.

There are risks associated with our arrangement to continue to operate the Ohio distribution facility with a third party operations and labor management company that provides distribution operations services, including risks related to increased operating expenses and operating under a third party arrangement. On February 5, 2013, we entered into a contract with a third party distribution center operations and labor management company to provide distribution operations services at the Ohio Facility. The third party distribution center operations company employs many of our prior employees, including union employees, at the Ohio Facility. There are a number of risks associated with continuing to operate the Ohio Facility, including increased operating expenses and risks related to the ability of the third party distribution center operations company to appropriately staff the Ohio Facility with both union and non-union employees on reasonable and appropriate terms. We also have limited ability to control our third party distribution center operations company, and such company may take actions with respect to its employees without our approval and may not maintain good relations with its employees and unions. Issues that arise in connection with the operation of our Ohio Facility could cause supply disruptions and other logistical issues and could therefore have a material, adverse effect on our business, financial condition, liquidity and results of operations.

There are risks associated with the various businesses we have disposed. In connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the United States and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to third parties, for which we or certain

27 of our subsidiaries remain secondarily liable for the remaining obligations on 136 such leases. See ‘‘Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Position, Liquidity and Capital Resources — Commitments and Capital Expenditures,’’ and Note 9 of Notes to Consolidated Financial Statements for more information.

Our international sourcing operations are subject to a variety of legal, regulatory, political, labor and economic risks, including risks relating to the importation and exportation of product. We source most of our products outside the United States through arrangements with independent suppliers in 12 countries as of January 2, 2016. There are a number of risks associated with importing our products, including but not limited to the following: • the potential reimposition of quotas, which could limit the amount and type of goods that may be imported annually from a given country, in the context of a trade retaliatory case; • changes in social, political, legal and economic conditions, or labor unrest or terrorist acts that could result in the disruption of trade from the countries in which our manufacturers or suppliers are located; • the imposition of additional regulations, or the administration of existing regulations, relating to products which are imported, exported or otherwise distributed; • the imposition of additional duties, tariffs, taxes and other charges or other trade barriers on imports or exports; • risks of increased sourcing costs, including costs for materials and labor and such increases potentially resulting from the elimination of quota on apparel products; • our ability to adapt to and compete effectively in the current quota environment, in which general quota has expired on apparel products, resulting in changing in sourcing patterns and lowered barriers to entry, but political activities which could result in the reimposition of quotas or other restrictive measures have been initiated or threatened; • significant delays in the delivery of cargo due to security considerations; • the imposition of anti-dumping or countervailing duty proceedings resulting in the potential assessment of special anti-dumping or countervailing duties; and • the enactment of new legislation or the administration of current international trade regulations, or executive action affecting international textile agreements, including the United States reevaluation of the trading status of certain countries and/or retaliatory duties, quotas or other trade sanctions, which, if enacted, would increase the cost of products purchased from suppliers in such countries. Any one of these or similar factors could have a material adverse effect on our business, financial condition, liquidity, results of operations and current business practices.

We face risks associated with operating in international markets. Approximately 18.5% of our revenues were generated by operations outside the United States during the 2015 fiscal year. Our ability to operate and be successful in new international markets and to operate and maintain the current level of sales in our existing international markets, is subject to risks associated with international operations. These include complying with a variety of foreign laws and regulations, adapting to local customs and culture, unexpected changes in regulatory requirements, new tariffs or other barriers in some international markets, political instability and terrorist attacks, changes in diplomatic and trade relationships, currency risks and general economic conditions in specific countries and markets. Any one of these or similar factors could have a material adverse effect on our business, financial condition, liquidity, results of operations and current business practices.

28 We rely on third parties to provide us with services in connection with the administration of certain aspects of our business. We have entered into agreements with third party service providers, both domestic and overseas, to provide processing and administrative functions over a broad range of areas, and we may continue to do so in the future. These areas include finance and accounting, information technology, human resources, buying/sourcing, distribution functions, and e-commerce. Services provided by third parties could be interrupted as a result of many factors, including contract disputes. Any failure by third parties to provide us with these services on a timely basis or within our service level expectations and performance standards could result in a disruption of our operations and could have a material adverse effect on our business, financial condition, liquidity and results of operations. In addition, to the extent we are unable to maintain these arrangements, we would incur substantial costs, including costs associated with hiring new employees, in order to return these services in-house or to transition the services to other third parties.

Our ability to utilize all or a portion of our United States deferred tax assets may be limited significantly if we experience an ‘‘ownership change.’’ As of January 2, 2016, we had United States deferred tax assets of approximately $438.1 million, which include net operating loss (‘‘NOL’’) carryforwards and other items which could be considered net unrealized built in losses (‘‘NUBIL’’). Among other factors, our ability to utilize our NOL and/or our NUBIL items to offset future taxable income may be limited significantly if we experience an ‘‘ownership change’’ as defined in section 382 of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’). In general, an ownership change will occur if there is a cumulative increase in ownership of our stock by ‘‘5-percent shareholders’’ (as defined in the Code) that exceeds 50 percentage points over a rolling three-year period. The limitation arising from an ‘‘ownership change’’ under section 382 of the Code on our ability to utilize our United States deferred tax assets depends on the value of our stock at the time of the ownership change. We continue to monitor changes in our ownership and do not believe we had a change in control as of January 2, 2016. If all or a portion of our deferred tax assets are subject to limitation because we experience an ownership change, depending on the value of our stock at the time of the ownership change, our future cash flows could be adversely impacted due to increased tax liability. As of January 2, 2016, substantially all of the tax benefits of our United States deferred tax assets had been offset with a full valuation allowance that was recognized in our financial statements.

The outcome of current and future litigations and other proceedings in which we are involved may have a material adverse effect on our results of operations, liquidity or cash flows. We are a party to several litigations and other proceedings and claims which, if determined unfavorably to us, could have a material adverse effect on our results of operations, liquidity or cash flows. We may in the future become party to other claims and legal actions which, either individually or in the aggregate, could have a material adverse effect on our results of operations, liquidity or cash flows. In addition, any of the current or possible future legal proceedings in which we may be involved could require significant management and financial resources, which could otherwise be devoted to the operation of our business.

Item 1B. Unresolved Staff Comments. None.

Item 2. Properties. Our distribution and administrative functions are conducted in leased facilities. We also lease space for our specialty retail and outlet stores. We believe that our existing facilities are well maintained, in good operating condition and are adequate for our present level of operations. We use unaffiliated third parties to provide distribution services to meet our distribution requirements.

29 Our principal executive offices, as well as certain sales, merchandising and design staffs, are located at 2 Park Avenue, New York, NY, where we lease approximately 135,000 square feet. We also lease approximately 106,000 square feet in an office building in North Bergen, New Jersey, which houses operational staff. The following table sets forth information with respect to our key leased properties:

Approximate Square Footage Location(a) Primary Use Occupied West Chester, OH(b) ...... Distribution Center 601,000 2 Park Avenue, New York, NY ...... Offices 135,000 North Bergen, NJ(c) ...... Offices 106,000

(a) We also lease showroom, warehouse and office space in various other domestic and international locations. We exited certain New York offices during 2014, for which we remain obligated under the respective leases. (b) During the third quarter of 2013, we sold the West Chester, OH facility for net proceeds of $20.3 million and entered into a sale-leaseback arrangement with the buyer for a 10-year term. (c) During the second quarter of 2013, we sold the North Bergen, NJ office for net proceeds of $8.7 million and entered into a sale-leaseback arrangement with the buyer for a 12-year term with two five-year renewal options.

Item 3. Legal Proceedings. The Company is a party to various 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 (see Notes 1 and 9 of Notes to Consolidated Financial Statements).

Executive Officers of the Registrant. Information as to the executive officers of the Company, as of January 2, 2016 is set forth below:

Name Age Position(s) Craig A. Leavitt ..... 55 Chief Executive Officer George M. Carrara . . 47 President and Chief Operating Officer Deborah J. Lloyd .... 51 Chief Creative Officer Thomas Linko ...... 43 Senior Vice President — Chief Financial Officer William Higley ...... 56 Senior Vice President — Human Resources Timothy F. Michno . . . 58 Senior Vice President — General Counsel and Secretary Linda Yanussi ...... 54 Senior Vice President — Global Operations and Chief Information Officer Executive officers serve at the discretion of the Board of Directors. Mr. Leavitt joined the Company in April 2008 as Co-President and Chief Operating Officer of Kate Spade LLC and was named Chief Executive Officer of Kate Spade & Company in February 2014. Prior to joining the Company, he was President of Global Retail at Link Theory Holdings, where he had total responsibility for merchandising, operations, planning and allocation and real estate for the Theory and Helmut Lang retail businesses. Prior to that, Mr. Leavitt spent several years at Diesel, where he was most recently Executive Vice President of Sales and Retail. Previously, Mr. Leavitt spent 16 years at Polo Ralph Lauren, where he held positions of increasing responsibility, the last being Executive Vice President of Retail Concepts. Mr. Carrara joined the Company in April 2012 as Executive Vice President, Chief Financial Officer and Chief Operating Officer and was promoted to his current role in February 2014. Prior to that, he had held

30 numerous finance positions at Tommy Hilfiger over the prior 12 years, including Chief Financial Officer for the Jeans division from 1999 to 2003; Chief Operating Officer and Chief Financial Officer of wholesale operations from 2003 to 2004; Executive Vice President of US Operations — Wholesale and Retail from 2004 to 2005 and Chief Operating Officer from 2006 to 2011. Ms. Lloyd joined the Company in November 2007 as Chief Creative Officer. Prior to joining the Company, she was Executive Vice President of Design and Product Development at Banana Republic, where she was responsible for design for both the Women’s and Men’s businesses, including accessories and fragrance. Prior to that, Ms. Lloyd spent five years at Burberry, where she was instrumental in re-launching the Burberry Women’s London Collection. Mr. Linko joined the Company in July 2012 as Chief Financial Officer of the formerly owned Juicy Couture brand. In 2013, he was appointed Chief Operating Officer and, upon the sale of the Juicy Couture brandname and related intellectual property assets, led the wind-down of the business. Mr. Linko was named Chief Financial Officer of Kate Spade & Company in October 2014. Prior to joining the Company, he was Chief Financial Officer at Delta Galil, a global manufacturer and marketer of private label apparel products for men, women and children. In addition, Mr. Linko spent 12 years at Tommy Hilfiger, where he oversaw the financial operations as the Senior Vice President of Finance for Tommy Hilfiger North America. Mr. Higley joined the Company in March 1995 as Benefits Manager and has held various positions within the Human Resources department. From 2005 until assuming his current position in January 2013, Mr. Higley served as the Vice President of Human Resources. In his present role, he oversees corporate Human Resources in the US and Asia, which includes Workplace Solutions, Payroll, HRIS, Compensation and Benefits and general HR support. Mr. Higley began his career working at Chase Manhattan Bank followed by small regional banks as well as The Bank of New York prior to joining the Company. Mr. Michno joined the Company in October 2015 as Senior Vice President, General Counsel and oversees all legal matters for the Company. Prior to joining the Company, he served as the General Counsel and Secretary of Movado Group, Inc. since 1992. Before joining Movado Group, Inc., he was an associate at the New York firm of Chadbourne & Parke from 1988 to 1991, and served as a resident outside counsel to Fortune Brands, Inc. (formerly known as American Brands, Inc.), a consumer products company. He has practiced law since 1983. Ms. Yanussi joined the Company in April 2012 as Vice President of Information Technology and assumed the position of Senior Vice President — Information Technology and Global Operations in January 2013. In December 2015, her title was changed to Senior Vice President — Global Operations and Chief Information Officer. Prior to joining the Company, she held various positions at Tommy Hilfiger over a period of eleven years, most recently as Senior Vice President of Operations and Logistics, North America for over four years and as Vice President of Operations prior to that.

Item 4. Mine Safety Disclosures. Not applicable.

31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. MARKET INFORMATION Our common stock trades on the NYSE under the symbol KATE. The table below sets forth the high and low closing sale prices of our common stock for the periods indicated.

Fiscal Period High Low 2015: 1st Quarter ...... $35.30 $26.42 2nd Quarter ...... 34.38 21.47 3rd Quarter ...... 23.37 17.04 4th Quarter ...... 21.82 17.16 2014: 1st Quarter ...... $40.15 $27.56 2nd Quarter ...... 39.20 31.69 3rd Quarter ...... 40.45 25.95 4th Quarter ...... 32.21 24.64

HOLDERS On February 19, 2016, the closing sale price of our common stock was $17.01. As of February 19, 2016, the approximate number of record holders of common stock was 3,248.

DIVIDENDS We did not pay any dividends during 2015 or 2014.

32 PERFORMANCE GRAPH Comparison of Cumulative Five Year Return $500

$450

$400

$350

$300

$250

$200

$150

$100

$50

$0 1/1/11 12/31/11 12/29/12 12/28/13 1/3/15 1/2/16

Kate Spade & Company S&P Smallcap 600

S&P Midcap 400 New Benchmarking Group Prior Benchmarking Group 25FEB201619240697

2010 2011 2012 2013 2014 2015 Kate Spade & Company ...... $100.00 $120.53 $169.41 $442.88 $449.86 $248.18 S&P SmallCap 600 ...... 100.00 101.02 117.51 166.05 175.61 172.14 S&P MidCap 400 ...... 100.00 98.27 115.84 154.64 169.75 166.05 New Benchmarking Group(a) ...... 100.00 96.32 113.24 124.88 117.41 108.32 Prior Benchmarking Group(b) ...... 100.00 94.94 129.75 163.48 166.03 139.29 (a) The New Benchmarking Group consisted of Columbia Sportswear Company.; Express, Inc.; G III Apparel Group, Ltd.; Guess?, Inc.; J. Crew Group, Inc.; lululemon athletica inc.; Steve Madden, Ltd.; Tumi Holdings Inc.; Vera Bradley, Inc.; and Vince Holding Corp. (b) The Prior Benchmarking Group consisted of Ann, Inc.; Express, Inc.; Guess?, Inc.; J. Crew Group, Inc.; lululemon athletica inc.; Michael Kors Holdings Limited; Tumi Holdings Inc.; Under Armour, Inc.; Urban Outfitters, Inc.; Vera Bradley, Inc.; and Vince Holding Corp. The line graph above compares the cumulative total stockholder return on the Company’s Common Stock over a 5-year period with the return on (i) the Standard & Poor’s SmallCap 600 Stock Index (‘‘S&P SmallCap 600’’); (ii) the Standard & Poor’s MidCap 400 Stock Index (‘‘S&P MidCap 400’’) (which the Company’s shares became a part of on March 21, 2014); and (iii) two indices comprised of: (a) the previously designated compensation peer group (the ‘‘Prior Benchmarking Group’’) designated by the Board’s Compensation Committee in consultation with its compensation consultants, against which executive compensation practices of the Company were compared and (b) the new compensation peer group (the ‘‘New Benchmarking Group’’) designated for the Company’s 2015 fiscal year by the Board’s Compensation Committee in consultation with its compensation consultants, which reflects a total of three additions to and four deletions from the Prior Benchmarking Group. We have historically constructed our

33 compensation benchmarking group based on companies with comparable products, revenue composition and size. We believe that the New Benchmarking Group provides a more meaningful comparison in terms of comparable products, revenue composition and size. In accordance with SEC disclosure rules, the measurements are indexed to a value of $100 at December 31, 2010 (the last trading day before the beginning of our 2011 fiscal year) and assume that all dividends were reinvested.

ISSUER PURCHASES OF EQUITY SECURITIES The following table summarizes information about our purchases during the quarter ended January 2, 2016, of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934:

Total Number of Maximum Shares Approximate Purchased Dollar Value of as Part of Shares that Publicly May Yet Be Total Number of Announced Purchased Shares Plans or Under the Plans Purchased Average Price Programs (In or Programs Period (In thousands)(a) Paid Per Share thousands) (In thousands)(b) October 4, 2015 — October 31, 2015 ...... — $ — — $28,749 November 1, 2015 — December 5, 2015 .... — — — 28,749 December 6, 2015 — January 2, 2016 ...... — — — 28,749 Total — 13 Weeks Ended January 2, 2016 . . . — $ — — $28,749

(a) Includes shares withheld to cover tax-withholding requirements relating to the vesting of restricted stock issued to employees pursuant to the Company’s shareholder-approved stock incentive plans. (b) The Company initially announced the authorization of a share buyback program in December 1989. Since its inception, the Company’s Board of Directors has authorized the purchase under the program of an aggregate of $2.275 billion of the Company’s stock. The ABL Facility currently restricts the Company’s ability to repurchase stock.

34 Item 6. Selected Financial Data. The following table sets forth certain information regarding our results of operations and financial position and is qualified in its entirety by the Consolidated Financial Statements and notes thereto, which appear elsewhere herein.

(Amounts in thousands, except per common share data) 2015 2014 2013 2012 2011 Net sales ...... $1,242,720 $1,138,603 $803,371 $ 544,765 $ 569,820 Gross profit ...... 754,107 680,271 496,590 339,932 309,983 Operating income (loss) ...... 66,398 33,472 20,215 (36,022) (140,335) Income (loss) from continuing operations(a)(b) . . 21,708 76,726 (32,165) (52,687) 101,144 Net income (loss)(b) ...... 17,087 159,160 72,995 (74,505) (171,687) Working capital ...... 354,538 221,705 206,473 36,407 124,772 Total assets ...... 980,361 926,338 977,511 902,523 950,004 Total debt ...... 401,557 410,743 394,201 406,294 446,315 Total stockholders’ equity (deficit) ...... 245,221 199,611 (32,482) (126,930) (108,986) Per common share data: Basic Income (loss) from continuing operations . 0.17 0.61 (0.27) (0.48) 1.07 Net income (loss) ...... 0.13 1.26 0.60 (0.68) (1.81) Diluted Income (loss) from continuing operations . 0.17 0.60 (0.27) (0.48) 0.91 Net income (loss) ...... 0.13 1.25 0.60 (0.68) (1.35) Weighted average shares outstanding, basic .... 127,634 126,264 121,057 109,292 94,664 Weighted average shares outstanding, diluted(c) . 128,222 127,019 121,057 109,292 120,692

(a) During 2015, 2014 and 2013, we recorded pretax charges of $35.4 million, $42.0 million and $10.6 million, respectively, related to our streamlining initiatives, which are discussed in Note 13 of Notes to Consolidated Financial Statements. During 2015, we recorded a pretax charge of $26.0 million to terminate contracts with our former joint venture partner in China. During 2013, we recorded a pretax non-cash impairment charge of $6.1 million related to our former investment in the Mexx business. During 2014 and 2013, we recorded pretax non-cash impairment charges of $1.5 million and $3.3 million, respectively, in our Adelington Design Group segment related to the TRIFARI trademark. During 2012, we recorded a pretax gain of $40.1 million related to the acquisition of the remaining 51.0% interest in Kate Spade Japan Co., Ltd. During 2011, we recorded a pretax gain of $287.0 million related to the sales of: (i) the global trademark rights for the Liz Claiborne family of brands; (ii) the trademark rights in the US and Puerto Rico for MONET; (iii) the Dana Buchman trademark; and (iv) the trademark rights related to our former Curve brand and selected other smaller fragrance brands. (b) During 2014, we recorded a net benefit of $87.4 million resulting from the reversal of reserves for uncertain tax positions due to the expiration of the related statutes of limitations. (c) Because we incurred losses from continuing operations in 2013 and 2012, outstanding stock options, nonvested shares and potentially dilutive shares issuable upon conversion of the Convertible Notes are antidilutive. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods.

35 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Business Segments We operate our kate spade new york and JACK SPADE brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. Our Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent activities for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker (‘‘CODM’’) to evaluate performance and allocate resources. In identifying our reportable segments, we considered our management structure and the economic characteristics, products, customers, sales growth potential and long-term profitability of our operating segments. As such, we configured our operations into the following three reportable segments: • KATE SPADE North America segment — consists of our kate spade new york and JACK SPADE brands in North America. • KATE SPADE International segment — consists of our kate spade new york and JACK SPADE brands in International markets (principally in Japan, Asia (excluding Japan), Europe and Latin America). • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands and (ii) the licensed LIZWEAR and LIZ CLAIBORNE NEW YORK brands. We, as licensor, also license to third parties the right to produce and market products bearing certain Company-owned trademarks.

Market Environment The industries in which we operate have historically been subject to cyclical variations, including recessions in the general economy. Our results are dependent on a number of factors impacting consumer spending, including, but not limited to, general economic and business conditions; consumer confidence; wages and employment levels; the housing market; levels of perceived and actual consumer wealth; consumer debt levels; availability of consumer credit; credit and interest rates; fluctuations in foreign currency exchange rates; fuel and energy costs; energy shortages; the performance of the financial, equity and credit markets; tariffs and other trade barriers; taxes; general political conditions, both domestic and abroad; and the level of customer traffic within department stores, malls and other shopping and selling environments. Macroeconomic challenges and uncertainty continue to dampen consumer spending; job growth remains inconsistent, with stagnating real wages in certain markets in which we operate; unemployment levels remain high; consumer retail traffic remains inconsistent and the retail environment remains promotional. Furthermore, economic conditions in international markets in which we operate, including Europe and Asia, remain uncertain and volatile. Economic conditions outside of our markets may also have a negative impact on the markets in which we operate. We are focusing on initiatives that drive margin improvement and continue to grow the kate spade new york brand through product category and geographic expansion across our four category pillars: women’s, men’s, children’s and home.

Competitive Profile We operate in global fashion markets that are intensely competitive and subject to, among other things, macroeconomic conditions and consumer demands, tastes and discretionary spending habits. As we anticipate that the global economic uncertainty will continue into the foreseeable future, we will continue to carefully manage liquidity and spending.

36 In summary, the measure of our success in the future will depend on our ability to continue to navigate through an uncertain macroeconomic environment with challenging market conditions, execute on our strategic vision, including attracting and retaining the management talent necessary for such execution, designing and delivering products that are acceptable to the marketplaces that we serve, sourcing the manufacture and distribution of our products on a competitive and efficient basis, and continuing to drive profitable growth. We have established the following operating and financial goals to further develop kate spade new york into a global lifestyle brand: (i) driving top line growth by opening kate spade new york retail locations in North America; expanding product categories within our existing network as well as new channels, continuing e-commerce expansion and entering into local licenses to meet customer needs in Japan; focusing on our e-commerce site as a global flagship to influence purchases both online and in our retail stores; and expanding our presence in selected geographies through a partnered approach that requires little capital and is expected to be accretive to operating margins; (ii) driving quality of sale initiatives with continued moderation of promotions across channels and increased marketing that leverages customer relationship management (‘‘CRM’’) capability and focuses on acquiring full price customers to support those efforts; (iii) delivering the world of kate spade new york to our customer seamlessly across channels through a channel agnostic approach, while using our e-commerce site as a global flagship, offering our broadest product assortment across our category pillars and improving delivery speed to our consumer through a buy anywhere, receive anywhere model; and (iv) increasing product accessibility and improving our speed-to-market capabilities through micro-assorting and localization at the store level, focusing on regional product, volume and climate to better assort by market taste and provide our consumer what she wants, when she wants it. Reference is also made to the other economic, competitive, governmental and technological factors affecting our operations, markets, products, services and prices as set forth in this report, including, without limitation, under ‘‘Statement Regarding Forward-Looking Statements’’ and ‘‘Item 1A — Risk Factors’’ in this Annual Report on Form 10-K.

Recent Developments and Operational Initiatives In the second quarter of 2015, we signed a distribution agreement for our operations in Latin America, including in Brazil, which leverages the network of our distribution partner. As part of these actions, we closed our Company-operated stores in Brazil during the third quarter of 2015 and no longer operate directly in Brazil. In the first quarter of 2015, we entered a global licensing agreement with Fossil Group, Inc. (‘‘Fossil’’) for the design, development and distribution of kate spade new york watches through 2025, with the first collection of watches designed, developed and distributed in collaboration with us to launch in 2016. Accordingly, we now earn royalty income under the agreement with Fossil and no longer sell watches through our wholesale channel. In the first quarter of 2015 we: • acquired the 60.0% interest in KS China Co., Limited (‘‘KSC’’) owned by E-Land Fashion China Holdings, Limited (‘‘E-Land’’) for $36.0 million, including a contract termination payment of $26.0 million; and • converted the reacquired businesses in Hong Kong, Macau and Taiwan and the KATE SPADE business in China into 50.0% owned joint ventures with Walton Brown, a subsidiary of The Lane Crawford Joyce Group (‘‘LCJG’’), a leading luxury retail, brand management and distribution company in Asia, and received a net $19.7 million from LCJG for their interests in the joint ventures, subject to adjustments. On January 29, 2015, we announced the discontinuation of KATE SPADE SATURDAY as a standalone business. We also announced a new business model for JACK SPADE to leverage the distribution network

37 of its retail partners and expand its e-commerce platform. As part of these actions, substantially all of KATE SPADE SATURDAY’s Company-owned and three partnered store locations were closed by the end of the second quarter of 2015. We also closed JACK SPADE’s Company-owned stores by the end of the second quarter of 2015. In the fourth quarter of 2015, we launched kate spade new york e-commerce websites in Germany, Italy, Spain and the Netherlands. In the third quarter of 2015, we launched our e-commerce website in France. On February 3, 2014, we completed the sale of 100.0% of the capital stock of Lucky Brand Dungarees, Inc. (‘‘Lucky Brand’’) to LBD Acquisition Company, LLC (‘‘LBD Acquisition’’), a Delaware limited liability company and affiliate of Leonard Green & Partners, L.P., for aggregate consideration of $225.0 million, comprised of $140.0 million cash consideration and a three-year $85.0 million Lucky Brand Note (the ‘‘Lucky Brand Note’’) issued by the successor of LBD Acquisition, Lucky Brand Dungarees, LLC (‘‘Lucky Brand LLC’’) at closing, subject to working capital and other adjustments. On March 4, 2015, we and Lucky Brand LLC entered into a transfer and settlement agreement (the ‘‘Lucky Brand Note Agreement’’) to settle the Lucky Brand Note in full, prior to its maturity. Pursuant to the terms of the Lucky Brand Note Agreement, Lucky Brand LLC paid us $81.0 million to settle the principal balance of the Lucky Brand Note and related unpaid interest and payment in kind. Giving effect to the Lucky Brand Note Agreement, since the date of issuance, we collected aggregate principal and interest under the Lucky Brand Note of $89.0 million. The transactions contemplated by the Lucky Brand Note Agreement closed on March 4, 2015. On November 6, 2013, we sold the Juicy Couture brandname and related intellectual property assets (the ‘‘Juicy Couture IP’’) to an affiliate of Authentic Brands Group (‘‘ABG’’) for a total purchase price of $195.0 million. The Juicy Couture IP was licensed back to us to accommodate the wind-down of operations, which was substantially completed in the second quarter of 2014. We paid guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license. On April 7, 2014, we sold our Juicy Couture business in Europe to an operating partner of ABG for $8.6 million, subject to working capital adjustments. On November 19, 2013, we entered into an agreement to terminate the lease of our Juicy Couture flagship store on Fifth Avenue in New York City in exchange for a $51.0 million payment. On May 15, 2014, we surrendered such premises to the landlord and received proceeds of $45.8 million (net of taxes and fees), in addition to $5.0 million previously received. For a discussion of certain risks relating to our recent initiatives, see ‘‘Item 1A — Risk Factors’’ in this Annual Report on Form 10-K.

Discontinued Operations The activities of our former Lucky Brand and Juicy Couture businesses have been segregated and reported as discontinued operations for all periods presented. The initiatives relating to the KATE SPADE SATURDAY business, the JACK SPADE Company-owned stores and our directly operated business in Brazil do not represent a strategic shift in our operations and therefore are not reported as discontinued operations.

2015 Overall Results Our 2015 results reflected: • Net sales growth in our KATE SPADE North America segment primarily driven by increased kate spade new york direct-to-consumer sales;

38 • Reduced net sales in our KATE SPADE International segment, primarily reflecting the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture and the impact of changes in foreign currency exchange rates; • The impact of the wind-down operations of KATE SPADE SATURDAY, JACK SPADE brick and mortar stores and our directly owned operations in Brazil; and • Reduced net sales and gross profit in our Adelington Design Group segment, primarily related to the exited TRIFARI, TRINA TURK and Kensie brands. During 2015, we recorded the following pretax items: • Expenses associated with our streamlining initiatives of $35.4 million; • A $26.0 million charge to terminate contracts with our former joint venture partner in China; • A $9.9 million loss related to the prepayment discount on the settlement of the Lucky Brand Note; and • A $4.0 million write-off of the cumulative translation adjustment of our subsidiary in Brazil due to its substantial liquidation in 2015. Our 2014 results reflected: • Net sales growth in our KATE SPADE North America segment; • Net sales growth in our KATE SPADE International segment, reflecting increases across all geographies in the segment and $26.3 million of incremental net sales from the 2014 acquisition of the KATE SPADE businesses in Southeast Asia; and • Reduced net sales and gross profit in our Adelington Design Group segment, primarily related to the LIZWEAR, LIZ CLAIBORNE NEW YORK and private label jewelry businesses. During 2014, we recorded the following pretax items: • Expenses associated with our streamlining initiatives of $42.0 million; • A $16.9 million loss on the extinguishment of debt in connection with the redemption of the 10.5% Senior Secured Notes due April 2019 (the ‘‘Senior Notes’’), which were refinanced with proceeds from the issuance of term loans in an aggregate principal amount of $400.0 million maturing in April 2021 (collectively, the ‘‘Term Loan’’) as provided under a term loan credit agreement that we entered into on April 10, 2014 (the ‘‘Term Loan Credit Agreement’’); • Additional inventory charges of $7.9 million as a result of our decision to exit KATE SPADE SATURDAY as a standalone business and close our JACK SPADE retail stores; and • A non-cash impairment charge of $1.5 million in our Adelington Design Group segment related to our trademark for the TRIFARI brand.

Net Sales Net sales in 2015 were $1.243 billion, an increase of $104.1 million or 9.1%, compared to 2014 net sales of $1.139 billion. The increase in net sales compared to 2014 includes year-over-year decreases of: (i) $33.6 million related to the wind-down operations of KATE SPADE SATURDAY, JACK SPADE brick and mortar stores and our directly owned operations in Brazil; (ii) $28.2 million related to the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture; (iii) $26.8 million from changes in foreign currency exchange rates; and (iv) $17.9 million for the additional week in 2014, excluding the impact of wind-down operations. These were partially offset by an increase of $2.5 million resulting from outperformance in our kate spade new york e-commerce flash sale website in North America.

39 Gross Profit and Income from Continuing Operations Gross profit in 2015 was $754.1 million, an increase of $73.8 million compared to 2014, primarily due to increased net sales in our KATE SPADE North America segment. Our gross profit rate increased from 59.7% in 2014 to 60.7% in 2015, which primarily reflected: (i) inventory charges recorded in 2014 of $7.9 million as a result of our decision to exit KATE SPADE SATURDAY as a standalone business and close our JACK SPADE brick and mortar stores; and (ii) the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture. These were partially offset by a change in mix due to accelerated outlet store openings in 2014, in order to capitalize on the one-time opportunity presented by the Juicy Couture real estate portfolio. We recorded income from continuing operations of $21.7 million in 2015, as compared to $76.7 million in 2014. Income from continuing operations in 2014 included an income tax benefit of $84.3 million, which reflected a net $87.4 million reduction in the reserve for uncertain tax positions due to the expiration of the related statutes of limitations. The year-over-year change also reflected: (i) an increase in gross profit; (ii) the absence of the loss on extinguishment of debt of $16.9 million in 2015; (iii) an increase in Selling, general & administrative expenses (‘‘SG&A’’) in 2015, including a $26.0 million charge to terminate contracts with our former joint venture partner in China; (iv) the loss on settlement of the Lucky Brand Note of $9.9 million; and (v) a $7.1 million increase in Other expense, net.

Balance Sheet We ended 2015 with a net debt position (total debt less cash and cash equivalents and marketable securities) of $103.7 million as compared to $226.7 million at year-end 2014. The $123.0 million decrease in our net debt primarily reflected: (i) the receipt of $75.1 million from Lucky Brand LLC to settle the Lucky Brand Note in March 2015; (ii) the receipt of a net $17.6 million from LCJG for their interests in the joint ventures; (iii) the funding of $60.2 million of capital and in-store shop expenditures in 2015; and (iv) the payment of $10.0 million to acquire E-Land’s 60.0% interest in KSC. We also generated $120.5 million of cash from continuing operating activities over the past 12 months, which included the impact of a $26.0 million payment to terminate contracts with our former joint venture partner in China. The operating activities of our discontinued operations used $15.0 million of cash over the past 12 months.

40 RESULTS OF OPERATIONS As discussed above, we present our results based on three reportable segments.

2015 vs. 2014 The following table sets forth our operating results for the year ended January 2, 2016 (52 weeks), compared to the year ended January 3, 2015 (53 weeks):

Fiscal Years Ended January 2, January 3, Variance Dollars in millions 2016 2015 $ % Net Sales ...... $1,242.7 $1,138.6 $ 104.1 9.1% Gross Profit ...... 754.1 680.3 73.8 10.9% Selling, general & administrative expenses ...... 687.7 645.3 (42.4) (6.6)% Impairment of intangible asset ...... — 1.5 1.5 * Operating Income ...... 66.4 33.5 32.9 98.4% Other expense, net ...... (11.1) (4.0) (7.1) * Loss on settlement of note receivable ...... (9.9) — (9.9) * Loss on extinguishment of debt ...... — (16.9) 16.9 * Interest expense, net ...... (19.2) (20.2) 1.0 5.1% Provision (benefit) for income taxes ...... 4.5 (84.3) (88.8) * Income from Continuing Operations ...... 21.7 76.7 (55.0) (71.7)% Discontinued operations, net of income taxes ...... (4.6) 82.5 (87.1) * Net Income ...... $ 17.1 $ 159.2 $(142.1) (89.3)%

* Not meaningful.

Net Sales Net sales for 2015 were $1.243 billion, an increase of $104.1 million, or 9.1%, compared to 2014 net sales of $1.139 billion. The increase in net sales compared to 2014 includes year-over-year decreases of: (i) $33.6 million related to the wind-down operations of KATE SPADE SATURDAY, JACK SPADE brick and mortar stores and our directly owned operations in Brazil; (ii) $28.2 million related to the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture; (iii) $26.8 million from changes in foreign currency exchange rates; and (iv) $17.9 million for the additional week in 2014, excluding the impact of wind-down operations. These were partially offset by an increase of $2.5 million resulting from outperformance in our kate spade new york e-commerce flash sale website in North America. Excluding the additional week in 2014, kate spade new york comparable direct-to-consumer sales, including e-commerce, increased by 12.6% in 2015; excluding e-commerce net sales, kate spade new york comparable direct-to-consumer sales increased by 9.4% in 2015. Net sales results for our segments are provided below: • KATE SPADE North America net sales were $1.031 billion, a 15.6% increase compared to 2014 net sales of $891.8 million, primarily driven by increased direct-to-consumer and wholesale net sales in our kate spade new york brand. The increase in net sales compared to 2014 includes year-over-year decreases of: (i) $23.3 million in the KATE SPADE SATURDAY brand as we substantially completed the wind-down in the second quarter of 2015 and a decrease in our JACK SPADE brand due to the closure of our brick and mortar stores as we reposition the brand; (ii) $14.0 million for the additional week in 2014; and (iii) $6.9 million from changes in foreign currency exchange rates. These were partially offset by an increase of $2.5 million resulting from outperformance in our kate spade new york e-commerce flash sale website.

41 We ended 2015 with 104 kate spade new york specialty retail stores and 64 outlet stores, reflecting a net addition of 11 kate spade new york specialty retail stores and 7 outlet stores over the last 12 months. Key operating metrics for our kate spade new york North America retail operations included the following: – Average retail square footage in 2015 was approximately 362 thousand square feet, a 22.7% increase compared to 2014; and – Sales productivity was $1,496 per average square foot in 2015, as compared to $1,457 in 2014 on a constant currency basis, excluding the impact of an additional week in 2014. • KATE SPADE International net sales were $188.2 million, an 11.9% decrease compared to 2014 net sales of $213.6 million, which primarily reflected: (i) a $28.2 million decrease related to the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture, as discussed above; (ii) a decrease of $19.9 million from changes in foreign currency exchange rates; (iii) a $3.9 million decrease for the additional week in 2014; (iv) a decrease of $2.6 million related to the wind-down operations of KATE SPADE SATURDAY, JACK SPADE brick and mortar and our directly operated business in Brazil; and (v) an increase in net sales to our international distributors. We ended 2015 with 22 kate spade new york specialty retail stores, 52 concessions, and 13 outlet stores, reflecting a net reduction over the last 12 months of 10 specialty retail stores and one outlet store, including the conversion of 6 specialty retail stores, 3 concessions and 1 outlet store totaling 11 thousand square feet in the Hong Kong, Macau and Taiwan territories to a joint venture. With the completion of the wind-down of our directly owned business in Brazil, we have owned and operated direct-to-consumer operations in Japan and Europe in our International segment. Key operating metrics for our kate spade new york International retail operations in Japan and Europe included the following: – Average retail square footage, including concessions, in 2015 was approximately 73 thousand square feet, a 16.6% increase compared to 2014; and – Sales productivity was $1,634 per average square foot in 2015, compared to $1,618 in 2014 on a constant currency basis, excluding the impact of an additional week in 2014. • Adelington Design Group net sales were $23.4 million for 2015, a decrease of $9.8 million, or 29.5%, compared to 2014, primarily related to a $7.6 million decrease in the exited TRIFARI, TRINA TURK and Kensie brands and a $2.5 million decrease in our LIZWEAR brand, partially offset by a $0.3 million increase in the MONET and LIZ CLAIBORNE brands. Comparable direct-to-consumer net sales are calculated as follows: • New stores become comparable after 14 full fiscal months of operations (on the first day of the 15th full fiscal month); • Except in unusual circumstances, closing stores become non-comparable one full fiscal month prior to the scheduled closing date; • A remodeled store will be changed to non-comparable when there is a 20.0% or more increase/ decrease in its selling square footage (effective at the start of the fiscal month when construction begins). The store becomes comparable again after 14 full fiscal months from the re-open date; • A store that relocates becomes non-comparable when the new location is materially different from the original location (in respect to selling square footage and/or traffic patterns); • Stores that are acquired are not comparable until they have been reflected in our results for a period of 12 months; and • E-commerce sales are comparable after 12 full fiscal months from the website launch date (on the first day of the 13th full month).

42 We evaluate sales productivity based on net sales per average square foot, which is defined as net sales divided by the average of beginning and end of period gross square feet and excludes e-commerce net sales.

Gross Profit Gross profit in 2015 was $754.1 million, an increase of $73.8 million compared to 2014, primarily due to increased net sales in our KATE SPADE North America segment. Our gross profit rate increased from 59.7% in 2014 to 60.7% in 2015, which primarily reflected: (i) inventory charges recorded in 2014 of $7.9 million as a result of our decision to exit KATE SPADE SATURDAY as a standalone business and JACK SPADE brick and mortar stores; and (ii) the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture. These were partially offset by a change in mix due to accelerated outlet store openings in 2014, in order to capitalize on the one-time opportunity presented by the Juicy Couture real estate portfolio. Expenses related to warehousing activities, including receiving, storing, picking, packing and general warehousing charges are included in SG&A; accordingly, our gross profit may not be directly comparable to others who may include these expenses as a component of cost of goods sold.

Selling, General & Administrative Expenses SG&A increased $42.4 million, or 6.6%, to $687.7 million in 2015 compared to 2014. The change in SG&A reflected the following: • A $62.5 million increase in SG&A in our KATE SPADE North America segment, primarily related to direct-to-consumer expansion reflecting: (i) increased rent and other store operating expenses; and (ii) increased compensation related expenses; • A $26.0 million charge incurred in 2015 to terminate contracts with our former joint venture partner in China; • A $33.0 million decrease in SG&A in our KATE SPADE International segment, including a reduction associated with the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture and reflecting: (i) decreased rent and other store operating expenses; (ii) lower advertising expenses; and (iii) reduced concession fees; • An $8.3 million decrease in our Adelington Design Group segment; and • A $4.8 million decrease in expenses associated with our streamlining initiatives, brand-exiting activities and acquisition related costs.

Impairment of Intangible Asset In 2014, we recorded a non-cash impairment charge of $1.5 million in our Adelington Design Group segment related to our trademark for the TRIFARI brand.

Operating Income Operating income for 2015 was $66.4 million (5.3% of net sales), compared to $33.5 million (2.9% of net sales) in 2014.

Other Expense, Net Other expense, net amounted to $11.1 million in 2015 and $4.0 million in 2014. Other expense, net consisted primarily of (i) equity in the losses of KSC and KS HMT of $6.7 million in 2015 and $2.6 million in 2014, respectively; (ii) a $4.0 million write-off of the cumulative translation adjustment of our subsidiary in Brazil due to its substantial liquidation in 2015; and (iii) foreign currency transaction gains and losses.

43 Loss on Settlement of Note Receivable In 2015, we recognized a $9.9 million loss related to the prepayment discount on the settlement of the Lucky Brand Note, as discussed above.

Loss on Extinguishment of Debt In 2014, we recorded a $16.9 million loss on the extinguishment of debt in connection with the redemption of the Senior Notes, which were refinanced with proceeds from the issuance of the Term Loan.

Interest Expense, Net Interest expense, net was $19.2 million in 2015, as compared to $20.2 million in 2014, primarily reflecting the absence of $13.5 million of interest expense in 2015 due to the refinancing of the Senior Notes in the second quarter of 2014 and a $2.3 million write-off of deferred financing fees in 2014 as a result of a reduction in the size of our ABL Facility, offset in part by a reduction of interest income of $9.2 million due to the repayment of the Lucky Brand Note in the first quarter of 2015 and additional interest expense of $5.6 million related to the Term Loan.

Provision (Benefit) for Income Taxes The income tax provision of $4.5 million in 2015 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 income tax benefit of $(84.3) million in 2014 primarily represented refunds from certain tax jurisdictions, partially offset by 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. In addition to those items, the 2014 benefit for income taxes included a net $87.4 million reduction in the reserve for uncertain tax positions, resulting from the expiration of the related statutes of limitations. We did not record income tax benefits for substantially all losses incurred during 2015 and 2014, as it is not more likely than not that we will utilize such benefits due to the combination of our history of pretax losses and our ability to carry forward or carry back tax losses or credits.

Income from Continuing Operations Income from continuing operations in 2015 was $21.7 million, or 1.7% of net sales, compared to $76.7 million in 2014, or 6.7% of net sales. Earnings per share (‘‘EPS’’), basic from continuing operations was $0.17 in 2015 and $0.61 in 2014. EPS, diluted from continuing operations was $0.17 in 2015 and $0.60 in 2014.

Discontinued Operations, Net of Income Taxes Loss from discontinued operations in 2015 was $(4.6) million, reflecting a loss on disposal of discontinued operations of $(1.5) million and a $(3.1) million loss from discontinued operations. Income from discontinued operations in 2014 was $82.5 million, reflecting a gain on disposal of discontinued operations of $130.0 million and a $(47.5) million loss from discontinued operations. EPS, basic from discontinued operations was $(0.04) in 2015 and $0.65 in 2014. EPS, diluted from discontinued operations was $(0.04) in 2015 and $0.65 in 2014.

Net Income Net income in 2015 was $17.1 million, compared to $159.2 million in 2014. EPS, basic was $0.13 in 2015 and $1.26 in 2014. EPS, diluted was $0.13 in 2015 and $1.25 in 2014.

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

Fiscal Years Ended January 2, January 3, Variance Dollars in thousands 2016 2015 $ % Reportable Segments Adjusted EBITDA: KATE SPADE North America ...... $177,593 $143,009 $34,584 24.2% KATE SPADE International(a) ...... 17,697 810 16,887 * Adelington Design Group ...... 4,523 4,092 431 10.5% Other(b) ...... — (940) 940 * Total Reportable Segments Adjusted EBITDA ...... 199,813 146,971 Depreciation and amortization, net(c) ...... (46,311) (48,441) Charges due to streamlining initiatives(d), brand-exiting activities, acquisition related costs and loss on asset disposals and impairments, net ...... (40,399) (30,371) Joint venture contract termination fee ...... (26,000) — Share-based compensation(e) ...... (25,577) (37,270) Adjusted equity loss included in Reportable Segments Adjusted EBITDA(f) ...... 4,872 2,583 Operating Income ...... 66,398 33,472 Other expense, net(a) ...... (11,137) (4,033) Loss on settlement of note receivable ...... (9,873) — Loss on extinguishment of debt ...... — (16,914) Interest expense, net ...... (19,152) (20,178) Provision (benefit) for income taxes ...... 4,528 (84,379) Income from Continuing Operations ...... $ 21,708 $ 76,726

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

45 A discussion of Segment Adjusted EBITDA of our reportable segments for the years ended January 2, 2016 and January 3, 2015 follows: • KATE SPADE North America Adjusted EBITDA for 2015 was $177.6 million (17.2% of net sales), compared to $143.0 million (16.0% of net sales) in 2014. The year-over-year increase reflected an increase in gross profit, as discussed above, partially offset by an increase in SG&A related to direct-to-consumer expansion, including an increase in rent and other store operating expenses and increased compensation related expenses. • KATE SPADE International Adjusted EBITDA for 2015 was $17.7 million (9.4% of net sales), compared to $0.8 million (0.4% of net sales) in 2014. The year-over-year increase reflected: (i) the closure of our Company-owned stores in Brazil; (ii) an increase in gross profit related to international distribution agreements; and (iii) a decrease in SG&A. The increase in the adjusted EBITDA margin from 0.4% in 2014 to 9.4% in 2015 primarily related to an increase in the gross profit rate, primarily driven by the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture and increased sales to our international distributors. • Adelington Design Group Adjusted EBITDA for 2015 was $4.5 million (19.3% of net sales), compared to Adjusted EBITDA of $4.1 million (12.3% of net sales) in 2014. The increase in Adjusted EBITDA reflected decreased SG&A, partially offset by reduced gross profit.

2014 vs. 2013 The following table sets forth our operating results for the year ended January 3, 2015 (53 weeks), compared to the year ended December 28, 2013 (52 weeks):

Fiscal Years Ended January 3, December 28, Variance Dollars in millions 2015 2013 $ % Net Sales ...... $1,138.6 $ 803.4 $ 335.2 41.7% Gross Profit ...... 680.3 496.6 183.7 37.0% Selling, general & administrative expenses ...... 645.3 473.1 (172.2) (36.4)% Impairment of intangible assets ...... 1.5 3.3 1.8 53.5% Operating Income ...... 33.5 20.2 13.3 65.6% Other expense, net ...... (4.0) (2.1) (1.9) (95.6)% Impairment of cost investment ...... — (6.1) 6.1 * Loss on extinguishment of debt ...... (16.9) (1.7) (15.2) * Interest expense, net ...... (20.2) (47.1) 26.9 57.1% Benefit for income taxes ...... (84.3) (4.6) 79.7 * Income (Loss) from Continuing Operations ...... 76.7 (32.2) 108.9 * Discontinued operations, net of income taxes ...... 82.5 105.2 (22.7) (21.6)% Net Income ...... $ 159.2 $ 73.0 $ 86.2 *

* Not meaningful.

Net Sales Net sales for 2014 were $1.139 billion, an increase of $335.2 million or 41.7%, as compared to 2013 net sales of $803.4 million. Excluding the additional week in 2014, comparable direct-to-consumer net sales, including e-commerce, increased by 24.4% in the 2014; excluding e-commerce net sales, comparable direct-to-consumer net sales increased by 21.6%. Including the additional week in 2014, comparable direct-to-consumer net sales, including e-commerce, increased by 25.9% in 2014; excluding e-commerce net sales, comparable direct-to-consumer net sales increased by 23.1%.

46 Net sales results for our segments are provided below: • KATE SPADE North America net sales were $891.8 million, a 49.2% increase compared to 2013. We ended 2014 with 108 specialty retail stores and 58 outlet stores, reflecting the net addition over the last 12 months of 20 specialty retail stores and 16 outlet stores. Key operating metrics for our North America retail operations included the following: – Average retail square footage in 2014 was approximately 315 thousand square feet, a 42.9% increase compared to 2013; and – Sales productivity was $1,437 per average square foot in 2014, as compared to $1,234 for 2013. The store counts at the end of 2014 included 15 specialty retail stores and 1 outlet store for KATE SPADE SATURDAY and JACK SPADE with average retail square footage in 2014 of 20 thousand square feet. • KATE SPADE International net sales were $213.6 million, a 46.9% increase compared to 2013, reflecting increases across all geographies in the segment. Net sales included $23.1 million of incremental net sales from the acquisition of the KATE SPADE businesses in Southeast Asia. We ended 2014 with 42 specialty retail stores, 15 outlet stores and 54 concessions, reflecting the net addition over the last 12 months of 6 specialty retail stores, 5 outlet stores and 9 concessions and the acquisition of 6 specialty retail stores, 2 concessions and 1 outlet store. Key operating metrics for our International retail operations included the following: – Average retail square footage, including concessions, in 2014 was approximately 94 thousand square feet, a 34.4% increase compared to 2013; and – Sales productivity was $1,711 per average square foot in 2014, as compared to $1,536 for 2013. The store counts at the end of 2014 included 16 specialty retail stores, 5 concessions and 2 outlets for KATE SPADE SATURDAY, JACK SPADE and Hong Kong, Macau and Taiwan with average retail square footage in 2014 of 22 thousand square feet. • Adelington Design Group net sales were $33.3 million, a decrease of $27.0 million, or 44.8%, compared to 2013, reflecting the following: – An $8.2 million decrease related to the LIZWEAR brand; – An $8.2 million decrease related to the LIZ CLAIBORNE and MONET brands; – A net $7.4 million decrease related to the LIZ CLAIBORNE NEW YORK and private label jewelry businesses; and – A $3.2 million decrease primarily related to the expiration of our former Dana Buchman brand supplier agreement in October 2013.

Gross Profit

Gross profit in 2014 was $680.3 million (59.7% of net sales), compared to $496.6 million (61.8% of net sales) in 2013. The increase in gross profit was primarily due to increased net sales in our KATE SPADE North America and KATE SPADE International segments, partially offset by decreased net sales in our Adelington Design Group segment. Our gross profit rate decreased from 61.8% in 2013 to 59.7% in 2014, primarily reflecting: (i) additional inventory charges of $7.9 million in 2014 as a result of our decision to exit KATE SPADE SATURDAY as a standalone business and close our JACK SPADE retail stores; (ii) a more promotional retail environment; (iii) a change in mix in our KATE SPADE North America segment related to accelerating outlet store openings in order to capitalize on the one-time opportunity presented

47 by the Juicy Couture real estate portfolio; (iv) foreign currency pressure on our operations in Japan; and (v) the impact of off-price sales associated with the liquidation of excess KATE SPADE SATURDAY launch year inventory.

Selling, General & Administrative Expenses

SG&A increased $172.2 million, or 36.4%, to $645.3 million in 2014 compared to 2013. The change in SG&A reflected the following: • A $106.4 million increase in SG&A in our KATE SPADE North America segment, primarily related to direct-to-consumer expansion reflecting: (i) increased rent and other store operating expenses; (ii) increased compensation related expenses; and (iii) increased e-commerce fees and advertising expenses; • A $49.1 million increase in SG&A in our KATE SPADE International segment, primarily related to direct-to-consumer expansion, reflecting: (i) increased rent, concession fees and other store operating expenses; (ii) increased compensation related expenses; and (iii) increased advertising expenses. The increase also included incremental SG&A associated with the KATE SPADE businesses in Southeast Asia; • A $26.6 million increase in expenses associated with our streamlining initiatives, brand-exiting activities and acquisition related costs; • A $5.9 million decrease associated with reduced costs at our Adelington Design Group segment; and • A $4.0 million decrease in expenses related principally to distribution functions that were included in the Juicy Couture and Lucky Brand historical results, but are not directly attributable to Juicy Couture or Lucky Brand and therefore, have not been included in discontinued operations. SG&A as a percentage of net sales was 56.7% in 2014, compared to 58.9% in 2013.

Impairment of Intangible Assets

In 2014 and 2013, we recorded non-cash impairment charges of $1.5 million and $3.3 million, respectively, in our Adelington Design Group segment related to our trademark for the TRIFARI brand.

Operating Income

Operating income for 2014 was $33.5 million (2.9% of net sales), compared to $20.2 million (2.5% of net sales) in 2013.

Other Expense, Net

Other expense, net amounted to $4.0 million in 2014 and $2.1 million in 2013. Other expense, net consisted primarily of (i) foreign currency transaction gains and losses and (ii) equity in the losses of KSC.

Impairment of Cost Investment

In 2013, we recorded a $6.1 million impairment charge related to our former investment in the Mexx business.

48 Loss on Extinguishment of Debt

In 2014, we recorded a $16.9 million loss on the extinguishment of debt in connection with the redemption of the Senior Notes, which were refinanced with proceeds from the issuance of the Term Loan. In 2013, we recorded a $1.7 million loss on the extinguishment of debt in connection with the conversion of $19.9 million of our 6.0% Convertible Senior Notes due June 2014 (the ‘‘Convertible Notes’’) into 5.6 million shares of our common stock.

Interest Expense, Net

Interest expense, net was $20.2 million in 2014, as compared to $47.1 million in 2013, primarily reflecting (i) a net decrease of $13.0 million in interest expense due to the refinancing of the Senior Notes with the net proceeds from the Term Loan in the second quarter of 2014; (ii) the recognition of $11.3 million of interest income in 2014 related to the Lucky Brand Note; (iii) a decrease of $3.1 million related to reduced borrowings under the ABL Facility and the extinguishment of the Convertible Notes; and (iv) a $2.3 million write-off of deferred financing fees in 2014 as a result of a reduction in the size of our ABL Facility.

Benefit for Income Taxes

In 2014 and 2013, we recorded a benefit for income taxes of $84.3 million and $4.6 million, respectively. The income tax benefits reflected refunds from certain tax jurisdictions, partially offset by 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. In addition to those items, the 2014 benefit for income taxes included a net $87.4 million reduction in the reserve for uncertain tax positions, resulting from the expiration of the related statutes of limitations. We did not record income tax benefits for substantially all losses incurred during 2014 and 2013, as it is not more likely than not that we will utilize such benefits due to the combination of our history of pretax losses and our ability to carry forward or carry back tax losses or credits.

Income (Loss) from Continuing Operations

Income (loss) from continuing operations in 2014 was $76.7 million, or 6.7% of net sales, compared to $(32.2) million in 2013, or (4.0)% of net sales. EPS, basic from continuing operations was $0.61 in 2014 and $(0.27) in 2013. EPS, diluted from continuing operations was $0.60 in 2014 and $(0.27) in 2013.

Discontinued Operations, Net of Income Taxes

Income from discontinued operations in 2014 was $82.5 million, reflecting a gain on disposal of discontinued operations of $130.0 million and a $(47.5) million loss from discontinued operations. Income from discontinued operations in 2013 was $105.2 million, reflecting a gain on disposal of discontinued operations of $143.4 million and a $(38.2) million loss from discontinued operations. EPS, basic and diluted, from discontinued operations was $0.65 in 2014 and $0.87 in 2013.

Net Income

Net income in 2014 was $159.2 million, compared to $73.0 million in 2013. EPS, basic was $1.26 in 2014 and 0.60 in 2013. EPS, diluted was $1.25 in 2014 and $0.60 in 2013.

49 Segment Adjusted EBITDA Segment Adjusted EBITDA for our reportable segments is provided below. Fiscal Years Ended January 3, December 28, Variance Dollars in thousands 2015 2013 $ % Reportable Segments Adjusted EBITDA: KATE SPADE North America ...... $143,009 $ 70,250 $72,759 103.6% KATE SPADE International(a) ...... 810 (815) 1,625 * Adelington Design Group ...... 4,092 12,008 (7,916) (65.9)% Other(b) ...... (940) (4,334) 3,394 78.3% Total Reportable Segments Adjusted EBITDA ...... 146,971 77,109 Depreciation and amortization, net(c) ...... (48,441) (35,088) Charges due to streamlining initiatives(d), brand-exiting activities, acquisition related costs, impairment of intangible assets and loss on asset disposals and impairments, net ...... (30,371) (15,716) Share-based compensation(e) ...... (37,270) (7,269) Equity loss included in Reportable Segments Adjusted EBITDA ...... 2,583 1,179 Operating Income ...... 33,472 20,215 Other expense, net(a) ...... (4,033) (2,062) Impairment of cost investment ...... — (6,109) Loss on extinguishment of debt ...... (16,914) (1,707) Interest expense, net ...... (20,178) (47,065) Benefit for income taxes ...... (84,379) (4,563) Income (Loss) from Continuing Operations ...... $ 76,726 $ (32,165)

* Not meaningful. (a) Amounts include equity in the losses of our equity method investee of $2.6 million and $1.2 million in 2014 and 2013, respectively. (b) Other consists of expenses principally related to distribution functions that were included in Juicy Couture and Lucky Brand historical results, but are not directly attributable to those businesses and therefore have not been included in discontinued operations. (c) Excludes amortization included in Interest expense, net. (d) See Note 13 of Notes to Consolidated Financial Statements for a discussion of streamlining charges. (e) Includes share-based compensation expense of $17.3 million and $2.8 million in 2014 and 2013, respectively, that was classified as restructuring. A discussion of Segment Adjusted EBITDA of our reportable segments for the years ended January 3, 2015 and December 28, 2013 follows: • KATE SPADE North America Adjusted EBITDA for 2014 was $143.0 million (16.0% of net sales), compared to $70.3 million (11.8% of net sales) in 2013. The period-over-period increase reflected an increase in gross profit, as discussed above, partially offset by an increase in SG&A related to direct-to-consumer expansion, including an increase in rent and other store operating expenses, payroll related expenses, e-commerce fees and advertising expenses. • KATE SPADE International Adjusted EBITDA for 2014 was $0.8 million (0.4% of net sales), compared to $(0.8) million ((0.6)% of net sales) in 2013. The period-over-period increase reflected an increase in gross profit, as discussed above, partially offset by an increase in SG&A related to direct-to-consumer expansion, including an increase in rent, concession fees and other store operating expenses, payroll related expenses and advertising expenses. KATE SPADE International

50 Adjusted EBITDA in 2014 included $2.8 million of incremental Adjusted EBITDA from the acquisition of the KATE SPADE businesses in Southeast Asia. • Adelington Design Group Adjusted EBITDA for 2014 was $4.1 million (12.3% of net sales), compared to Adjusted EBITDA of $12.0 million (19.9% of net sales) in 2013. The decrease in Adjusted EBITDA reflected decreased gross profit, partially offset by reduced SG&A.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES Cash Requirements Our primary ongoing cash requirements are to: (i) fund seasonal working capital needs (primarily accounts receivable and inventory); (ii) fund capital expenditures related to the opening and refurbishing of our specialty retail and outlet stores and normal maintenance activities; (iii) invest in our information systems; (iv) fund operational and contractual obligations, including remaining efforts associated with our streamlining initiatives; and (v) potentially repurchase or retire debt obligations.

Sources and Uses of Cash Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, as well as borrowings through our lines of credit. Term Loan. On April 10, 2014, we entered into the Term Loan Credit Agreement, which provides for term loans in an aggregate principal amount of $400.0 million, maturing in April 2021. The Term Loan is subject to amortization payments of $1.0 million per quarter, which commenced on October 1, 2014, with the balance due at maturity. Interest on the outstanding principal amount of the Term Loan accrues at a rate equal to LIBOR (with a floor of 1.0%) plus 3.0% per annum, payable in cash. The Term Loan was funded on May 12, 2014, and we used $354.8 million of the net proceeds of $392.0 million from the Term Loan to redeem all of our remaining outstanding Senior Notes on May 12, 2014, as discussed above. The Term Loan and other obligations under the Term Loan Credit Agreement are guaranteed by certain of our restricted subsidiaries (the ‘‘Guarantors’’), which include (i) all of our existing material domestic restricted subsidiaries, (ii) all of our future wholly owned restricted subsidiaries (other than foreign subsidiaries, CFCs, CFC holding companies and subsidiaries of any of the foregoing and certain immaterial subsidiaries) and (iii) all of our future non-wholly owned restricted subsidiaries that guarantee capital markets debt securities or term indebtedness of the Company or any Guarantor. The Term Loan Credit Agreement permits us to incur, from time to time, additional incremental term loans under the Term Loan Credit Agreement (subject to obtaining commitments for such term loans) and other pari passu lien indebtedness, subject to an overall limit of $100.0 million plus such additional amount that would cause our consolidated net total secured debt ratio not to exceed 3.75 to 1.0 on a pro forma basis. Any such incremental term loans and other pari passu lien indebtedness are permitted to share in the collateral described below on a pari passu basis with the Term Loan. The Term Loan may be prepaid, at our option, in whole or in part, at any time at par plus accrued interest; provided that if the Term Loan is prepaid or refinanced in connection with a repricing transaction within six months after the initial borrowing, a 1.0% penalty is applicable. Subject to certain permitted liens and other exclusions and exceptions, the Term Loan is secured (i) on a first-priority basis by a lien on our KATE SPADE trademarks and certain related rights owned by us and the Guarantors (the ‘‘Term Priority Collateral’’) and (ii) by a second-priority security interest in our and the Guarantors’ other assets (the ‘‘ABL Priority Collateral’’ and together with the Term Priority Collateral, the ‘‘Collateral’’), which secure our ABL Facility on a first-priority basis. The Term Loan is required to be prepaid in an amount equal to 50.0% of our Excess Cash Flow (as defined in the Term Loan Credit Agreement) with respect to each fiscal year ending on or after January 2, 2016. The percentage of Excess Cash Flow that must be so applied is reduced to 25.0% if our consolidated net total debt ratio is less than 2.75 to 1.0 and to 0% if our consolidated net total debt ratio is less than 2.25 to 1.0. Lenders may elect not to accept mandatory prepayments.

51 The Term Loan Credit Agreement limits our and our restricted subsidiaries’ ability to, among other things, incur indebtedness, make dividend payments or other restricted payments, create liens, sell assets (including securities of our restricted subsidiaries), permit certain restrictions on dividends and transfers of assets by our 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 our assets, in each case subject to certain designated exceptions and qualifications. The Term Loan Credit Agreement also contains certain affirmative covenants and events of default that are customary for credit agreements governing term loans. ABL Facility. In May 2014, we terminated our prior revolving credit agreement and completed a fourth amendment to and restatement of the ABL Facility, which extended the maturity date of the facility to May 2019. Availability under the ABL Facility shall be in an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of our 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 facility provided under the ABL Facility of 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 our current domestic subsidiaries, certain of our future domestic subsidiaries and certain of our foreign subsidiaries. The ABL Facility is secured by a first- priority lien on substantially all of our assets and the assets of the other borrowers and guarantors (other than certain trademark collateral in which the lenders under the Term Loan Credit Agreement have a first- priority lien, which trademark collateral secures the obligations under the ABL Facility on a second- priority lien basis). The ABL Facility limits our and our 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 our restricted subsidiaries and enter into sale and leaseback transactions. These covenants are subject to important exceptions and qualifications, and many of the covenants are subject to an exception based on meeting the fixed charge coverage ratio and/or certain minimum availability tests. The ABL Facility also contains representations and warranties (some of which are brought down to the time of each borrowing made), affirmative covenants and events of default that are customary for asset-based revolving credit agreements. In addition, the terms and conditions of the ABL Facility: (i) provide for a decrease in fees and interest rates compared to our previous asset-based revolving loan facility (including eurocurrency spreads of 1.50% to 2.00% over LIBOR, depending on the level of aggregate availability), (ii) require us to maintain pro forma compliance with a fixed charge coverage ratio of 1.0:1.0 on a trailing four-quarter basis if availability under the ABL Facility for three consecutive business days falls below the greater of $15.0 million and 10.0% of the lesser of the aggregate commitments and the borrowing base and (iii) require us 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. Based on our forecast of borrowing availability under the ABL Facility, we anticipate that cash flows from operations and the projected borrowing availability under our ABL Facility will be sufficient to fund our liquidity requirements for at least the next 12 months. There can be no certainty that availability under the ABL Facility will be sufficient to fund our liquidity needs. Should we be unable to comply with the requirements in the ABL Facility, we would be unable to borrow under such agreement and any amounts outstanding would become immediately due and payable,

52 unless we were able to secure a waiver or an amendment under the ABL Facility. Should we be unable to borrow under the ABL Facility, or if outstanding borrowings thereunder become immediately due and payable, our liquidity would be significantly impaired, which would have a material adverse effect on our business, financial condition and results of operations. In addition, an acceleration of amounts outstanding under the ABL Facility would likely cause cross-defaults under our other outstanding indebtedness, including the Term Loan. The sufficiency and availability of our projected sources of liquidity may be adversely affected by a variety of factors, including, without limitation: (i) the level of our operating cash flows, which will be impacted by retailer and consumer acceptance of our products, general economic conditions and the level of consumer discretionary spending; (ii) the status of, and any adverse changes in, our credit ratings; (iii) our ability to maintain required levels of borrowing availability under the ABL Facility and to comply with other covenants included in our debt and credit facilities; (iv) the financial wherewithal of our larger department store and specialty retail store customers; and (v) interest rate and exchange rate fluctuations. Because of the continuing uncertainty and risks relating to future economic conditions, we may, from time to time, explore various initiatives to improve our liquidity, including issuance of debt securities, sales of various assets, additional cost reductions and other measures. In addition, where conditions permit, we may also, from time to time, seek to retire, exchange or purchase our outstanding debt in privately- negotiated transactions or otherwise. We may not be able to successfully complete any such actions. Cash and Debt Balances. We ended 2015 with $297.9 million in cash and cash equivalents, compared to $184.0 million at the end of 2014 and with $401.6 million of debt outstanding, compared to $410.7 million at the end of 2014. The $123.0 million decrease in our net debt primarily reflected: (i) the receipt of $75.1 million from Lucky Brand LLC to settle the Lucky Brand Note in March 2015; (ii) the receipt of a net $17.6 million from LCJG for their interests in the joint ventures; (iii) the funding of $60.2 million of capital and in-store shop expenditures in 2015; and (iv) the payment of $10.0 million to acquire E-Land’s 60.0% interest in KSC. We also generated $120.5 million of cash from continuing operating activities over the past 12 months, which included a $26.0 million payment to terminate contracts with our former joint venture partner in China. The operating activities of our discontinued operations used $15.0 million of cash over the past 12 months. Accounts Receivable increased $6.8 million, or 7.5%, at year-end 2015 compared to year-end 2014, primarily reflecting: (i) an increase in kate spade new york wholesale accounts receivable, including international distributors; and (ii) the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture, partially offset by the impact of the wind-down of the KATE SPADE SATURDAY business and Brazil operations. Inventories increased $33.6 million, or 21.3% at year-end 2015 compared to year-end 2014, primarily due to an increase in kate spade new york inventory to support growth initiatives, partially offset by the impact of the wind-down of the KATE SPADE SATURDAY operations and JACK SPADE brick and mortar stores and the conversion of the Hong Kong, Macau and Taiwan territories to a joint venture. Borrowings under our ABL Facility peaked at $8.0 million during 2015, compared to a peak of $6.0 million in 2014. We had no outstanding borrowings under our ABL Facility at January 2, 2016, compared to $6.0 million at January 3, 2015. Net cash provided by operating activities of our continuing operations was $120.5 million in 2015, compared to $44.6 million in 2014. This $75.9 million year-over-year change was primarily due to a decrease in cash outflows related to working capital and increased earnings in 2015 compared to 2014 (excluding depreciation and amortization, foreign currency gains and losses, impairment charges, a reduction in the reserve for uncertain tax positions and other non-cash items). The operating activities of our discontinued operations used $15.0 million and $30.2 million of cash in the fiscal years ended January 2, 2016 and January 3, 2015, respectively. Net cash provided by (used in) investing activities of our continuing operations was $18.6 million in 2015, compared to $(134.6) million in 2014. Net cash provided by investing activities in 2015 primarily reflected:

53 (i) the receipt of net proceeds of $75.1 million from the settlement of the Lucky Brand Note in March 2015; (ii) the receipt of net proceeds of $17.6 million from LCJG for their interest in the joint ventures; (iii) the use of $60.2 million for capital and in-store shop expenditures; (iv) the payment of $10.0 million to acquire E-Land’s 60.0% interest in KSC; and (v) the use of $5.0 million for investments in and advances to KSC. Net cash used in investing activities in 2014 reflected: (i) the use of $100.0 million for capital and in-store shop expenditures; (ii) the payment of $32.3 million for the acquisition of the existing KATE SPADE business in Southeast Asia from Globalluxe Kate Spade HK Limited; and (iii) the use of $2.4 million for investments in and advances to KSC. The investing activities of our discontinued operations provided $0.6 million and $137.8 million during the fiscal years ended January 2, 2016 and January 3, 2015, respectively. Net cash (used in) provided by financing activities was $(8.5) million in 2015, compared to $40.6 million in 2014. The $49.1 million year-over-year change primarily reflected: (i) a decrease in proceeds from the exercise of stock options of $39.5 million; (ii) an $8.2 million reduction in payments for deferred financing fees; (iii) proceeds of $398.0 million from the issuance of the Term Loan in 2014; (iv) the use of $390.7 million for the redemption of the Senior Notes in 2014; and (v) an increase in net cash used by borrowing activities under our ABL Facility of $9.5 million.

Commitments and Capital Expenditures Pursuant to a buying/sourcing agency agreement, Li & Fung acts as the primary global apparel and accessories buying/sourcing agent, with the exception of our jewelry product lines. On March 24, 2015, we modified this arrangement in order to, among other things, transition our buying/sourcing activities for our accessories products to an in-house model, beginning with our Spring 2016 collection. We pay Li & Fung an agency commission based on the cost of our product purchases through Li & Fung. We are obligated to use Li & Fung as our primary buying/sourcing agent for our ready-to-wear apparel products and we may use Li & Fung as a buying/sourcing agent with respect to our 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. Our agreement with Li & Fung is not exclusive. In connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to third parties, for which we or certain of our subsidiaries remain secondarily liable for the remaining obligations on 136 such leases. As of January 2, 2016, the future aggregate payments under these leases amounted to $92.1 million and extended to various dates through 2025. On December 3, 2014, Mexx Canada Company filed for bankruptcy protection from its creditors under Canadian bankruptcy laws. Although an inactive and insolvent subsidiary of ours may be secondarily liable under approximately 50 leases that were assigned to Mexx Canada Company in connection with the disposal of the Mexx business, we do not currently believe that these circumstances will require payments by us for liabilities under the leases. The amount of our potential liability, if any, with respect to these leases cannot be determined at this time. Our 2016 capital expenditures are expected to be approximately $65.0 – $70.0 million, compared to $60.2 million in 2015. These expenditures primarily relate to our plan to open approximately 15 Company operated retail stores globally in 2016, net of approximately 7 store closures, the continued technological upgrading of our management information systems and costs associated with the refurbishment of selected specialty retail and outlet stores. We expect capital expenditures and working capital cash needs to be financed with available cash, cash provided by operating activities and our ABL Facility.

54 The following table summarizes as of January 2, 2016 our contractual cash obligations by future period (see Notes 1, 9 and 10 of Notes to Consolidated Financial Statements): Payments Due by Period Less than After Contractual cash obligations * 1 year 1-3 years 4-5 years 5 years Total (In millions) Operating lease commitments ...... $ 61.7 $120.8 $108.5 $172.9 $ 463.9 Capital lease obligations ...... 2.1 4.3 4.6 10.8 21.8 Inventory purchase commitments ...... 107.5 — — — 107.5 Term Loan ...... 4.0 8.0 8.0 375.0 395.0 Interest on Term Loan(a) ...... 16.1 31.3 30.8 8.0 86.2 Pension withdrawal liability ...... 2.2 — — — 2.2 Total ...... $193.6 $164.4 $151.9 $566.7 $1,076.6

* The table above does not include any amounts for assigned leases and amounts recorded for uncertain tax positions. We cannot estimate the amounts or timing of payments related to uncertain tax positions. (a) Interest is calculated at 4.0% per annum. Debt consisted of the following: January 2, January 3, In thousands 2016 2015 Term Loan credit facility(a) ...... 393,431 396,158 ABL Facility ...... — 6,000 Capital lease obligations ...... 8,126 8,585 Total debt ...... $401,557 $410,743

(a) The balance as of January 2, 2016 and January 3, 2015 included an unamortized debt discount of $1.6 million and $1.8 million, respectively. For information regarding our debt and credit instruments, refer to Note 10 of Notes to Consolidated Financial Statements. Availability under the ABL Facility is an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of our 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 facility provided under the ABL Facility of 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. As of January 2, 2016, availability under our ABL Facility was as follows: Letters of Total Borrowing Outstanding Credit Available Excess (a) (a) (b) In thousands Facility Base Borrowings Issued Capacity Capacity ABL Facility(a) ...... $200,000 $290,969 $ — $10,512 $189,488 $169,488

(a) Availability under the ABL Facility is the lesser of $200.0 million or a borrowing base that is computed monthly and comprised of 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.

55 Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements.

Hedging Activities Our operations are exposed to risks associated with fluctuations in foreign currency exchange rates. In order to reduce exposures related to changes in foreign currency exchange rates, we use forward contracts and options and may utilize foreign currency collars and swap contracts to hedge specific exposure to variability in forecasted cash flows associated primarily with inventory purchases mainly of our KATE SPADE business in Japan. As of January 2, 2016, we had forward contracts maturing through June 2016 to sell 689.5 million yen for $5.9 million. We also had option contracts maturing through December 2016 to sell 2.4 billion yen for $20.7 million. We use foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with intercompany loans. As of January 2, 2016, we had forward contracts to sell 5.1 billion yen for $42.2 million maturing through March 2016. Transaction gains (losses) for the year ended January 2, 2016 were not significant. Transaction gains of $4.5 million and $8.5 million related to these derivative instruments for the years ended January 3, 2015 and December 28, 2013, respectively, were reflected within Other expense, net.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, goodwill, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods. Estimates by their nature are based on judgments and available information. The estimates that we make are based upon historical factors, current circumstances and the experience and judgment of our management. We evaluate our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluations. Therefore, actual results could materially differ from those estimates under different assumptions and conditions. For accounts receivable, we estimate the net collectibility, considering both historical and anticipated trends as well as an evaluation of economic conditions and the financial positions of our customers. For inventory, we review the aging and salability of our inventory and estimate the amount of inventory that we will not be able to sell in the normal course of business. This distressed inventory is written down to the expected recovery value to be realized through off-price channels. If we incorrectly anticipate these trends or unexpected events occur, our results of operations could be materially affected. We utilize various valuation methods to determine the fair value of acquired tangible and intangible assets. For inventory, the method uses the expected selling prices of finished goods. Intangible assets acquired are valued using a discounted cash flow model. Should any of the assumptions used in these projections differ significantly

56 from actual results, material impairment losses could result where the estimated fair values of these assets become less than their carrying amounts. For accrued expenses related to items such as employee insurance, workers’ compensation and similar items, accruals are assessed based on outstanding obligations, claims experience and statistical trends; should these trends change significantly, actual results would likely be impacted. Changes in such estimates, based on more accurate information, may affect amounts reported in future periods. We are not aware of any reasonably likely events or circumstances that would result in different amounts being reported that would materially affect our financial condition or results of operations.

Revenue Recognition Revenue is recognized from our direct-to-consumer, wholesale and licensing operations. Retail store and e-commerce revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. The Company does not recognize revenue for estimated gift card breakage. Revenue within our wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. We review and refine these estimates on a monthly basis based on current experience, trends and retailer performance. Our historical estimates of these costs have not differed materially from actual results. Licensing revenues are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees.

Income Taxes Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. We also assess the likelihood of the realization of deferred tax assets and adjust the carrying amount of these deferred tax assets by a valuation allowance to the extent we believe it more likely than not that all or a portion of the deferred tax assets will not be realized. We consider many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in our effective tax rate in future periods for various reasons, including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is our policy to recognize the impact of an uncertain income tax position on our income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. We record interest expense and penalties payable to relevant tax authorities as income tax expense.

57 Accounts Receivable — Trade, Net In the normal course of business, we extend credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on an evaluation of historical and anticipated trends, the financial condition of our customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with our customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. Should circumstances change or economic or distribution channel conditions deteriorate significantly, we may need to increase our provisions. Our historical estimates of these costs have not differed materially from actual results.

Inventories, Net Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. We continually evaluate the composition of our inventories by assessing slow-turning, ongoing product as well as prior seasons’ fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of our individual product lines, the impact of market trends and economic conditions and the value of current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. We review our inventory position on a monthly basis and adjust our estimates based on revised projections and current market conditions. If economic conditions worsen, we incorrectly anticipate trends or unexpected events occur, our estimates could be proven overly optimistic and required adjustments could materially adversely affect future results of operations. Our historical estimates of these costs and our provisions have not differed materially from actual results.

Intangibles, Net Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. Our annual impairment test is performed as of the first day of the third fiscal quarter. We assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that an indefinite-lived intangible asset is not impaired, then we are not required to take further action. However, if we conclude otherwise, then we are required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. We estimate the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We recognize an impairment loss when the estimated fair value of the intangible asset is less than the carrying value.

58 The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset’s value may be impaired. Impairment testing is based on a review of forecasted operating cash flows. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to our Consolidated Statement of Income. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years. As a result of the impairment analysis performed in connection with our purchased trademarks with indefinite lives, no impairment charges were recorded during 2015. In 2014, we recorded a non-cash impairment charge of $1.5 million to reduce the carrying value of the TRIFARI trademark to zero, due to the expected exit of the brand. In 2013, we recorded a non-cash impairment charge of $3.3 million which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark (see Note 11 of Notes to Consolidated Financial Statements).

Goodwill Goodwill is not amortized but rather tested for impairment at least annually. Our annual impairment test is performed as of the first day of the third fiscal quarter. We assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that goodwill is impaired. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that goodwill is impaired, then we are not required to take further action. However, if we conclude otherwise, then we are required to determine the fair value of goodwill and perform the quantitative impairment test by comparing the fair value and carrying amount of the related reporting unit. A two-step impairment test is then performed on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. We determine the fair value of our reporting units using the market approach, as is typically used for companies providing products where the value of such a company is more dependent on the ability to generate earnings than the value of the assets used in the production process. Under this approach, we estimate fair value based on market multiples of earnings for comparable companies. We also use discounted future cash flow analyses to corroborate these fair value estimates. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit’s goodwill based upon the residual of the summed identified tangible and intangible assets. As a result of the impairment analysis performed in connection with our goodwill, no impairment charges were recorded during 2015, 2014 or 2013. During 2014, we recorded additional goodwill as a result of the reacquisition of the KATE SPADE business in Southeast Asia (see Note 2 of Notes to Consolidated Financial Statements); in the first quarter of 2015, $16.0 million of the goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan was reclassified to Investment in unconsolidated subsidiaries upon closing of the joint venture with Walton Brown, as discussed above.

59 Accrued Expenses Accrued expenses for employee insurance, workers’ compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted.

Share-Based Compensation We recognize compensation expense based on the fair value of employee share-based awards, including stock options, restricted stock and restricted stock with performance features that impact vesting, net of estimated forfeitures. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share-based awards expected to be forfeited prior to vesting. Determining the fair value of shares with market conditions at the grant date requires judgment, including the weighting of historical and estimated implied volatility of the Company’s stock price and where appropriate, a market index. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.

Inflation The rate of inflation over the past few years has not had a significant impact on our sales or profitability.

ACCOUNTING PRONOUNCEMENTS For a discussion of recently adopted and recent accounting pronouncements, see Notes 1 and 21 of Notes to Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We finance our capital needs through available cash and cash equivalents, operating cash flows, letters of credit and our ABL Facility. Our floating rate Term Loan and ABL Facility expose us to market risk for changes in interest rates. Loans thereunder bear interest at rates that vary with changes in prevailing market rates. We do not speculate on the future direction of interest rates. As of January 2, 2016 and January 3, 2015, our exposure to changing market rates related to our ABL Facility and the Term Loan credit facility was as follows:

Dollars in millions January 2, 2016 January 3, 2015 ABL Facility ...... $ — $ 6.0 Average interest rate ...... — 1.68% Term loan credit facility ...... $395.0 $398.0 Average interest rate ...... 4.00% 4.00% A ten percent change in the average rate would have a minimal impact to interest expense during the year ended January 2, 2016. The Term Loan interest is based on LIBOR (with a floor of 1.0%) plus 3.0% per annum; therefore a ten percent change in the average LIBOR rate would not impact interest expense, since the LIBOR rate was below the floor of 1.0% at January 2, 2016. As of January 2, 2016, we had forward contracts with net notional amounts of $48.1 million and option contracts of $20.7 million. Unrealized gains (losses) for outstanding foreign currency forward contracts and option contracts were $(0.5) million. A sensitivity analysis to changes in foreign currency exchange rates indicated that if the yen weakened by 10.0% against the US dollar, the fair value of these instruments would increase by $6.2 million at January 2, 2016. Conversely, if the yen strengthened by 10.0% against the

60 US dollar, the fair value of these instruments would decrease by $6.2 million at January 2, 2016. Any resulting changes in the fair value of the instruments would be partially offset by changes in the underlying balance sheet positions. We do not hedge all transactions denominated in foreign currency. We are exposed to credit related losses if the counterparties to our derivative instruments fail to perform their obligations. We systemically measure and assess such risk as it relates to the credit ratings of these counterparties, all of which currently have satisfactory credit ratings and therefore we do not expect to realize losses associated with counterparty default.

Item 8. Financial Statements and Supplementary Data. See the ‘‘Index to Consolidated Financial Statements and Schedule’’ appearing at the end of this Annual Report on Form 10-K for information required under this Item 8.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.

Item 9A. Controls and Procedures. Our management, under the supervision and with the participation of our Chief Executive Officer, President and Chief Operating Officer and Chief Financial Officer, evaluated our disclosure controls and procedures at the end of each of our fiscal quarters. Our Chief Executive Officer, President and Chief Operating Officer and Chief Financial Officer concluded that, as of January 2, 2016, our disclosure controls and procedures were effective to ensure that all information required to be disclosed is recorded, processed, summarized and reported within the time periods specified, and that information required to be filed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) is accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended January 2, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. See ‘‘Index to Consolidated Financial Statements and Schedule’’ appearing at the end of this Annual Report on Form 10-K for Management’s Report on Internal Control Over Financial Reporting.

Item 9B. Other Information. None.

61 PART III Item 10. Directors, Executive Officers and Corporate Governance. With respect to our Executive Officers, see ‘‘Executive Officers of the Registrant’’ in Part I of this Annual Report on Form 10-K. Information regarding Section 16(a) compliance, the Audit Committee (including membership and Audit Committee Financial Experts but excluding the ‘‘Audit Committee Report’’), our code of ethics and background of our Directors appearing under the captions ‘‘Section 16(a) Beneficial Ownership Reporting Compliance,’’ ‘‘Corporate Governance,’’ ‘‘Additional Information-Company Code of Ethics and Business Practices’’ and ‘‘Election of Directors’’ in our Proxy Statement for the 2016 Annual Meeting of Shareholders (the ‘‘2016 Proxy Statement’’) is hereby incorporated by reference.

Item 11. Executive Compensation. Information called for by this Item 11 is incorporated by reference to the information set forth under the headings ‘‘Compensation Discussion and Analysis’’ and ‘‘Executive Compensation’’ (other than the Board Compensation Committee Report) in the 2016 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. EQUITY COMPENSATION The following table summarizes information about the stockholder approved Kate Spade & Company Outside Directors’ 1991 Stock Ownership Plan (the ‘‘Outside Directors’ Plan’’); Fifth & Pacific Companies, Inc. 1992 Stock Incentive Plan; Fifth & Pacific Companies, Inc. 2000 Stock Incentive Plan (the ‘‘2000 Plan’’); Fifth & Pacific Companies, Inc. 2002 Stock Incentive Plan (the ‘‘2002 Plan’’); Fifth & Pacific Companies, Inc. 2005 Stock Incentive Plan (the ‘‘2005 Plan’’); Fifth & Pacific Companies, Inc. 2011 Stock Incentive Plan (the ‘‘2011 Plan’’); and Fifth & Pacific Companies, Inc. 2013 Stock Incentive Plan (the ‘‘2013 Plan’’), which together comprise all of our existing equity compensation plans, as of January 2, 2016. In January 2006, we adopted the Fifth & Pacific Companies, Inc. Outside Directors’ Deferral Plan, which amended and restated the Outside Directors’ Plan by eliminating equity grants under the Outside Directors’ Plan, including the annual grant of shares of Common Stock. The last grant under the Outside Directors’ Plan was made on January 10, 2006. All subsequent Director stock grants have been made under the remaining shareholder approved plans.

Number of Securities Remaining Available for Number of Securities to be Weighted Average Exercise Future Issuance Under Issued Upon Exercise of Price of Outstanding Equity Compensation Plans Outstanding Options, Options, Warrants and (Excluding Securities Plan Category Warrants and Rights Rights Reflected in Column) Equity Compensation Plans Approved by Stockholders . 1,552,132(a) $15.35(b) 7,623,334(c) Equity Compensation Plans Not Approved by Stockholders ...... — N/A — Total ...... 1,552,132(a) $15.35(b) 7,623,334(c)

(a) Includes 646,249 shares of Common Stock issuable under the 2002, 2005, 2011 and 2013 Plans pursuant to participants’ elections thereunder to defer certain director compensation. Excluded from the above table are 1,924,250 restricted share units including shares with market conditions impacting the quantity of shares vesting.

62 (b) Shares of Common Stock issuable under the 2002, 2005, 2011 and 2013 Plans pursuant to participants’ election thereunder to defer certain director compensation were not included in calculating the Weighted Average Exercise Price. (c) In addition to options, warrants and rights, the 2000 Plan, the 2002 Plan, the 2005 Plan, the 2011 Plan and the 2013 Plan authorize the issuance of restricted stock, unrestricted stock and performance stock. Each of the 2000 and the 2002 Plans contains a sub-limit on the aggregate number of shares of restricted Common Stock, which may be issued; the sub-limit under the 2000 Plan is set at 1,000,000 shares and the sub-limit under the 2002 Plan is set at 1,800,000 shares. The 2005 Plan contains an aggregate 2,000,000 shares sub-limit on the number of shares of restricted stock, restricted stock units, unrestricted stock and performance shares that may be awarded. The 2011 Plan contains an aggregate 1,500,000 shares sub-limit on the number of shares of restricted stock, restricted stock units, unrestricted stock and performance shares that may be awarded. For purposes of computing the number of shares available for grant, awards other than stock options and stock appreciation rights will be counted against the 2011 Plan maximum in a 1.6-to-1.0 ratio. Security ownership information of certain beneficial owners and management as called for by this Item 12 is incorporated by reference to the information set forth under the heading ‘‘Security Ownership of Certain Beneficial Owners and Management’’ in the 2016 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence. Information called for by this Item 13 is incorporated by reference to the information set forth under the headings ‘‘Certain Relationships and Related Transactions’’ in the 2016 Proxy Statement.

Item 14. Principal Accounting Fees and Services. Information called for by this Item 14 is incorporated by reference to the information set forth under the heading ‘‘Ratification of the Appointment of the Independent Registered Public Accounting Firm’’ in the 2016 Proxy Statement.

PART IV Item 15. Exhibits and Financial Statement Schedules. (a) 1. Financial Statements ...... Refer to Index to Consolidated Financial Statements on Page F-1 (a) 2. Schedule SCHEDULE II — Valuation and Qualifying Accounts . . F-52 NOTE: Schedules other than those referred to above and parent company financial statements have been omitted as inapplicable or not required under the instructions contained in Regulation S-X or the information is included elsewhere in the financial statements or the notes thereto.

63 (a) 3. Exhibits

Exhibit No. Description 2(a) — Merger Agreement, dated as of September 1, 2011, by and among Registrant and Liz Claiborne Foreign Holdings, Inc. and Gores Malibu Holdings (Luxembourg) S.a.r.l., EuCo B.V. (incorporated herein by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K dated September 6, 2011). 2(b) — Asset Purchase Agreement, dated as of September 1, 2011, by and among Registrant and Liz Claiborne Canada Inc. and Gores Malibu Holdings (Luxembourg) S.a.r.l., 3256890 Nova Scotia Limited (incorporated herein by reference to Exhibit 2.2 to Registrant’s Current Report on Form 8-K dated September 6, 2011). 3(a) — Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) to Registrant’s Current Report on Form 8-K dated May 28, 2009). 3(b) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) to Registrant’s Current Report on Form 8-K dated June 3, 2010). 3(c) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated May 18, 2012). 3(d) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) and to Registrant’s Current Report on Form 8-K dated May 17, 2013). 3(e) — Amendment to the Restated Certificate of Incorporation of Registrant (incorporated herein by reference to Exhibit 3(a) and to Registrant’s Current Report on Form 8-K dated May 22, 2015). 3(f) — By-Laws of Registrant, as amended through May 27, 2010 (incorporated herein by reference to Exhibit 3(b) to Registrant’s Current Report on Form 8-K dated June 3, 2010). 3(g) — Amendment to By-Laws of Registrant (incorporated herein by reference to Exhibit 3(b) to Registrant’s Current Report on Form 8-K dated May 17, 2013). 3(h) — Amendment to By-Laws of Registrant (incorporated herein by reference to Exhibit 3(b) to Registrant’s Current Report on Form 8-K dated May 22, 2015). 3(i) — Amendment to Articles of Incorporation of Registrant (incorporated herein by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated March 3, 2014). 4(a) — Specimen certificate for Registrant’s Common Stock, par value $1.00 per share (incorporated herein by reference to Exhibit 4(a) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 26, 1992). 10(a)*+ — Description of Kate Spade & Company 2015 Employee Incentive Plan (Cash). 10(b)+ — The Kate Spade & Company 401(k) Savings and Profit Sharing Plan, as amended and restated (incorporated herein by reference to Exhibit 10(g) to Registrant’s 2002 Annual Report). 10(b)(i)+ — First Amendment to the Kate Spade & Company 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(i) to the 2003 Annual Report). 10(b)(ii)+ — Second Amendment to the Kate Spade & Company 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(ii) to the 2003 Annual Report). 10(b)(iii)+ — Third Amendment to the Kate Spade & Company 401(k) Savings and Profit Sharing Plan (incorporated herein by reference to Exhibit 10(e)(iii) to the 2003 Annual Report). 10(b)(iv)+ — Trust Agreement (the ‘‘401(k) Trust Agreement’’) dated as of October 1, 2003 between Registrant and Fidelity Management Trust Company (incorporated herein by reference to Exhibit 10(e)(iv) to the 2003 Annual Report).

64 Exhibit No. Description 10(b)(v)+ — First Amendment to the 401(k) Trust Agreement (incorporated herein by reference to Exhibit 10(e)(v) to Registrant’s Annual Report on Form 10-K for the fiscal year ended January 1, 2005 (the ‘‘2004 Annual Report’’). 10(b)(vi)+ — Second Amendment to the 401(k) Trust Agreement (incorporated herein by reference to Exhibit 10(e)(vi) to the 2004 Annual Report). 10(c)+ — Liz Claiborne, Inc. Amended and Restated Outside Directors’ 1991 Stock Ownership Plan (the ‘‘Outside Directors’ 1991 Plan’’) (incorporated herein by reference to Exhibit 10(m) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 1995). 10(c)(i)+ — Amendment to the Outside Directors’ 1991 Plan, effective as of December 18, 2003 (incorporated herein by reference to Exhibit 10(f)(i) to the 2003 Annual Report). 10(c)(ii)+ — Form of Option Agreement under the Outside Directors’ 1991 Plan (incorporated herein by reference to Exhibit 10(m)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 1996). 10(c)(iii)+ — Liz Claiborne, Inc. Outside Directors’ Deferral Plan (incorporated herein by reference to Exhibit 10(f)(iii) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the ‘‘2005 Annual Report). 10(d)+ — Liz Claiborne, Inc. 2000 Stock Incentive Plan (the ‘‘2000 Plan’’) (incorporated herein by reference to Exhibit 4(e) to Registrant’s Form S-8 dated as of January 25, 2001). 10(d)(i)+ — Amendment No. 1 to the 2000 Plan (incorporated herein by reference to Exhibit 10(h)(i) to the 2003 Annual Report). 10(d)(ii)+ — Form of Option Grant Certificate under the 2000 Plan (incorporated herein by reference to Exhibit 10(z)(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2000 (the ‘‘2000 Annual Report’’)). 10(d)(iii) — Form of Special Retention Award Agreement under the Company’s 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K dated June 17, 2011) 10(e)+ — Liz Claiborne, Inc. 2002 Stock Incentive Plan (the ‘‘2002 Plan’’) (incorporated herein by reference to Exhibit 10(y)(i) to Registrant’s Quarterly Report on Form 10-Q for the period ended June 29, 2002 (the ‘‘2nd Quarter 2002 10-Q’’)). 10(e)(i)+ — Amendment No. 1 to the 2002 Plan (incorporated herein by reference to Exhibit 10(y)(iii) to the 2nd Quarter 2002 10-Q). 10(e)(ii)+ — Amendment No. 2 to the 2002 Plan (incorporated herein by reference to Exhibit 10(i)(ii) to the 2003 Annual Report). 10(e)(iii)+ — Amendment No. 3 to the 2002 Plan (incorporated herein by reference to Exhibit 10(i)(iii) to the 2003 Annual Report). 10(e)(iv)+ — Form of Option Grant Certificate under the 2002 Plan (incorporated herein by reference to Exhibit 10(y)(ii) to the 2nd Quarter 2002 10-Q). 10(f)+ — Description of Supplemental Life Insurance Plans (incorporated herein by reference to Exhibit 10(q) to the 2000 Annual Report). 10(g)+ — Liz Claiborne, Inc. Supplemental Executive Retirement Plan effective as of January 1, 2002, constituting an amendment, restatement and consolidation of the Liz Claiborne, Inc. Supplemental Executive Retirement Plan and the Liz Claiborne, Inc. Bonus Deferral Plan (incorporated herein by reference to Exhibit 10(t)(i) to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 29, 2001). 10(g)(i)+ — Liz Claiborne, Inc. 2005 Supplemental Executive Retirement Plan effective as of January 1, 2005, including amendments through December 31, 2008 (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 31, 2008). 10(g)(ii)+ — Trust Agreement, dated as of January 1, 2002, between Registrant and Wilmington Trust Company (incorporated herein by reference to Exhibit 10(t)(i) to the 2002 Annual Report).

65 Exhibit No. Description 10(h)+ — Liz Claiborne Inc. 2005 Stock Incentive Plan (the ‘‘2005 Plan’’) (incorporated herein by reference to Exhibit 10.1(b) to Registrant’s Current Report on Form 8-K dated May 26, 2005). 10(h)(i)+ — Amendment No. 1 to the 2005 Plan (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated July 12, 2005). 10(h)(ii)+ — Form of Restricted Stock Grant Certificate under the 2005 Plan (incorporated herein by reference to Exhibit 10(a) to Registrant’s Quarterly Report on Form 10-Q for the period ended April 2, 2005). 10(h)(iii)+ — Form of Option Grant Confirmation under the 2005 Plan (incorporated herein by reference to Exhibit 99.2 to Registrant’s Current Report on Form 8-K dated December 4, 2008). 10(i)+ — Liz Claiborne Inc. 2011 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated May 23, 2011 which incorporates by reference Exhibit A to Definitive Proxy Statement for the 2011 Annual Meeting of the Registrant, filing April 7, 2011). 10(i)(i) — Form of Restricted Stock Unit Grant Certificate under the 2011 Plan (incorporated herein by reference to Exhibit 10.47 to Registrant’s Form S-4 dated January 18, 2013). 10(i)(ii) — Form of Option Grant Certificate under the 2011 Plan (incorporated herein by reference to Exhibit 10.46 to Registrant’s Form S-4 dated January 18, 2013). 10(j) — Fifth & Pacific Companies, Inc. 2013 Incentive Plan (the ‘‘2013 Plan’’) (incorporated herein by reference to Appendix B to Definitive Proxy Statement for the 2013 Annual Meeting of the Registrant filed April 3, 2013). 10(j)(i) — Form of 2014 Market Share Unit Award Notice of Grant under the 2013 Plan (incorporated herein by reference to Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q for the period ended April 5, 2014 (the ‘‘1st Quarter 2014 10-Q’’). 10(j)(ii) — Form of 2014 Performance Share Award Notice of Grant under the 2013 Plan (incorporated herein by reference to Exhibit 10.4 to the 1st Quarter 2014 10-Q). 10(j)(iii) — Form of Staking Market Share Unit Award Grant Certificate under the 2013 Plan (incorporated herein by reference to Exhibit 10.5 to the 1st Quarter 2014 10-Q). 10(j)(iv) — Form of Market Share Unit Award Notice of Grant under the 2013 Plan (incorporated herein by reference to Exhibit 10(j)(iv) to Registrant’s Annual Report on Form 10-K for the year ended January 3, 2015 (the ‘‘2014 Annual Report’’)). 10(j)(v) — Form of Option Grant Certificate under the 2013 Plan (incorporated herein by reference to Exhibit 10(j)(v) to Registrant’s 2014 Annual Report). 10(j)(vi) — Form of 2015 Performance Share Award Notice of Grant under the 2013 Plan (incorporated herein by reference to Exhibit 10(j)(vi) to the Registrant’s 2014 Annual Report). 10(j)(vii)* — Form of Performance Share Award Notice of Grant under the 2013 Plan. 10(j)(viii)* — Form of Restricted Stock Unit Grant Confirmation under the 2013 Plan. 10(k)(i)+ — 2010 Section 162(m) Long Term Performance Plan (incorporated herein by reference to Exhibit D to Definitive Proxy Statement filed April 13, 2010). 10(k)(ii)+ — Kate Spade & Company Section 162(m) Annual Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed May 22, 2015). 10(l)+ — Form of 2012 Executive Severance Agreement (incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated April 3, 2012). 10(l)(i)+* — Form of Executive Severance Agreement. 10(m) — Severance Benefit Agreement, by and between Registrant and William L. McComb, dated July 14, 2009 (incorporated herein by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated July 15, 2009).

66 Exhibit No. Description 10(n) — Executive Termination Benefits Agreement, by and between Registrant and William L. McComb, dated as of July 14, 2009 (incorporated herein by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated July 15, 2009). 10(o) — Employment Agreement by and between Registrant and Craig Leavitt, dated January 7, 2014 (incorporated herein by reference to Exhibit 10(o) to the 2013 Annual Report). 10(p) — Employment Agreement by and between Registrant and Deborah Lloyd, dated January 7, 2014 (incorporated herein by reference to Exhibit 10(p) to the 2013 Annual Report). 10(q) — Purchase Agreement, dated October 12, 2011, between Registrant, J.C. Penney Corporation, Inc. and J.C. Penney Company, Inc. (incorporated herein by reference to Exhibit 10(y) to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2011). 10(s) — Term Credit Agreement dated as of April 10, 2014 among Kate Spade & Company, as Borrower, the Lenders and Bank of America, N.A., as Administrative Agent for the Lenders, JPMorgan Chase Bank, N.A., as Syndication Agent, Suntrust Bank and Wells Fargo Bank National Association, as Co-Documentation Agents and Bank of America, N.A., JPMorgan Securities, LLC, as Joint Bookrunners and Joint Lead Arrangers (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended April 5, 2014). 10(t) — Credit Agreement, dated May 16, 2014, among Kate Spade & Company, Kate Spade UK Limited, and Kate Spade Canada Inc., as borrowers, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and US Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, J.P. Morgan Europe Limited, as European Administrative Agent and European Collateral Agent, Bank of America, N.A., as Syndication Agent, Wells Fargo Bank, N.A. and SunTrust Bank, as Documentation Agents (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended July 5, 2014). 10(u) — Purchase Agreement, dated as of October 7, 2013, by and among ABG-Juicy LLC, as Buyer, Fifth & Pacific Companies, Inc., as Seller, and Juicy Couture, Inc. (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended September 28, 2013). 10(v) — Amendment Agreement, dated as of November 6, 2013, by and among ABG-Juicy LLC, Fifth & Pacific Companies, Inc., and Juicy Couture, Inc. (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended September 28, 2013). 10(v)(i) — Purchase Agreement, dated as of December 10, 2013, by and among LBD Acquisition Company, LLC, as Buyer, Fifth & Pacific Companies, Inc., as Seller, and Lucky Brand Dungarees, Inc. (incorporated herein by reference to Registrant’s Current Report on Form 8-K filed December 10, 2013). 10(v)(ii) — Secured Note, dated February 3, 2014 and due February 1, 2017, by and between LBD Acquisition Company, LLC, as payor, and Fifth & Pacific Companies, Inc., as payee (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the period ended April 5, 2014). 21* — List of Registrant’s Subsidiaries. 23* — Consent of Independent Registered Public Accounting Firm. 31(a)* — Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 31(b)* — Rule 13a-14(a) Certification of President and Chief Operating Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.

67 Exhibit No. Description 31(c)* — Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 32(a)*# — Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. 32(b)*# — Certification of President and Chief Operating Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. 32(c)*# — Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002. 99* — Undertakings. 101.INS* XBRL Instance Document. 101.SCH* XBRL Taxonomy Extension Schema Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Taxonomy Extension Presentation Linkbase Document.

+ Compensation plan or arrangement required to be noted as provided in Item 14(a)(3). * Filed herewith. ǵ Certain portions of this exhibit have been omitted in connection with the grant of confidential treatment therefore. # A signed original of this written statement required by Section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

68 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on March 1, 2016.

KATE SPADE & COMPANY

By: /s/ Thomas Linko By: /s/ Michael Rinaldo By: /s/ George M. Carrara Thomas Linko, Michael Rinaldo, George M. Carrara, Chief Financial Officer Corporate Controller and President and Chief Operating (principal financial officer) Chief Accounting Officer Officer (principal accounting officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on March 1, 2016.

Signature Title

/s/ Craig A. Leavitt Chief Executive Officer and Director Craig A. Leavitt (principal executive officer) /s/ Lawrence Benjamin Director Lawrence Benjamin /s/ Raul J. Fernandez Director Raul J. Fernandez /s/ Kenneth B. Gilman Director Kenneth B. Gilman /s/ Nancy J. Karch Director and Chairman of the Board Nancy J. Karch /s/ Kenneth P. Kopelman Director Kenneth P. Kopelman /s/ Deborah Lloyd Director Deborah Lloyd /s/ Douglas Mack Director Douglas Mack /s/ Jan Singer Director Jan Singer /s/ Doreen A. Toben Director Doreen A. Toben

69 KATE SPADE & COMPANY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Page Number MANAGEMENT’S REPORTS AND REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...... F-2 to F-4 FINANCIAL STATEMENTS Consolidated Balance Sheets as of January 2, 2016 and January 3, 2015 ...... F-5 Consolidated Statements of Income for the Three Fiscal Years Ended January 2, 2016 F-6 Consolidated Statements of Comprehensive Income for the Three Fiscal Years Ended January 2, 2016 ...... F-7 Consolidated Statements of Retained Earnings, Accumulated Comprehensive Loss and Changes in Capital Accounts for the Three Fiscal Years Ended January 2, 2016 F-8 Consolidated Statements of Cash Flows for the Three Fiscal Years Ended January 2, 2016 ...... F-9 Notes to Consolidated Financial Statements ...... F-10 to F-51 SCHEDULE II — Valuation and Qualifying Accounts ...... F-52

F-1 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Securities and Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Management has evaluated the effectiveness of the Company’s internal control over financial reporting as of January 2, 2016 based upon criteria for effective internal control over financial reporting described in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘‘COSO’’) in 2013. Based on our evaluation, management determined that the Company’s internal control over financial reporting was effective as of January 2, 2016 based on the criteria in Internal Control — Integrated Framework issued by COSO. The Company’s internal control over financial reporting as of January 2, 2016 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report which appears herein.

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS The management of Kate Spade & Company is responsible for the preparation, objectivity and integrity of the consolidated financial statements and other information contained in this Annual Report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include some amounts that are based on management’s informed judgments and best estimates. Deloitte & Touche LLP, an independent registered public accounting firm, has audited these consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and has expressed herein their unqualified opinion on those financial statements. The Audit Committee of the Board of Directors, which oversees all of the Company’s financial reporting process on behalf of the Board of Directors, consists solely of independent directors, meets with the independent registered public accounting firm, internal auditors and management periodically to review their respective activities and the discharge of their respective responsibilities. Both the independent registered public accounting firm and the internal auditors have unrestricted access to the Audit Committee, with or without management, to discuss the scope and results of their audits and any recommendations regarding the system of internal controls. March 1, 2016

/s/ Craig A. Leavitt /s/ George M. Carrara /s/ Thomas Linko Craig A. Leavitt George M. Carrara Thomas Linko Chief Executive Officer President and Chief Operating Chief Financial Officer Officer

F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Kate Spade & Company We have audited the internal control over financial reporting of Kate Spade & Company (the ‘‘Company’’) as of January 2, 2016, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2016, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended January 2, 2016 of the Company and our report dated March 1, 2016 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

New York, New York March 1, 2016

F-3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Kate Spade & Company We have audited the accompanying consolidated balance sheets of Kate Spade & Company (the ‘‘Company’’) as of January 2, 2016 and January 3, 2015, and the related consolidated statements of income, statements of comprehensive income, statements of retained earnings, accumulated other comprehensive loss and changes in capital accounts, and cash flows for each of the three fiscal years in the period ended January 2, 2016. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Kate Spade & Company as of January 2, 2016 and January 3, 2015, and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 2, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of January 2, 2016, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2016 expressed an unqualified opinion on the Company’s internal control over financial reporting

/s/ DELOITTE & TOUCHE LLP

New York, New York March 1, 2016

F-4 Kate Spade & Company CONSOLIDATED BALANCE SHEETS

In thousands, except share data January 2, 2016 January 3, 2015 Assets Current Assets: Cash and cash equivalents ...... $ 297,851 $ 184,044 Accounts receivable — trade, net ...... 96,850 90,091 Inventories, net ...... 191,879 158,241 Deferred income taxes ...... 1,855 616 Other current assets ...... 33,279 41,508 Total current assets ...... 621,714 474,500 Property and Equipment, Net ...... 173,963 174,072 Goodwill ...... 48,730 64,798 Intangibles, Net ...... 86,288 90,327 Deferred Income Taxes ...... 1,241 56 Note Receivable ...... — 88,976 Other Assets ...... 48,425 33,609 Total Assets ...... $ 980,361 $ 926,338 Liabilities and Stockholders’ Equity Current Liabilities: Short-term borrowings ...... $ 4,514 $ 10,459 Accounts payable ...... 109,327 88,402 Accrued expenses ...... 151,680 150,926 Income taxes payable ...... 1,655 3,008 Total current liabilities ...... 267,176 252,795 Long-Term Debt ...... 397,043 400,284 Other Non-Current Liabilities ...... 52,021 56,465 Deferred Income Taxes ...... 18,900 17,183 Commitments and Contingencies (Note 9) 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 Capital in excess of par value ...... 224,677 199,100 Retained earnings ...... 1,155,838 1,145,643 Accumulated other comprehensive loss ...... (30,041) (29,986) 1,526,911 1,491,194 Common stock in treasury, at cost — 48,544,175 and 49,065,798 shares ...... (1,281,690) (1,291,583) Total stockholders’ equity ...... 245,221 199,611 Total Liabilities and Stockholders’ Equity ...... $ 980,361 $ 926,338

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-5 Kate Spade & Company CONSOLIDATED STATEMENTS OF INCOME

Fiscal Years Ended In thousands, except per common share data January 2, 2016 January 3, 2015 December 28, 2013 Net Sales ...... $1,242,720 $1,138,603 $ 803,371 Cost of goods sold ...... 488,613 458,332 306,781 Gross Profit ...... 754,107 680,271 496,590 Selling, general & administrative expenses ...... 687,709 645,266 473,075 Impairment of intangible assets ...... — 1,533 3,300 Operating Income ...... 66,398 33,472 20,215 Other expense, net ...... (11,137) (4,033) (2,062) Loss on settlement of note receivable ...... (9,873) — — Impairment of cost investment ...... — — (6,109) Loss on extinguishment of debt ...... — (16,914) (1,707) Interest expense, net ...... (19,152) (20,178) (47,065) Income (Loss) Before Provision (Benefit) for Income Taxes ...... 26,236 (7,653) (36,728) Provision (benefit) for income taxes ...... 4,528 (84,379) (4,563) Income (Loss) from Continuing Operations ...... 21,708 76,726 (32,165) Discontinued operations, net of income taxes ...... (4,621) 82,434 105,160 Net Income ...... $ 17,087 $ 159,160 $ 72,995 Earnings per Share, Basic: Income (Loss) from Continuing Operations ...... $ 0.17 $ 0.61 $ (0.27) Net Income ...... $ 0.13 $ 1.26 $ 0.60 Earnings per Share, Diluted: Income (Loss) from Continuing Operations ...... $ 0.17 $ 0.60 $ (0.27) Net Income ...... $ 0.13 $ 1.25 $ 0.60 Weighted Average Shares, Basic ...... 127,634 126,264 121,057 Weighted Average Shares, Diluted ...... 128,222 127,019 121,057

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-6 Kate Spade & Company CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal Years Ended In thousands January 2, 2016 January 3, 2015 December 28, 2013 Net Income ...... $ 17,087 $159,160 $ 72,995 Other Comprehensive Income (Loss), Net of Income Taxes: Cumulative translation adjustment, net of income taxes of $0 ...... (1,966) (10,234) (11,788) Write-off of translation adjustment in connection with liquidation of foreign subsidiaries ...... 4,008 — — Change in fair value of cash flow hedging derivatives, net of income taxes of $(1,160), $566 and $602, respectively ...... (2,097) 1,127 983 Comprehensive Income ...... $ 17,032 $150,053 $ 62,190

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-7 Treasury Shares Treasury (9,107) — — (9,107) (10,805) — — (10,805) Accumulated (5,959) — (544,200) 10,782 4,823 (2,109) — (244,780) 4,573 2,464 72,995 — — — 72,995 17,087 — — — 17,087 (23,266) — (4,010,331) 65,215 41,949 159,160 — — — 159,160 (652) (112,230) — (5,634,179) 133,001 20,119 9,618 — — — — 9,618 25,577 — — — — 25,577 43,116 — — — — 43,116 Capital in Other Common Stock Shares Amount Value Par Earnings Loss Shares Amount Total Number of Excess of Retained Comprehensive Number of 176,437,234 $176,437 $224,677 $1,155,838 $(30,041) 48,544,175 $(1,281,690) $ 245,221 176,437,234 $176,437 $147,018 $1,071,551 $(10,074) 59,851,190 $(1,511,862) $(126,930) 176,437,234 176,437 199,100 1,145,643 (29,986) 49,065,798 (1,291,583) 199,611 176,437,234 176,437 155,984 1,020,633 (20,879) 53,501,234 (1,364,657) (32,482) Kate Spade & Company CHANGES IN CAPITAL ACCOUNTS CHANGES IN CAPITAL ...... — — — — ...... — — — — (55) — — (55) ...... — — — — ...... — — — — ...... — — ...... — — ...... — — — ...... — — — ...... — — — The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. The accompanying Notes to Consolidated ...... — — — ...... — — — ...... — — — CONSOLIDATED STATEMENTS OF RETAINED EARNINGS, ACCUMULATED OTHER COMPREHENSIVE LOSS ACCUMULATED EARNINGS, AND OF RETAINED STATEMENTS CONSOLIDATED Net income BALANCE, 29, 2012 DECEMBER Net income Exercise of stock options Other comprehensive loss, net of income taxes Other comprehensive Exercise of stock options Other comprehensive loss, net of income taxes Restricted shares issued, net of cancellations and shares withheld for taxes shares issued, net Restricted . . .Amortization — share-based compensation Exchanges of Convertible Senior Notes, net — — — (5,724) — (171,577) 3,422 (2,302) Restricted shares issued, net of cancellations and shares withheld for taxes shares issued, net Restricted . . .Amortization — share-based compensation 2, 2016 BALANCE, JANUARY — — — (4,783) — (276,843) 5,320 537 In thousands, except share data In thousands, except share BALANCE, JANUARY 3, 2015 BALANCE, JANUARY Restricted shares issued, net of cancellations and shares withheld for taxes shares issued, net Restricted . . .Amortization — share-based compensation — — — (10,884) — (425,105) 7,859 (3,025) Exercise of stock options Other comprehensive loss, net of income taxes BALANCE, DECEMBER 28, 2013 Net income

F-8 Kate Spade & Company CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal Years Ended January 2, 2016 January 3, 2015 December 28, 2013 In thousands Cash Flows from Operating Activities: Net income ...... $ 17,087 $ 159,160 $ 72,995 Adjustments to arrive at income (loss) from continuing operations ..... 4,621 (82,434) (105,160) Income (loss) from continuing operations ...... 21,708 76,726 (32,165) Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: Depreciation and amortization ...... 49,937 54,438 38,780 Impairment of intangible assets ...... — 1,533 3,300 Loss on asset disposals and impairments, including streamlining initiatives, net ...... 13,600 13,063 8,110 Deferred income taxes ...... 474 (350) (3,665) Share-based compensation ...... 25,577 37,270 7,269 Loss on settlement of note receivable ...... 9,873 — — Loss on extinguishment of debt ...... — 16,914 1,707 Foreign currency transaction losses, net ...... 4,845 6,535 9,656 Equity losses of equity investees ...... 6,694 2,583 1,179 Other, net ...... (281) (13) 71 Changes in assets and liabilities: Increase in accounts receivable — trade, net ...... (7,540) (27,643) (1,167) Increase in inventories, net ...... (42,540) (21,903) (47,115) Decrease (increase) in other current and non-current assets ...... 5,597 (12,840) (8,753) Increase (decrease) in accounts payable ...... 23,911 (9,681) 21,695 Increase (decrease) in accrued expenses and other non-current liabilities 7,773 (9,006) (34,337) Increase (decrease) in income taxes payable ...... 912 (83,062) 2,243 Net cash (used in) provided by operating activities of discontinued operations ...... (14,964) (30,200) 9,161 Net cash provided by (used in) operating activities ...... 105,576 14,364 (24,031) Cash Flows from Investing Activities: Proceeds from sales of property and equipment ...... 816 — 20,264 Purchases of property and equipment ...... (55,084) (93,609) (65,130) Net proceeds from disposition ...... — — 4,000 Payments for purchases of businesses ...... — (32,268) — Proceeds from sales of joint venture interests, net ...... 17,621 — — Payment for joint venture interest ...... (10,000) — — Payments for in-store merchandise shops ...... (5,123) (6,344) (2,461) Net proceeds from settlement of note receivable ...... 75,128 — — Investments in and advances to equity investees ...... (5,000) (2,400) (5,500) Other, net ...... 276 17 (363) Net cash provided by investing activities of discontinued operations ..... 634 137,759 143,306 Net cash provided by investing activities ...... 19,268 3,155 94,116 Cash Flows from Financing Activities: Proceeds from borrowings under revolving credit agreement ...... 2,000 8,411 650,553 Repayment of borrowings under revolving credit agreement ...... (8,000) (4,960) (647,706) Proceeds from issuance of Term Loan ...... — 398,000 — Repayment of Senior Notes ...... — (390,693) — Repayment of Term Loan ...... (3,000) (2,000) — Proceeds from capital lease ...... — — 8,673 Principal payments under capital lease obligations ...... (459) (410) (4,651) Proceeds from exercise of stock options ...... 2,464 41,949 4,823 Payment of deferred financing fees ...... (1,473) (9,712) (5,597) Net cash (used in) provided by financing activities ...... (8,468) 40,585 6,095

Effect of Exchange Rate Changes on Cash and Cash Equivalents ...... (2,569) (4,282) (5,197) Net Change in Cash and Cash Equivalents ...... 113,807 53,822 70,983 Cash and Cash Equivalents at Beginning of Year ...... 184,044 130,222 59,402 Cash and Cash Equivalents at End of Year ...... 297,851 184,044 130,385 Less: Cash and Cash Equivalents Held for Sale ...... — — 163 Cash and Cash Equivalents ...... $297,851 $ 184,044 $ 130,222

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-9 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS AND BASIS OF PRESENTATION Kate Spade & Company and its wholly-owned and majority-owned subsidiaries (the ‘‘Company’’) are engaged primarily in the design and marketing of a broad range of accessories and apparel. The Company operates its kate spade new york and JACK SPADE brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. The Company’s Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company’s activities for which separate financial information is available and which is utilized on a regular basis by the Company’s 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 brands in North America. • KATE SPADE International segment — consists of the Company’s kate spade new york and JACK SPADE brands in International markets (principally in Japan, Asia (excluding Japan), Europe and Latin America). • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands and (ii) the licensed LIZWEAR and LIZ CLAIBORNE NEW YORK brands. In the second quarter of 2015, the Company entered into a distribution agreement for its operations in Latin America, including in Brazil, which leverages the network of its distribution partner. As part of these actions, the Company completed the closure of its Company-operated stores during the third quarter 2015 and no longer operates directly in Brazil. This initiative does not represent a strategic shift in the Company’s operations and therefore is not presented as discontinued operations. 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. To effectuate the new joint ventures, (i) the Company acquired a 60.0% interest in KSC (in which the Company already owned a 40.0% interest) from E-Land Fashion China Holdings Limited (‘‘E-Land’’), its former partner in China, for an aggregate payment of $36.0 million, comprised of $10.0 million to acquire E-Land’s interest in KSC and $26.0 million to terminate related contracts and (ii) the Company received a net $19.7 million from LCJG for their 50.0% interests in the joint ventures, subject to adjustments. As a result, the Company no longer consolidates the operations for the businesses in Hong Kong, Macau and Taiwan, which it acquired on February 5, 2014 and had net sales of approximately $34.0 million in 2014 and $6.4 million in 2015, through the transaction date (see Note 2 — Acquisition). The Company accounts for its investments in the joint ventures under the equity method of accounting (see Note 17 — Additional Financial Information). Upon closing of the KS HMT joint venture, $16.0 million of goodwill related to the KATE SPADE businesses in

F-10 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Hong Kong, Macau and Taiwan and $14.0 million of net assets of KS HMT were reclassified to Investment in unconsolidated subsidiaries, which was included in Other assets on the accompanying Consolidated Balance Sheets. The Company concluded the carrying values of the assets and liabilities for Hong Kong, Macau and Taiwan approximated fair value, due in part to the recent acquisition of those territories from Globalluxe Kate Spade HK Limited (‘‘Globalluxe’’). Accordingly, no gain or loss was recorded on formation of KS HMT. The $26.0 million charge to terminate contracts associated with the KSC joint venture is recorded in Selling, general & administrative expenses (‘‘SG&A’’) on the accompanying Consolidated Statement of Income. On January 29, 2015, the Company announced that it is focusing its business on kate spade new york. As part of this business model, the Company discontinued KATE SPADE SATURDAY as a standalone business. The Company also announced a new business model for JACK SPADE to leverage the distribution network of its retail partners and expand its e-commerce platform. As part of these actions, substantially all of KATE SPADE SATURDAY’s Company-owned and three partnered store locations were closed by the end of the second quarter of 2015. The Company also closed JACK SPADE’s Company- owned stores by the end of the second quarter of 2015. These initiatives did not represent a strategic shift in the Company’s operations and therefore were not reported as discontinued operations. On February 3, 2014, the Company sold 100.0% of the capital stock of Lucky Brand Dungarees, Inc. (‘‘Lucky Brand’’) to LBD Acquisition Company, LLC (‘‘LBD Acquisition’’), a Delaware limited liability company and affiliate of Leonard Green & Partners, L.P., for an aggregate payment of $225.0 million, comprised of $140.0 million cash consideration and a three-year $85.0 million note (the ‘‘Lucky Brand Note’’) issued by the successor of LBD Acquisition, Lucky Brand Dungarees, LLC (‘‘Lucky Brand LLC’’) at closing, subject to working capital and other adjustments. On March 4, 2015, the Company and Lucky Brand LLC entered into a transfer and settlement agreement (the ‘‘Lucky Brand Note Agreement’’) to settle the Lucky Brand Note in full, prior to its maturity. Pursuant to the terms of the Lucky Brand Note Agreement, Lucky Brand LLC paid the Company $81.0 million to settle the principal balance of the Lucky Brand Note and related unpaid interest. Giving effect to the Lucky Brand Note Agreement, since the date of issuance, the Company collected aggregate principal and interest under the Lucky Brand Note of $89.0 million. The transactions contemplated by the Lucky Brand Note Agreement closed on March 4, 2015, and the Company recognized a $9.9 million loss on the settlement of the Lucky Brand Note in the first quarter of 2015. On November 6, 2013, the Company completed the sale of its Juicy Couture brandname and related intellectual property assets (the ‘‘Juicy Couture IP’’) to an affiliate of Authentic Brands Group (‘‘ABG’’) for a total purchase price of $195.0 million. The Juicy Couture IP was licensed back to the Company until December 31, 2014 to accommodate the wind-down of operations. The Company’s subsidiary, Juicy Couture, Inc., paid guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license. On March 29, 2014, the Company entered into an agreement to sell its Juicy Couture business in Europe to an operating partner of ABG for $8.6 million, subject to working capital adjustments. The transaction closed on April 7, 2014. On November 19, 2013, the Company entered into an agreement to terminate the lease of the Juicy Couture flagship store on Fifth Avenue in New York City in exchange for $51.0 million. On May 15, 2014, the Company surrendered such premises to the landlord and received proceeds of $45.8 million (net of taxes and fees), in addition to $5.0 million previously received by the Company. The activities of the Company’s former Lucky Brand and Juicy Couture businesses have been segregated and reported as discontinued operations for all periods presented.

F-11 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Summarized financial data for the aforementioned brands that are classified as discontinued operations are provided in Note 3 — Discontinued Operations and Disposals.

PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of the Company. All inter-company balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenues and expenses. Estimates by their nature are based on judgments and available information. Therefore, actual results could materially differ from those estimates under different assumptions and conditions. Critical accounting policies are those that are most important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s most critical accounting policies, discussed below, pertain to revenue recognition, income taxes, accounts receivable — trade, inventories, intangible assets, goodwill, accrued expenses and share-based compensation. In applying such policies, management must use some amounts that are based upon its informed judgments and best estimates. Due to the uncertainty inherent in these estimates, actual results could differ from estimates used in applying the critical accounting policies. Changes in such estimates, based on more accurate future information, may affect amounts reported in future periods.

Revenue Recognition The Company recognizes revenue from its direct-to-consumer, wholesale and licensing operations. Retail store and e-commerce revenues are recognized net of estimated returns at the time of sale to consumers. Sales tax collected from customers is excluded from revenue. Proceeds received from the sale of gift cards are recorded as a liability and recognized as sales when redeemed by the holder. The Company does not recognize revenue for estimated gift card breakage. Revenue within the Company’s wholesale operations is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, discounts and allowances. Returns and allowances require pre-approval from management. Discounts are based on trade terms. Estimates for end-of-season allowances are based on historical trends, seasonal results, an evaluation of current economic conditions and retailer performance. The Company reviews and refines these estimates on a monthly basis based on current experience, trends and retailer performance. The Company’s historical estimates of these costs have not differed materially from actual results. Licensing revenues, which amounted to $26.2 million, $16.2 million and $17.8 million during 2015, 2014 and 2013, respectively, are recorded based upon contractually guaranteed minimum levels and adjusted as actual sales data is received from licensees.

Income Taxes Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their

F-12 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be realized or settled. The Company also assesses the likelihood of the realization of deferred tax assets and adjusts the carrying amount of these deferred tax assets by a valuation allowance to the extent the Company believes it more likely than not that all or a portion of the deferred tax assets will not be realized. Many factors are considered when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Significant judgment is required in determining the worldwide provision for income taxes. Changes in estimates may create volatility in the Company’s effective tax rate in future periods for various reasons including changes in tax laws or rates, changes in forecasted amounts and mix of pretax income (loss), settlements with various tax authorities, either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions. It is the Company’s policy to recognize the impact of an uncertain income tax position on its income tax return at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50.0% likelihood of being sustained. The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense.

Accounts Receivable — Trade, Net In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. Accounts receivable — trade, net, as shown on the Consolidated Balance Sheets, is net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on an evaluation of historical and anticipated trends, the financial condition of the Company’s customers and an evaluation of the impact of economic conditions. An allowance for discounts is based on those discounts relating to open invoices where trade discounts have been extended to customers. Costs associated with potential returns of products as well as allowable customer markdowns and operational charge backs, net of expected recoveries, are included as a reduction to sales and are part of the provision for allowances included in Accounts receivable — trade, net. These provisions result from seasonal negotiations with the Company’s customers as well as historical deduction trends, net of expected recoveries, and the evaluation of current market conditions. The Company’s historical estimates of these costs have not differed materially from actual results.

Inventories, Net Inventories for seasonal, replenishment and on-going merchandise are recorded at the lower of actual average cost or market value. The Company continually evaluates the composition of its inventories by assessing slow-turning, ongoing product as well as prior seasons’ fashion product. Market value of distressed inventory is estimated based on historical sales trends for this category of inventory of the Company’s individual product lines, the impact of market trends and economic conditions and the value of current orders in-house relating to the future sales of this type of inventory. Estimates may differ from actual results due to quantity, quality and mix of products in inventory, consumer and retailer preferences

F-13 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) and market conditions. The Company’s historical estimates of these costs and its provisions have not differed materially from actual results.

Intangibles, Net Intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. The Company’s annual impairment test is performed as of the first day of the third fiscal quarter. The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that an indefinite-lived intangible asset is not impaired, then the Company is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The recoverability of the carrying values of all intangible assets with finite lives is re-evaluated when events or changes in circumstances indicate an asset’s value may be impaired. Impairment testing is based on a review of forecasted operating cash flows. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value through a charge to the Consolidated Statement of Income. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values. Trademarks with finite lives are amortized over their estimated useful lives. Intangible merchandising rights are amortized over a period of 3 to 4 years. Customer relationships are amortized assuming gradual attrition over periods ranging from 12 to 14 years. As a result of the impairment analysis performed in connection with the Company’s purchased trademarks with indefinite lives, no impairment charges were recorded during 2015. In the fourth quarter of 2014 and the third quarter of 2013, the Company recorded non-cash impairment charges of $1.5 million and $3.3 million, respectively, which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark (see Note 11 — Fair Value Measurements).

Goodwill Goodwill is not amortized but rather tested for impairment at least annually. The Company’s annual impairment test is performed as of the first day of the third fiscal quarter. The Company assesses qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that goodwill is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that goodwill is impaired, then the Company is not required to take further action. However, if the Company concludes otherwise,

F-14 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) then it is required to determine the fair value of goodwill and perform the quantitative impairment test by comparing the fair value and carrying amount of the related reporting unit. A two-step impairment test is then performed on goodwill. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the market approach, as is typically used for companies providing products where the value of such a company is more dependent on the ability to generate earnings than the value of the assets used in the production process. Under this approach, the Company estimates fair value based on market multiples of earnings for comparable companies. The Company also uses discounted future cash flow analyses to corroborate these fair value estimates. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step in order to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. The activities in the second step include valuing the tangible and intangible assets of the impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit’s goodwill based upon the residual of the summed identified tangible and intangible assets. As a result of the impairment analysis performed in connection with the Company’s goodwill, no impairment charges were recorded during 2015, 2014 or 2013. During 2014, the Company recorded additional goodwill as a result of the reacquisition of the KATE SPADE business in Southeast Asia; in the first quarter of 2015, $16.0 million of the goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan was reclassified to Investment in unconsolidated subsidiaries upon closing of the joint venture with Walton Brown, as discussed above.

Accrued Expenses Accrued expenses for employee insurance, workers’ compensation, contracted advertising and other outstanding obligations are assessed based on claims experience and statistical trends, open contractual obligations and estimates based on projections and current requirements. If these trends change significantly, then actual results would likely be impacted.

Share-Based Compensation The Company recognizes compensation expense based on the fair value of employee share-based awards, including stock options, restricted stock and restricted stock with performance features that impact vesting, net of estimated forfeitures. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share- based awards expected to be forfeited prior to vesting. Determining the fair value of shares with market conditions at the grant date requires judgment, including the weighting of historical and estimated implied volatility of the Company’s stock price and where appropriate, a market index. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.

OTHER SIGNIFICANT ACCOUNTING POLICIES Fair Value Measurements The Company applies the relevant accounting guidance on fair value measurements to (i) all financial instruments that are being measured and reported on a fair value basis; (ii) non-financial assets and liabilities measured and reported at fair value on a non-recurring basis; and (iii) disclosures of fair value of certain financial assets and liabilities.

F-15 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following fair value hierarchy is used in selecting inputs for those instruments measured at fair value that distinguishes between assumptions based on market data (observable) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels. Level 1 — Quoted market prices in active markets for identical assets or liabilities; Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. The fair values of the Company’s Level 2 derivative instruments were primarily based on observable forward exchange rates. Unobservable quantitative inputs used in the valuation of the Company’s derivative instruments included volatilities, discount rates and estimated credit losses. Fair value measurement for the Company’s assets assumes the highest and best use (the use that generates the highest returns individually or as a group) for the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date. This applies even if the intended use of the asset by the Company is different. Fair value measurement for the Company’s liabilities assumes that the liability is transferred to a market participant at the measurement date and that the nonperformance risk relating to the liability is the same before and after the transaction. Nonperformance risk refers to the risk that the obligation will not be fulfilled and includes the Company’s own credit risk. The Company does not apply fair value measurement to any instruments not required to be measured at fair value on a recurring basis.

Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at the date of purchase are classified as cash equivalents.

Property and Equipment, Net Property and equipment is stated at cost less accumulated depreciation and amortization. Machinery and equipment and furniture and fixtures are depreciated using the straight-line method over their estimated useful lives of three to seven years. Leasehold improvements are depreciated over the shorter of the remaining lease term or the estimated useful lives of the assets. Costs for maintenance and repairs are expensed as incurred. Leased property meeting certain capital lease criteria is capitalized and the present value of the related lease payments is recorded as a liability. Capitalized leased assets are reflected as a component of Land and building and the related amortization is recorded on the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The Company recognizes a liability for the fair value of an asset retirement obligation (‘‘ARO’’) if the fair value can be reasonably estimated. The Company’s ARO’s are primarily associated with the removal and disposal of leasehold improvements at the end of a lease term when the Company is contractually obligated to restore a facility to a condition specified in the lease agreement. Amortization of ARO’s is recorded on a straight-line basis over the lease term. The Company capitalizes the costs of software developed or obtained for internal use. Capitalization of software developed or obtained for internal use commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis over five years, when such software is substantially ready for use.

F-16 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company evaluates the recoverability of property and equipment if circumstances indicate an impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows to be generated from such assets, on an undiscounted basis. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of the impaired assets is reduced to fair value through a charge to the Company’s Consolidated Statement of Income. The Company recorded pretax charges of $8.6 million, $10.4 million and $1.5 million in 2015, 2014 and 2013, respectively, to reduce the carrying values of certain property and equipment to their estimated fair values, which was recorded in SG&A on the accompanying Consolidated Statement of Income (see Note 11 — Fair Value Measurements).

Operating Leases The Company leases office space, retail stores and distribution facilities. Many of these operating leases provide for tenant improvement allowances, rent increases and/or contingent rent provisions. Rental expense is recognized on a straight-line basis commencing with the possession date of the property, which is the earlier of the lease commencement date or the date when the Company takes possession of the property. Certain store leases include contingent rents that are based on a percentage of retail sales over stated thresholds. Tenant allowances are amortized on a straight-line basis over the life of the lease as a reduction of rent expense and are included in SG&A. The Company leases retail stores under leases with terms that are typically five or ten years. The Company amortizes rental abatements, construction allowances and other rental concessions classified as deferred rent on a straight-line basis over the initial term of the lease. The initial lease term can include one renewal under limited circumstances if the renewal is reasonably assured, based on consideration of all of the following factors: (i) a written renewal at the Company’s option or an automatic renewal; (ii) there is no minimum sales requirement that could impair the Company’s ability to renew; (iii) failure to renew would subject the Company to a substantial penalty; and (iv) there is an established history of renewals in the format or location.

Derivative Instruments The Company’s derivative instruments are recorded in the Consolidated Balance Sheets as either an asset or liability and measured at their fair value. The changes in a derivative’s fair value are recognized either currently in earnings or Accumulated other comprehensive loss, depending on whether the derivative qualifies for hedge accounting treatment. The Company tests each derivative for effectiveness at inception of each hedge and at the end of each reporting period. The Company uses foreign currency forward contracts, collars, options and swap contracts for the purpose of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases by Kate Spade Japan Co., Ltd. (‘‘KSJ’’), a wholly-owned subsidiary. These instruments are designated as cash flow hedges. To the extent the hedges are highly effective, the effective portion of the changes in fair value is included in Accumulated other comprehensive loss, net of income taxes, with the corresponding asset or liability recorded in the Consolidated Balance Sheet. The ineffective portion of the cash flow hedge is recognized primarily as a component of Cost of goods sold in current period earnings. Amounts recorded in Accumulated other comprehensive loss are reflected in current period earnings when the hedged transaction affects earnings. If fluctuations in the relative value of the currencies involved in the hedging activities were to move dramatically, such movement could impact the Company’s results of operations.

F-17 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company purchases short-term foreign currency contracts to neutralize balance sheet and other expected exposures, including intercompany loans. These derivative instruments do not qualify as cash flow hedges and are recorded at fair value with all gains or losses recognized as a component of SG&A or Other expense, net in current period earnings (see Note 12 — Derivative Instruments).

Foreign Currency Translation Assets and liabilities of non-US subsidiaries are translated at period-end exchange rates. Revenues and expenses for each month are translated using that month’s average exchange rate and then are combined for the period totals. Resulting translation adjustments are included in Accumulated other comprehensive loss. Gains and losses on translation of intercompany loans with foreign subsidiaries of a long-term investment nature are also included in this component of Stockholders’ equity (deficit).

Foreign Currency Transactions Outstanding balances in foreign currencies are translated at the end of period exchange rates. The resulting exchange differences are recorded in the Consolidated Statements of Income or Accumulated other comprehensive loss, as appropriate.

Cost of Goods Sold Cost of goods sold for wholesale operations includes the expenses incurred to acquire and produce inventory for sale, including product costs, freight-in, import costs, third party inspection activities, buying/ sourcing agent commissions and provisions for shrinkage. For retail operations, in-bound freight from the Company’s warehouse to its own retail stores is also included. Warehousing activities including receiving, storing, picking, packing and general warehousing charges are included in SG&A and, as such, the Company’s gross profit may not be comparable to others who may include these expenses as a component of Cost of goods sold.

Advertising, Promotion and Marketing All costs associated with advertising, promoting and marketing of Company products are expensed during the periods when the activities take place. Costs associated with cooperative advertising programs involving agreements with customers, whereby customers are required to provide documentary evidence of specific performance and when the amount of consideration paid by the Company for these services is at or below fair value, are charged to SG&A. Costs associated with customer cooperative advertising allowances without specific performance guidelines are recorded as a reduction of sales. The Company incurred expenses of $56.0 million, $56.9 million and $42.8 million for advertising, marketing & promotion for all brands in 2015, 2014 and 2013, respectively.

Shipping and Handling Costs Shipping and handling costs, which are mostly comprised of warehousing activities, are included as a component of SG&A in the Consolidated Statements of Income. In fiscal years 2015, 2014 and 2013, shipping and handling costs were $40.8 million, $32.8 million and $26.4 million, respectively.

Investments in Unconsolidated Subsidiaries The Company uses the equity method of accounting for its investments in and its proportionate share in earnings of affiliates that it does not control, but over which it exerts significant influence (see Note 20 — Related Party Transactions). The Company considers whether the fair value of its equity method

F-18 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) investments has declined below carrying value whenever adverse events or changes in circumstances indicate the recorded value may not be recoverable.

Cash Dividends and Common Stock Repurchases On December 16, 2008, the Board of Directors announced the suspension of the Company’s quarterly cash dividend indefinitely. The Company’s amended and restated revolving credit facility (as amended to date, the ‘‘ABL Facility’’) currently restricts its ability to pay dividends and repurchase stock (see Note 10 — Debt and Lines of Credit).

Fiscal Year The Company’s fiscal year ends on the Saturday closest to December 31. The 2015 and 2013 fiscal years, which ended on January 2, 2016 and December 28, 2013, reflected 52-week periods. The 2014 fiscal year, which ended January 3, 2015 reflected a 53-week period.

Subsequent Events The Company’s policy is to evaluate all events or transactions that occur from the balance sheet date through the date of the issuance of its financial statements. The Company has evaluated events or transactions that occurred from the balance sheet date through the date the Company issued these financial statements.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS On January 4, 2015, the first day of the Company’s 2015 fiscal year, the Company adopted new accounting guidance on the reporting of discontinued operations, which revised the threshold for a disposal to qualify as a discontinued operation and required new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation (see Note 3 — Discontinued Operations and Disposals).

NOTE 2: ACQUISITION On February 5, 2014, the Company, through its Kate Spade, LLC and Kate Spade Hong Kong Ltd. subsidiaries, reacquired existing KATE SPADE businesses in Southeast Asia from Globalluxe for a purchase price of $32.3 million, including $2.3 million for working capital and other previously agreed adjustments. The Company’s distribution partner operates the KATE SPADE businesses in Singapore, Malaysia, Indonesia and Thailand through distribution agreements and funded approximately $1.5 million to Globalluxe to acquire operating assets in those regions. Globalluxe and its distribution partners operated six stores and one concession in Hong Kong, one concession in Taiwan, one store in Macau, two stores and one concession in Singapore, two stores in Malaysia, three stores and one concession in Indonesia, and two stores and six concessions in Thailand. Prior to the acquisition from Globalluxe, the Company maintained wholesale distribution to Globalluxe. Following the transaction, the Company maintains wholesale distribution to distributors who operate the businesses in Singapore, Malaysia, Indonesia and Thailand. Since the date of the acquisition, the Company has directly owned and operated the businesses in Hong Kong, Macau and Taiwan and continued to do so until the conversion of those businesses to a joint venture with Walton Brown in the first quarter of 2015. The allocation of the purchase price to the assets acquired and liabilities assumed was based upon the estimated fair values at the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets is reflected as goodwill. Accordingly, the Company recorded $21.8 million of

F-19 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) goodwill, which is reflected in the KATE SPADE International reportable segment until the businesses in Hong Kong, Macau and Taiwan were converted to the joint venture with Walton Brown, at which time $16.0 million of such goodwill was reclassified to Investment in unconsolidated subsidiaries. The following table summarizes the estimated fair values of the assets acquired as of the acquisition date:

In thousands Assets acquired: Current assets ...... $ 3,549 Property and equipment, net ...... 1,267 Goodwill and intangibles, net(a) ...... 26,592 Other assets ...... 860 Total assets acquired ...... $32,268

(a) In the first quarter of 2015, $16.0 million of the goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan was reclassified to Investment in unconsolidated subsidiaries upon closing of the KS HMT joint venture with Walton Brown (see Note 1 — Basis of Presentation and Significant Accounting Policies).

The following table presents details of the acquired intangible assets:

In thousands Useful Life Estimated Fair Value Reacquired distribution rights ...... 1.7 years $4,500 Retail customer list ...... 3 years 256

NOTE 3: DISCONTINUED OPERATIONS AND DISPOSALS The Company completed the sale of Lucky Brand in February 2014 and substantially completed the wind-down operations of the Juicy Couture business in the second quarter of 2014. The Company recorded pretax and after tax (charges) income of $(1.5) million, $130.0 million and $143.4 million in 2015, 2014 and 2013, respectively, to reflect the estimated difference between the carrying value of the net assets disposed and their estimated fair value, less costs to dispose, including transaction costs. Summarized results of discontinued operations are as follows:

Fiscal Years Ended In thousands January 2, 2016 January 3, 2015 December 28, 2013 Net sales ...... $ 175 $209,519 $980,488

Loss before (benefit) provision for income taxes ..... $ (3,710) $(46,923) $(36,382) (Benefit) provision for income taxes ...... (577) 660 1,821 Loss from discontinued operations, net of income taxes ...... $ (3,133) $(47,583) $(38,203) (Loss) gain on disposal of discontinued operations, net of income taxes ...... $ (1,488) $130,017 $143,363

The Company recorded charges of $3.7 million, $26.6 million and $48.4 million during 2015, 2014 and 2013, respectively, related to its streamlining initiatives within Discontinued operations, net of income taxes.

F-20 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other As discussed in Note 1 — Basis of Presentation and Significant Accounting Policies, the Company completed substantially all of the closures of its KATE SPADE SATURDAY operations and JACK SPADE retail stores in the second quarter of 2015. Although such dispositions are individually significant, they do not represent a strategic shift in the Company’s operations and are not reflected as discontinued operations. The Company recorded pretax losses of $21.0 million, $38.2 million and $22.9 million during 2015, 2014 and 2013, respectively, related to the KATE SPADE SATURDAY and JACK SPADE retail stores that were substantially disposed in the second quarter of 2015.

NOTE 4: INVENTORIES, NET Inventories, net consisted of the following:

In thousands January 2, 2016 January 3, 2015 Raw materials and work in process ...... $ 525 $ 538 Finished goods ...... 191,354 157,703 Total ...... $191,879 $158,241

NOTE 5: PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following:

In thousands January 2, 2016 January 3, 2015 Land and buildings ...... $ 8,080 $ 9,300 Machinery and equipment ...... 121,212 140,189 Furniture and fixtures ...... 70,206 61,694 Leasehold improvements ...... 120,605 122,029 320,103 333,212 Less: Accumulated depreciation and amortization ...... 146,140 159,140 Total property and equipment, net ...... $173,963 $174,072

Depreciation and amortization expense on property and equipment for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, was $37.8 million, $38.3 million and $28.0 million, respectively, which included depreciation for property and equipment under capital leases of $0.7 million, $0.8 million and $1.9 million, respectively. Machinery and equipment under capital leases was $8.1 million and $9.3 million as of January 2, 2016 and January 3, 2015, respectively. During the third quarter of 2013, the Company sold its West Chester, OH distribution center (the ‘‘Ohio Facility’’) for net proceeds of $20.3 million and entered into a sale-leaseback arrangement with the buyer for a 10-year term, which was classified as an operating lease. The Company realized a gain of $9.5 million associated with the sale-leaseback, which has been deferred and will be recognized as a reduction to SG&A over the lease term. During the second quarter of 2013, the Company sold its North Bergen, NJ office for net proceeds of $8.7 million. The Company entered into a sale-leaseback arrangement with the buyer for a 12-year term with two five-year renewal options, which was classified as a capital lease (see Note 9 — Commitments and Contingencies). During the fourth quarter of 2015, the Company initiated a plan to exit approximately 24,000 square feet of the North Bergen, NJ office and recorded a $1.0 million impairment charge related to such action, which was recorded in SG&A on the accompanying Consolidated Statement of Income (see Note 11 — Fair Value Measurements).

F-21 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 6: GOODWILL AND INTANGIBLES, NET The following tables disclose the carrying value of all intangible assets:

Weighted Average Amortization In thousands Period January 2, 2016 January 3, 2015 Amortized intangible assets: Gross carrying amount: Owned trademarks ...... — $ 467 $ 467 Customer relationships ...... 12 years 7,168 7,422 Merchandising rights ...... 4 years 16,132 12,012 Reacquired rights ...... 3 years 14,371 14,371 Other ...... 4 years 2,322 2,322 Subtotal ...... 40,460 36,594 Accumulated amortization: Owned trademarks ...... (467) (467) Customer relationships ...... (5,297) (4,769) Merchandising rights ...... (6,629) (4,108) Reacquired rights ...... (14,371) (9,604) Other ...... (2,308) (2,219) Subtotal ...... (29,072) (21,167) Net: Owned trademarks ...... — — Customer relationships ...... 1,871 2,653 Merchandising rights ...... 9,503 7,904 Reacquired rights ...... — 4,767 Other ...... 14 103 Total amortized intangible assets, net ...... 11,388 15,427 Unamortized intangible assets: Owned trademarks ...... 74,900 74,900 Total intangible assets ...... $86,288 $ 90,327 Goodwill(a) ...... $48,730 $ 64,798

(a) The decrease in the balance primarily reflected the reclassification of $16.0 million of goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan to Investment in unconsolidated subsidiaries in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 1 — Basis of Presentation and Significant Accounting Policies and Note 2 — Acquisition). Amortization expense of intangible assets was $8.0 million, $8.2 million and $5.7 million for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively.

F-22 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The estimated amortization expense of intangible assets for the next five years is as follows:

Amortization Expense Fiscal Year (In millions) 2016 ...... $3.6 2017 ...... 3.5 2018 ...... 2.8 2019 ...... 1.3 2020 ...... 0.2 The changes in carrying amount of goodwill for the years ended January 2, 2016 and January 3, 2015 were as follows:

KATE SPADE Adelington Design In thousands International Group Total Balance as of December 28, 2013 ...... $47,664 $ 1,447 $ 49,111 Acquisition of existing KATE SPADE businesses in Southeast Asia ...... 21,836 — 21,836 Translation adjustment ...... (6,017) (132) (6,149) Balance as of January 3, 2015 ...... 63,483 1,315 64,798 Reclassification of goodwill to investment in unconsolidated subsidiaries(a) ...... (16,009) — (16,009) Translation adjustment ...... 138 (197) (59) Balance as of January 2, 2016 ...... $47,612 $ 1,118 $ 48,730

(a) Represents the reclassification of the goodwill related to the KATE SPADE businesses in Hong Kong, Macau and Taiwan to Investment in unconsolidated subsidiaries in the first quarter of 2015 upon closing of the joint venture with Walton Brown (see Note 1 — Basis of Presentation and Significant Accounting Policies and Note 2 — Acquisition).

NOTE 7: ACCRUED EXPENSES Accrued expenses consisted of the following:

In thousands January 2, 2016 January 3, 2015 Lease obligations ...... $ 28,544 $ 28,152 Payroll, bonuses and other employment related obligations ...... 28,194 27,446 Advertising ...... 11,841 11,026 Taxes, other than taxes on income ...... 11,084 9,275 Deferred income ...... 10,798 7,742 Streamlining initiatives ...... 10,430 13,633 Employee benefits ...... 7,231 5,354 Insurance related ...... 4,384 6,109 Interest ...... 4,082 355 Accrued disposition costs ...... — 2,325 Other ...... 35,092 39,509 Total ...... $151,680 $150,926

F-23 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 8: INCOME TAXES Income (loss) before provision (benefit) for income taxes consisted of the following:

Fiscal Years Ended In thousands January 2, 2016 January 3, 2015 December 28, 2013 United States ...... $43,198 $ (6,165) $(34,370) International ...... (16,962) (1,488) (2,358) Total ...... $26,236 $ (7,653) $(36,728)

The provision (benefit) for income taxes was as follows:

Fiscal Years Ended In thousands January 2, 2016 January 3, 2015 December 28, 2013 Current: Federal ...... $ 89 $(77,366) $ 686 Foreign ...... 3,686 809 (2,326) State and local ...... 279 (7,472) 742 Total Current(a) ...... 4,054 (84,029) (898) Deferred: Federal ...... 1,544 1,883 (626) Foreign ...... (1,641) (2,722) (437) State and local ...... 571 489 (2,602) Total Deferred ...... 474 (350) (3,665) $ 4,528 $(84,379) $ (4,563)

(a) Includes a net $87.4 million reduction in the reserve for uncertain tax positions, resulting from the expiration of the related statutes of limitations in the year ended January 3, 2015. The Company files a consolidated federal income tax return. Deferred income tax assets and liabilities represent the tax effects of revenues, costs and expenses, which are recognized for tax purposes in different periods from those used for financial statement purposes. The effective income tax rate differed from the statutory federal income tax rate as follows:

Fiscal Years Ended January 2, 2016 January 3, 2015 December 28, 2013 Federal tax at statutory rate ...... 35.0% 35.0% 35.0% State and local income taxes, net of federal benefit . . . 1.1 97.6 7.2 Officer and share-based compensation ...... (5.8) 226.4 — Change in valuation allowance ...... (72.5) (185.7) (13.2) Unrecognized tax benefits ...... 0.1 1,010.9 (1.9) Rate differential on foreign income ...... 30.4 (46.8) (15.0) Gain on disposition of subsidiary ...... 18.0 — — Conversion of debt to equity ...... — — (1.5) Indefinite-lived intangibles ...... 8.3 (31.0) 4.8 Other, net ...... 2.7 (3.9) (3.0) 17.3% 1,102.5% 12.4%

F-24 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of net deferred taxes arising from temporary differences were as follows:

In thousands January 2, 2016 January 3, 2015 Deferred tax assets: Inventory valuation ...... $ 10,762 $ 9,212 Nondeductible accruals ...... 9,975 10,363 Share-based compensation ...... 20,824 11,827 Net operating loss carryforward ...... 280,280 300,825 Goodwill ...... 5,682 5,603 Capital loss carryforward ...... 83,099 68,839 Unrealized gains ...... 17,532 8,413 Other ...... 13,114 9,580 Total deferred tax assets ...... 441,268 424,662 Deferred tax liabilities: Trademarks and other intangibles ...... (18,395) (17,622) Property and equipment ...... (4,711) (5,632) Other ...... (8,205) (2,746) Total deferred tax liabilities ...... (31,311) (26,000) Less: Valuation allowance ...... (425,761) (415,173) Net deferred tax liability ...... $ (15,804) $ (16,511)

The table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of January 2, 2016, and January 3, 2015, that arose from tax deductions related to share-based compensation that are greater than the compensation expense recognized for financial reporting. The deferred tax adjustment of that difference was $44.3 million and $44.7 million as of January 2, 2016 and January 3, 2015, respectively. As of January 2, 2016, the Company and its domestic subsidiaries had net operating loss and foreign tax credit carryforwards of $738.7 million (federal tax effected amount of $258.5 million) for federal income tax purposes that may be used to reduce future federal taxable income. As of January 2, 2016, the cumulative amount of tax deductions related to share-based compensation and the corresponding compensation expense adjustment for financial reporting was $113.8 million (federal tax effected amount of $39.8 million). The net operating loss for federal income tax purposes will begin to expire in 2028. As of January 2, 2016, the Company and certain of its domestic subsidiaries recorded a $64.9 million deferred tax asset related to net operating loss carryforwards for state income tax purposes that may be used to reduce future state taxable income. The net operating loss carryforwards for state income tax purposes begin to expire in 2016. As of January 2, 2016, certain of the Company’s foreign subsidiaries recorded an $1.1 million deferred tax asset related to net operating loss carryforwards for foreign income tax purposes that may be used to reduce future foreign taxable income. The net operating loss carryforwards for foreign income tax purposes begin to expire in 2016. As of January 2, 2016, the Company had total deferred tax assets related to net operating loss carryforwards of $280.3 million, of which $218.7 million, $60.5 million and $1.1 million were attributable to federal, domestic state and local, and foreign subsidiaries, respectively.

F-25 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of January 2, 2016, the Company and its subsidiaries recorded valuation allowances in the amount of $425.8 million against its net operating loss and other deferred tax assets due to of its history of pretax losses and inability to carry back tax losses or credits for refunds. This represents a total increase in the valuation allowance of $10.6 million compared to the balance at January 3, 2015. The Company has not provided for deferred taxes on the outside basis difference in its investments in foreign subsidiaries that are essentially permanent in duration. As of January 2, 2016, there were no unremitted earnings. It is not practicable to determine the amount of income taxes that would be payable in the event such outside basis differences reverse or unremitted earnings are repatriated. The Company did not provide deferred taxes on the outside basis difference in its former investment in Lucky Brand. The Company’s outside basis difference would result in the recording of a deferred tax asset with an offsetting valuation allowance. Due to the terms of the stock purchase agreement for the purchase of Lucky Brand shares, the buyer caused the Company to treat the transaction as a deemed sale of assets, and as a result, the deferred tax asset would not be recognizable. Changes in the amounts of unrecognized tax benefits are summarized as follows:

Fiscal Years Ended In thousands January 2, 2016 January 3, 2015 December 28, 2013 Balance as of beginning of period ...... $ 9,224 $ 84,108 $ 85,999 Increases from prior period positions ...... 1,305 32 1,436 Decreases from prior period positions ...... (823) — (4,348) Increases from current period positions ...... 243 — 2,000 Decreases relating to settlements with taxing authorities ...... — — (153) Reduction due to the lapse of the applicable statute of limitations ...... (893) (74,916) (826) Balance as of end of period(a) ...... $ 9,056 $ 9,224 $ 84,108

(a) As of January 2, 2016 and January 3, 2015, liabilities associated with the amounts are included within Income taxes payable and Other non-current liabilities on the accompanying Consolidated Balance Sheets. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. For the year ended January 2, 2016, the Company increased its accruals for interest and penalties by $0.7 million and $0.2 million, respectively. For the year ended January 3, 2015, the Company decreased its accruals for interest and penalties by $10.6 million and $1.6 million, respectively. For the year ended December 28, 2013, the Company increased its accruals for interest and penalties by $2.5 million and $0.1 million, respectively. At January 2, 2016 and at January 3, 2015, the accrual for interest was $2.5 million and $1.8 million, respectively and the accrual for penalties was $1.3 million and $1.1 million, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $9.1 million. The Company expects to reduce the liability for unrecognized tax benefits by an amount between $0.7 million and $3.5 million within the next 12 months due to either settlement or the expiration of the statute of limitations. The Company files tax returns in the US Federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which the Company has unrecognized tax benefits, is audited and finally resolved. While it is difficult to predict the final outcome or the timing of

F-26 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) resolution of any particular uncertain tax position, the Company believes that the unrecognized tax benefits reflect the most likely outcome. These unrecognized tax benefits, as well as the related interest, are adjusted in light of changing facts and circumstances. Favorable resolution would be recognized as a reduction to the effective tax rate in the period of resolution. The number of years with open tax audits varies depending upon the tax jurisdiction. The major tax jurisdictions include the US, Japan, United Kingdom and Canada. The Company is generally no longer subject to US Federal examination by the Internal Revenue Service (‘‘IRS’’) for the years before 2010 and, with few exceptions, this applies to tax examinations by state authorities for the years before 2010. The Company filed amended US Federal tax returns for 2005, 2006 and 2007 to convert expiring foreign tax credits into foreign tax deductions. The result of the amended returns increased the Company’s US Federal net operating loss carryforwards by $47.0 million. As a result, the IRS has the ability to reopen its past examinations of those years. In addition, the IRS and other taxing authorities can also subject the Company’s net operating loss carryforwards to further review when such net operation loss carryforwards are utilized.

NOTE 9: COMMITMENTS AND CONTINGENCIES Leases The Company leases office, showroom, warehouse/distribution, retail space and computers and other equipment under various non-cancelable operating lease agreements, which extend through 2028. Rental expense for 2015, 2014 and 2013 was $89.9 million, $87.0 million and $54.3 million, respectively, including certain costs such as real estate taxes and common area maintenance. At January 2, 2016, minimum aggregate rental commitments under non-cancelable operating and capital leases were as follows:

Fiscal Year 2016 2017 2018 2019 2020 Thereafter Total In millions Operating leases ...... $61.7 $61.6 $59.2 $54.6 $53.9 $172.9 $463.9 Capital leases ...... 2.1 2.1 2.2 2.3 2.3 10.8 21.8 Certain rental commitments have renewal options extending through the fiscal year 2028. Some of these renewals are subject to adjustments in future periods. Many of the leases call for additional charges, some of which are based upon various escalations, and, in the case of retail leases, the sales of the individual stores above base levels. Future rental commitments for leases have not been reduced by minimum non-cancelable sublease rentals aggregating $23.1 million. During the second quarter of 2013, the Company entered into a sale-leaseback agreement for its North Bergen, NJ office with a 12-year term and two five-year renewal options. This leaseback was classified as a capital lease and recorded at fair value. In connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to third parties, for which the Company or certain subsidiaries of the Company may remain secondarily liable for the remaining obligations on 136 such leases. As of January 2, 2016, the future aggregate payments under these leases amounted to $92.1 million and extended to various dates through 2025.

F-27 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Buying/Sourcing Pursuant to a buying/sourcing agency agreement, Li & Fung Limited (‘‘Li & Fung’’) acts as the primary global apparel and accessories buying/sourcing agent, with the exception of our jewelry product lines. On March 24, 2015, the Company modified this 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 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.

Other No single customer accounted for 10.0% of net sales in 2015. As of January 2, 2016, three customers accounted for greater than 10.0% of total accounts receivable, with an aggregate total of 34.2%. At January 2, 2016, the Company had short-term commitments for the purchase of raw materials and for the production of finished goods totaling $107.5 million. The Company is a party to several pending legal proceedings and claims. Although the outcome of any such actions cannot be determined with certainty, management is of the opinion that the final outcome of any of these actions should not have a material adverse effect on the Company’s financial position, results of operations, liquidity or cash flows.

NOTE 10: DEBT AND LINES OF CREDIT Long-term debt consisted of the following:

In thousands January 2, 2016 January 3, 2015 Term Loan credit facility, due April 2021(a) ...... $393,431 $396,158 ABL Facility ...... — 6,000 Capital lease obligations ...... 8,126 8,585 Total debt ...... 401,557 410,743 Less: Short-term borrowings(b) ...... 4,514 10,459 Long-term debt ...... $397,043 $400,284

(a) The balance as of January 2, 2016 and January 3, 2015 included an unamortized debt discount of $1.6 million and $1.8 million, respectively. (b) At January 2, 2016, the balance consisted of $4.0 million of Term Loan amortization payments and obligations under capital leases. At January 3, 2015, the balance consisted of $4.0 million of Term Loan amortization payments, outstanding borrowings under the Company’s amended and restated revolving credit facility (as amended to date, the ‘‘ABL Facility’’) and obligations under capital leases.

Senior Notes On April 14, 2014, the Company redeemed $37.2 million aggregate principal amount of its former 10.5% Senior Secured Notes due April 2019 (the ‘‘Senior Notes’’) at a price equal to 103.0% of their aggregate principal amount, plus accrued interest using cash on hand. On May 12, 2014, the Company redeemed the

F-28 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) remaining $334.8 million aggregate principal amount of the Senior Notes at a price equal to 105.25% of their aggregate principal amount, plus accrued interest, with the proceeds from the issuance of term loans in an aggregate principal amount of $400.0 million (collectively, the ‘‘Term Loan’’). The Company recognized a $16.9 million loss on extinguishment of debt related to these transactions in the second quarter of 2014.

Term Loan On April 10, 2014, the Company entered into a term loan credit agreement (the ‘‘Term Loan Credit Agreement’’), which provides for the Term Loan in an aggregate principal amount of $400.0 million, maturing in April 2021. The Term Loan is subject to amortization payments of $1.0 million per quarter, which commenced on October 1, 2014, with the balance due at maturity. Interest on the outstanding principal amount of the Term Loan accrues at a rate equal to LIBOR (with a floor of 1.0%) plus 3.0% per annum, payable in cash. The Term Loan was funded on May 12, 2014, and the Company used $354.8 million of the net proceeds of $392.0 million from the Term Loan to redeem the Company’s remaining outstanding Senior Notes on May 12, 2014, as discussed above. The Term Loan and other obligations under the Term Loan Credit Agreement are guaranteed by certain of the Company’s restricted subsidiaries (the ‘‘Guarantors’’), which include (i) all of the Company’s existing material domestic restricted subsidiaries, (ii) all future wholly owned restricted subsidiaries of the Company (other than foreign subsidiaries, CFCs, CFC holding companies and subsidiaries of any of the foregoing and certain immaterial subsidiaries) and (iii) all future non-wholly owned restricted subsidiaries of the Company that guarantee capital markets debt securities or term indebtedness of the Company or any Guarantor. The Term Loan Credit Agreement permits the Company to incur, from time to time, additional incremental term loans under the Term Loan Credit Agreement (subject to obtaining commitments for such term loans) and other pari passu lien indebtedness, subject to an overall limit of $100.0 million plus such additional amount that would cause the Company’s consolidated net total secured debt ratio not to exceed 3.75 to 1.0 on a pro forma basis. Any such incremental term loans and other pari passu lien indebtedness are permitted to share in the collateral described below on a pari passu basis with the Term Loan. The Term Loan may be prepaid, at the Company’s option, in whole or in part, at any time at par plus accrued interest; provided that if the Term Loan is prepaid or refinanced in connection with a repricing transaction within six months after the initial borrowing, a 1.0% penalty is applicable. Subject to certain permitted liens and other exclusions and exceptions, the Term Loan is secured (i) on a first-priority basis by a lien on the Company’s KATE SPADE trademarks and certain related rights owned by the Company and the Guarantors (the ‘‘Term Priority Collateral’’) and (ii) by a second-priority security interest in the Company’s and the Guarantors’ other assets (the ‘‘ABL Priority Collateral’’ and together with the Term Priority Collateral, the ‘‘Collateral’’), which secure the Company’s ABL Facility on a first- priority basis. The Term Loan is required to be prepaid in an amount equal to 50.0% of the Company’s Excess Cash Flow (as defined in the Term Loan Credit Agreement) with respect to each fiscal year ending on or after January 2, 2016. The percentage of Excess Cash Flow that must be so applied is reduced to 25.0% if the Company’s consolidated net total debt ratio is less than 2.75 to 1.0 and to 0% if the Company’s consolidated net total debt ratio is less than 2.25 to 1.0. Lenders may elect not to accept mandatory prepayments. The Term Loan Credit Agreement limits the Company’s and restricted subsidiaries’ ability to, among other things, incur indebtedness, make dividend payments or other restricted payments, create liens, sell assets (including securities of the Company’s restricted subsidiaries), permit certain restrictions on dividends and transfers of assets by the Company’s restricted subsidiaries, enter into certain types of transactions with

F-29 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) shareholders and affiliates and enter into mergers, consolidations or sales of all or substantially all of the Company’s assets, in each case subject to certain designated exceptions and qualifications. The Term Loan Credit Agreement also contains certain affirmative covenants and events of default that are customary for credit agreements governing term loans.

ABL Facility In May 2014, the Company terminated its prior revolving credit agreement and completed a fourth amendment to and restatement of the ABL Facility, which extended the maturity date of the facility to May 2019. Availability under the ABL Facility shall be an amount equal to the lesser of $200.0 million and a borrowing base that is computed monthly and comprised of the Company’s eligible cash, accounts receivable and inventory. The ABL Facility also includes a swingline subfacility of $30.0 million, a multicurrency subfacility of $35.0 million and the option to expand the facility by up to $100.0 million under certain specified conditions. A portion of the ABL Facility up to $125.0 million is available for the issuance of letters of credit, and standby letters of credit may not exceed $40.0 million in the aggregate. The ABL Facility allows two borrowing options: one borrowing option with interest rates based on euro currency rates and a second borrowing option with interest rates based on the alternate base rate, as defined in the ABL Facility, with a spread based on the aggregate availability under the ABL Facility. The ABL Facility is guaranteed by substantially all of the Company’s current domestic subsidiaries, certain of the Company’s future domestic subsidiaries and certain of the Company’s foreign subsidiaries. The ABL Facility is secured by a first-priority lien on substantially all of the assets of the Company and the other borrowers and guarantors (other than certain trademark collateral in which the lenders under the Term Loan Credit Agreement have a first-priority lien, which trademark collateral secures the obligations under the ABL Facility on a second-priority lien basis). The ABL Facility limits the Company’s, and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens, undergo certain fundamental changes, make investments, sell certain assets, enter into hedging transactions, make restricted payments and pay certain indebtedness, enter into transactions with affiliates, permit certain restrictions on dividends and transfers of assets by the Company’s restricted subsidiaries and enter into sale and leaseback transactions. These covenants are subject to important exceptions and qualifications, and many of the covenants are subject to an exception based on meeting the fixed charge coverage ratio and/or certain minimum availability tests. The ABL Facility also contains representations and warranties (some of which are brought down to the time of each borrowing made), affirmative covenants and events of default that are customary for asset-based revolving credit agreements. In addition, the terms and conditions of the ABL Facility: (i) provide for a decrease in fees and interest rates compared to the Company’s previous asset-based revolving loan facility (including eurocurrency spreads of 1.50% to 2.00% over LIBOR, depending on the level of aggregate availability), (ii) require the Company to maintain pro forma compliance with a fixed charge coverage ratio of 1.0:1.0 on a trailing four-quarter basis if availability under the ABL Facility for three consecutive business days falls below the greater of $15.0 million and 10.0% of the lesser of the aggregate commitments and the borrowing base and (iii) require the Company to apply substantially all cash collections to reduce outstanding borrowings under the ABL Facility if availability under the ABL Facility for three consecutive business days falls below the greater of $20.0 million and 12.5% of the lesser of the aggregate commitments and the borrowing base.

F-30 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The funds available under the ABL Facility may be used for working capital and for general corporate purposes. The Company currently believes that the financial institutions under the ABL Facility are able to fulfill their commitments, although such ability to fulfill commitments will depend on the financial condition of the Company’s lenders at the time of borrowing. As of January 2, 2016, availability under the Company’s ABL Facility was as follows:

Total Borrowing Outstanding Letters of Available Excess (a) (a) (b) In thousands Facility Base Borrowings Credit Issued Capacity Capacity ABL Facility(a) ...... $200,000 $290,969 $— $10,512 $189,488 $169,488

(a) Availability under the ABL Facility is the lesser of $200.0 million or a borrowing base that is computed monthly and comprised of the Company’s eligible cash, accounts receivable and inventory. (b) Excess capacity represents available capacity reduced by the minimum required aggregate borrowing availability under the ABL Facility of $20.0 million.

Capital Lease Obligations

In the second quarter of 2013, the Company entered into a sale-leaseback agreement for its office building in North Bergen, NJ, which included a sale price of $8.7 million and total lease payments of $26.9 million over a 12-year lease term. The Company’s capital lease obligations of $8.1 and $8.6 million as of January 2, 2016 and January 3, 2015, respectively, included $0.5 million within Short-term borrowings on the accompanying Consolidated Balance Sheets.

NOTE 11: FAIR VALUE MEASUREMENTS As discussed in Note 1 — Basis of Presentation and Significant Accounting Policies, the Company utilizes a three level hierarchy that defines the assumptions used to measure certain assets and liabilities at fair value. The following table presents the financial assets and liabilities the Company measures at fair value on a recurring basis, based on such fair value hierarchy:

Level 2 In thousands January 2, 2016 January 3, 2015 Financial Assets: Derivatives ...... $1,017 $3,193 Financial Liabilities: Derivatives ...... $(354) $ — 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.

F-31 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2015, based on such fair value hierarchy:

Fair Value Measured and Recorded at Total Losses — Net Carrying Value as Reporting Date Using: Year Ended In thousands of January 2, 2016 Level 1 Level 2 Level 3 January 2, 2016 Property and equipment ...... $2,292 $ — $ — $2,292 $8,596 As a result of a decline in the respective future anticipated cash flows of certain kate spade new york retail locations, as well as the Company’s decisions to: (i) no longer directly operate its Company-owned stores in Brazil; (ii) close all KATE SPADE SATURDAY retail operations and JACK SPADE retail stores; and (iii) consolidate office space at the Company’s North Bergen, NJ office (see Note 13 — Streamlining Initiatives), 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 SG&A on the accompanying Consolidated Statement of Income. The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2014, based on such fair value hierarchy:

Fair Value Measured and Recorded at Total Losses — Net Carrying Value as Reporting Date Using: Year Ended In thousands of January 3, 2015 Level 1 Level 2 Level 3 January 3, 2015 Property and equipment ...... $4,127 $ — $ — $4,127 $10,358 Intangibles, net ...... — — — — 1,533 As a result of the Company’s decision to close all KATE SPADE SATURDAY retail operations and JACK SPADE retail stores in the first half of 2015 (see Note 3 — Discontinued Operations and Disposals and Note 13 — Streamlining Initiatives), as well as a result of a decline in the respective future anticipated cash flows of certain retail locations of kate spade new york, KATE SPADE SATURDAY AND JACK SPADE, the Company determined that a portion of the carrying values of the assets exceeded their fair values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Income. In the fourth quarter of 2014, the Company recorded a non-cash impairment charge of $1.5 million to reduce the carrying balance of the TRIFARI trademark to zero, due to the expected exit of that brand. The following table presents the non-financial assets the Company measured at fair value on a non-recurring basis in 2013, based on such fair value hierarchy:

Fair Value Measured and Recorded at Total Losses — Net Carrying Value as Reporting Date Using: Year Ended In thousands of December 28, 2013 Level 1 Level 2 Level 3 December 28, 2013 Property and equipment ...... $15,706 $ — $ — $15,706 $1,480 Intangibles, net ...... 1,900 — — 1,900 3,300 Other Assets ...... — — — — 6,109 The Company performed impairment analyses on certain property and equipment as a result of a decline in the respective future anticipated cash flows of certain retail locations of JACK SPADE and the decision to revise the Company’s plan to outsource its distribution function (see Note 13 — Streamlining Initiatives). The Company determined that a portion of the carrying values of the assets exceeded their fair

F-32 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) values, resulting in impairment charges, which were recorded in SG&A on the accompanying Consolidated Statement of Income. In the third quarter of 2013, the Company recorded a non-cash impairment charge of $3.3 million, which reflected the difference in the estimated fair value and carrying value of the TRIFARI trademark. The Company estimated the fair value of the trademark using the income-based relief-from-royalty valuation method which assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use a comparable asset. The Company assumed a market royalty rate of 3.5%, a discount rate of 14.0% and a long term growth rate of 2.0%. Subsequent to the sale of its former global Mexx business, the Company retained a noncontrolling ownership interest in such business and accounted for its investment at cost (see Note 17 — Additional Financial Information). In the second quarter of 2013, the Company performed an impairment test based on market multiples of comparable transactions and determined that the carrying value of the investment exceeded its fair value, resulting in an impairment charge, which was recorded in Impairment of cost investment on the accompanying Consolidated Statement of Income. The fair values of the Company’s Level 3 Property and equipment and Intangible assets are based on either a market approach or an income approach using the Company’s forecasted cash flows over the estimated useful lives of such assets, as appropriate. The fair values and carrying values of the Company’s debt instruments are detailed as follows:

January 2, 2016 January 3, 2015 In thousands Fair Value Carrying Value Fair Value Carrying Value Term Loan credit facility, due April 2021(a) ...... $381,333 $393,431 $384,786 $396,158 Revolving credit facility(b) ...... — — 6,000 6,000

(a) Carrying values include unamortized debt discount or premium.

(b) Borrowings under the revolving credit facility bear interest based on market rate; accordingly, its fair value approximates its carrying value.

The fair values of the Company’s debt instruments were estimated using market observable inputs, including quoted prices in active markets, market indices and interest rate measurements. Within the hierarchy of fair value measurements, these are Level 2 fair values. The fair values of cash and cash equivalents, receivables and accounts payable approximate their carrying values due to the short-term nature of these instruments. As of January 3, 2015, the carrying amount of the Lucky Brand Note was $89.0 million, including initial principal of $85.0 million and accrued payment in kind of $4.0 million. In evaluating its fair value, the Company considered various facts and circumstances, including (i) known changes in market values of comparable instruments in active markets; (ii) the inability to transfer the Lucky Brand Note and the lack of an active market to do so; and (iii) entity specific factors related to the issuer of the Lucky Brand Note including the absence of any factors that would suggest that the counterparty may be unable to meet its obligations under the terms of the Lucky Brand Note. Based on those factors and the inherent subjectivity in evaluating fair value of the Lucky Brand Note and similar instruments, the Company concluded that providing a range of fair value was appropriate. The Company determined the range of fair value of the Lucky Brand Note, including accrued payment in kind,

F-33 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) to be between $79.0 million and $89.0 million. The low end of such range was determined using two methods. The Company reviewed the average change in fair value of comparable instruments in active markets and also estimated an implied discount based on the non-transferrable nature of the Lucky Brand Note. The high end of the range considered entity specific circumstances and assumed LGP would pay the Lucky Brand Note in full.

NOTE 12: 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 purposes of hedging the specific exposure to variability in forecasted cash flows associated primarily with inventory purchases by its business in Japan. As of January 2, 2016, the Company had forward contracts maturing through June 2016 to sell 689.5 million yen for $5.9 million. The Company also had option contracts maturing through December 2016 to sell 2.4 billion yen for $20.7 million. The Company uses foreign currency forward contracts outside the cash flow hedging program to manage currency risk associated with intercompany loans. As of January 2, 2016, the Company had forward contracts to sell 5.1 billion yen for $42.2 million maturing through March 2016. Transaction gains (losses) for the year ended January 2, 2016 were not significant. Transaction gains of $4.5 million and $8.5 million related to these derivative instruments for the January 3, 2015 and December 28, 2013, respectively, were reflected within Other expense, net on the accompanying Consolidated Statements of Income. The following table summarizes the fair value and presentation in the Consolidated Financial Statements for derivatives designated as hedging instruments and derivatives not designated as hedging instruments:

Foreign Currency Contracts Designated as Hedging Instruments Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value In thousands January 2, 2016 ...... Other current assets $26,612 $1,017 Accrued expenses $ — $ — January 3, 2015 ...... Other current assets 39,100 3,066 Accrued expenses — — The following table summarizes the fair value and presentation in the Consolidated Financial Statements for derivatives not designated as hedging instruments:

Foreign Currency Contracts Not Designated as Hedging Instruments Asset Derivatives Liability Derivatives Balance Sheet Notional Balance Sheet Notional Period Location Amount Fair Value Location Amount Fair Value In thousands January 2, 2016 ...... Other current assets $ — $ — Accrued expenses $42,156 $354 January 3, 2015 ...... Other current assets 33,350 127 Accrued expenses — —

F-34 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the effect of foreign currency exchange contracts on the Consolidated Financial Statements:

Location of Gain or Amount of Gain or (Loss) Reclassified Amount of Gain or Amount of Gain or (Loss) Recognized in from Accumulated (Loss) Reclassified (Loss) Recognized in Accumulated OCI OCI into Operations from Accumulated Operations on on Derivative (Effective and OCI into Operations Derivative (Effective Portion) Ineffective Portion) (Effective Portion) (Ineffective Portion) In thousands Fiscal year ended January 2, 2016 ...... $(1,409) Cost of goods sold $1,848 $ — Fiscal year ended January 3, 2015 ...... 2,854 Cost of goods sold 1,161 — Fiscal year ended December 28, 2013 ...... 2,911 Cost of goods sold 1,326 —

NOTE 13: STREAMLINING INITIATIVES 2015 Actions In the second quarter of 2015, the Company announced that it signed a new distribution agreement for its operations in Latin America, including in Brazil, which will leverage the network of its new partner. As part of these actions, the Company completed the closure of its Company-operated stores during the third quarter of 2015 and no longer operates directly in Brazil. The Company recorded charges related to contract terminations, severance, non-cash asset impairment charges and other costs related to these actions. On January 29, 2015, the Company announced that it is focusing its business on kate spade new york. As part of this business model, the Company discontinued KATE SPADE SATURDAY as a standalone business. The Company also announced a new business model for JACK SPADE to leverage the distribution network of its retail partners and expand its e-commerce platform. As part of these actions, KATE SPADE SATURDAY’s Company-owned and three partnered store locations were substantially closed by the end of the second quarter of 2015. The Company also completed the closure of JACK SPADE’s Company-owned stores. These actions resulted in restructuring charges related to contract assignment and termination costs, severance and non-cash asset impairment charges and were substantially completed in the second quarter of 2015.

2014 Actions Based on a probability weighted approach, the Company recorded non-cash asset impairment charges in 2014 related to the then-likely closure of the KATE SPADE SATURDAY operations and JACK SPADE Company-owned stores, as discussed above. In connection with the sale of the Juicy Couture IP and former Lucky Brand business, the Board of Directors of the Company approved various changes to its senior management, which resulted in charges related to severance in the first quarter of 2014. As discussed in Note 14 — Share-Based Compensation, the Company’s Compensation Committee approved the continued vesting of unvested options and restricted stock awards without any required service period or the accelerated vesting of such awards for former employees, including former executive officers. In addition, as a result of the closure of the Company’s former New York office as well as reduction of office space in the Company’s office in North

F-35 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Bergen, NJ, the Company recorded charges related to asset impairment, contract terminations and other charges in 2014 and 2015. The Company expects to pay approximately $7.7 million of accrued streamlining costs during 2016. The Company does not expect any significant restructuring charges in 2016. In addition, the Company expects to pay $2.7 million of accrued streamlining costs related to discontinued operations in 2016. A summary rollforward and components of the Company’s streamlining initiatives were as follows:

Contract Payroll and Termination Asset In thousands Related Costs Costs Write-Downs Other Costs Total Balance at December 29, 2012 ...... $ 4,559 $ 4,243 $ — $ 15,764 $ 24,566 2013 provision(a) ...... 5,657 6 1,744 3,194 10,601 2013 asset write-downs ...... — — (1,744) — (1,744) Translation difference ...... (7) 12 — 18 23 2013 spending(a) ...... (7,173) (2,110) — (7,269) (16,552) Balance at December 28, 2013 ...... 3,036 2,151 — 11,707 16,894 2014 provision(a) ...... 33,729 1,540 6,367 316 41,952 2014 asset write-downs ...... — — (6,367) — (6,367) Translation difference ...... — — — (3) (3) 2014 spending(a) ...... (34,685) (2,704) — (5,190) (42,579) Balance at January 3, 2015 ...... 2,080 987 — 6,830 9,897 2015 provision(a) ...... 12,480 11,271 8,333 3,311 35,395 2015 asset write-downs ...... — — (8,333) — (8,333) Translation difference ...... (1) — — 29 28 2015 spending(a) ...... (12,221) (7,465) — (6,792) (26,478) Balance at January 2, 2016(b) ...... $ 2,338 $ 4,793 $ — $ 3,378 $ 10,509

(a) Payroll and related costs provision and spending include $0.3 million, $17.3 million and $2.8 million in 2015, 2014 and 2013, respectively, of non-cash share-based compensation expense. (b) The balance in other costs at January 2, 2016 includes $2.2 million for a withdrawal liability incurred in 2011 related to a multi- employer pension plan that the Company will pay through June 1, 2016. Expenses associated with the Company’s streamlining actions were primarily recorded in SG&A in the Consolidated Statements of Income and impacted reportable segments and Corporate as follows:

Fiscal Years Ended In thousands January 2, 2016 January 3, 2015 December 28, 2013 KATE SPADE North America ...... $19,056 $ 7,319 $ 791 KATE SPADE International ...... 8,916 1,567 — Adelington Design Group ...... 1,832 982 272 Other(a) ...... 5,591 32,084 9,538 Total ...... $35,395 $41,952 $10,601

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

F-36 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 14: SHARE-BASED COMPENSATION The Company issues stock options, restricted shares, restricted share units and shares with performance features to employees under share-based compensation plans, which are described herein. Compensation expense for stock options and restricted stock awards is measured at fair value on the date of grant based on the number of shares granted. Beginning in 2015, the fair value of stock options is estimated based on the Trinomial lattice pricing model; the fair value of restricted shares is based on the quoted market price on the date of the grant. Stock option expense is recognized using the straight-line attribution basis over the entire vesting period of the award. Restricted share, restricted share unit and performance share expense is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. Expense is recognized net of estimated forfeitures. 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. During 2014, the Company’s Compensation Committee approved the continued vesting of unvested options and restricted stock awards without any required service period or the accelerated vesting of such awards for former employees, including former executive officers, upon their separation from the Company. Compensation expense related to the Company’s share-based payment awards totaled $25.6 million, $37.3 million and $7.3 million for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. Compensation expense included $0.3 million, $17.3 million and $2.8 million for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively, that was classified as restructuring.

Stock Plans

In March 1992, March 2000, March 2002, March 2005, May 2011 and May 2013 the Company adopted the ‘‘1992 Plan,’’ the ‘‘2000 Plan,’’ the ‘‘2002 Plan,’’ the ‘‘2005 Plan,’’ the ‘‘2011 Plan’’ and the ‘‘2013 Plan’’ respectively, under which options (both nonqualified options and incentive stock options) to acquire shares of common stock may be granted to officers, other key employees, consultants and outside directors, in each case as selected by the Company’s Compensation Committee (the ‘‘Committee’’). Payment by option holders upon exercise of an option may be made in cash or, with the consent of the Committee, by delivering previously acquired shares of Company common stock or any other method approved by the Committee. If previously acquired shares are tendered as payment, the shares are subject to a six-month holding period, as well as specific authorization by the Committee. To date, this type of exercise has not been approved or transacted. The Committee has the authority under all of the plans to allow for a cashless exercise option, commonly referred to as a ‘‘broker-assisted exercise.’’ Under this method of exercise, participating employees must make a valid exercise of their stock options through a designated broker. Based on the exercise and information provided by the Company, the broker sells the shares on the open market. The employees receive cash upon settlement, some of which is used to pay the purchase price. Neither the stock-for-stock nor broker-assisted cashless exercise option are generally available to

F-37 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) executive officers or directors of the Company. Although there are none currently outstanding, stock appreciation rights may be granted in connection with all or any part of any option granted under the plans and may also be granted without a grant of a stock option. Vesting schedules will be accelerated upon a change of control of the Company. Options and stock appreciation rights generally may not be transferred during the lifetime of a holder. Awards under the 2002 and 2005 Plans may also be made in the form of dividend equivalent rights, restricted stock, unrestricted stock performance shares and restricted stock units. Exercise prices for awards under the 2000, 2002, 2005, 2011 and 2013 Plans are determined by the Committee; to date, all stock options have been granted at an exercise price not less than the closing market value of the underlying shares on the date of grant. Awards granted under plans no longer in use by the Company, including the 2005, 2002, 2000 and 1992 Plans, remain in effect in accordance with their terms. The 2011 Plan provides for the issuance of up to 3.0 million shares of common stock, of which no more than 1.5 million shares may be awarded pursuant to grants of restricted stock, restricted stock units, unrestricted stock and performance shares. The 2011 Plan expires in 2021. The 2013 Plan provides for the issuance of up to 9.5 million shares of common stock. The 2013 Plan expires in 2023. As of January 2, 2016, 7.6 million shares were available for future grant under the 2011 and 2013 Plans. The Company delivers treasury shares upon the exercise of stock options and vesting of restricted shares. The difference between the cost of the treasury shares and the exercise price of the options has been reflected on a first-in, first-out basis.

Stock Options

The Company grants stock options to certain domestic and international employees. These options are subject to transfer restrictions and risk of forfeiture until earned by continuing employment. Stock options are issued at the current market price and have a three-year vesting period and a contractual term of 7-10 years. Beginning in 2015, 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.

Fiscal Year Ended Valuation Assumptions: January 2, 2016 December 28, 2013 Weighted-average fair value of options granted ...... $15.92 $10.32 Expected volatility ...... 76.5% 59.5% Weighted-average volatility ...... 58.7% 59.5% Expected term (in years) ...... 4.2 4.9 Dividend yield ...... — — Risk-free rate ...... 1.9% 0.1% to 3.9% Expected annual forfeiture ...... 15.3% 12.4% Expected volatilities are based on a term structure of implied volatility, which assumes changes in volatility over the life of an option.

F-38 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company utilizes historical optionee behavioral data to estimate the option exercise and termination rates that are used in the valuation model. The expected term represents an estimate of the period of time options are expected to remain outstanding. The expected term provided in the above table represents an option weighted-average expected term based on the estimated behavior of distinct groups of employees who received options in 2015 and 2013. The range of risk-free rates is based on a forward curve of interest rates at the time of option grant. A summary of award activity under the Company’s stock option plans as of January 2, 2016 and changes therein during the fiscal year then ended are as follows:

Weighted Weighted Average Aggregate Intrinsic Average Exercise Remaining Value Shares Price Contractual Term (In thousands) Outstanding January 3, 2015 ...... 1,030,969 $11.25 3.9 $21,613 Granted ...... 174,458 34.29 Exercised ...... (244,780) 10.07 5,869 Cancelled/expired ...... (54,764) 22.08 Outstanding at January 2, 2016 ...... 905,883 15.35 3.4 $ 5,686 Vested or expected to vest at January 2, 2016 . 873,924 14.68 3.4 $ 5,686 Exercisable at January 2, 2016 ...... 573,593 8.12 2.4 $ 5,686 The intrinsic value per option exercised was $23.98, $24.62 and $16.46 for the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. As of January 2, 2016, there were approximately 0.3 million nonvested stock options with a weighted average exercise price of $13.20 and there was $2.2 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 1.3 years. The total fair value of shares vested for the years ended January 2, 2016, January 3, 2015 and December 28, 2013 was $2.3 million, $3.2 million and $4.9 million, respectively.

Restricted Stock

The Company grants restricted shares and restricted share units to certain domestic and international employees. These shares are subject to transfer restrictions and risk of forfeiture until earned by continued employment. These shares generally vest 50% on the second anniversary date from the date of grant and 50% on the third anniversary date from the date of grant. The Company grants performance shares to certain of its employees, including the Company’s executive officers. Performance shares are earned based on the achievement of certain profit or other targets aligned with the Company’s strategy. In 2015, the Company granted 105,245 market share units (‘‘MSUs’’) to a group of key executives with an aggregate grant date fair value of $4.6 million and which vest 50% on each of the second and third anniversaries of the grant date as part of an annual long-term incentive plan (‘‘LTIP’’). The MSUs earned will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company’s stock price over the vesting periods.

F-39 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In 2014, the Company granted 1,291,487 MSUs to a group of key executives with an aggregate grant date fair value of $64.9 million as staking grants (‘‘Staking Grants’’) and as part of an annual LTIP. The Staking Grants have a grant date fair value of $54.8 million and vest 50% on the third anniversary of grant and 50% on the fifth anniversary of grant. The MSUs included in the LTIP represent a portion of the awards granted under that plan, have a grant date fair value of $10.1 million and vest 50% on each of the second and third anniversaries of the grant date. The MSUs issued as Staking Grants and as part of the LTIP have a minimum earnout of 30% of target. The MSUs earned will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company’s stock price over the vesting periods. The fair value for the MSUs granted was calculated using the Monte Carlo simulation model. For the years ended January 2, 2016 and January 3, 2015, the following assumptions were used in determining fair value:

Fiscal Years Ended Valuation Assumptions: January 2, 2016 January 3, 2015 Weighted-average fair value ...... $43.35 $50.24 Expected volatility ...... 43.2% 52.3% Dividend yield ...... — — Risk-free rate ...... 1.1% to 1.7% 1.68% Weighted-average expected annual forfeiture ...... 5.0% 4.8% In 2015, the other portion of the LTIP consists of an award of 243,419 performance shares that vests on the third anniversary of the grant date. The number of performance shares earned will vary from zero to 200% of the number of awards granted depending on the Company’s Total Shareholder Return (‘‘TSR’’) relative to the TSR of the S&P Mid-Cap 400 Index as well as an earnings-based performance condition. The performance shares have a grant date fair value of $9.1 million that was calculated using a Monte Carlo simulation model. In 2014, the other portion of the LTIP consists of an award of 202,541 performance shares that vests on the third anniversary of the grant date. The performance shares have a grant date fair value of $8.9 million that was calculated using a Monte Carlo simulation model. For the years ended January 2, 2016 and January 3, 2015, the following assumptions were used in determining fair value:

Fiscal Years Ended Valuation Assumptions: January 2, 2016 January 3, 2015 Weighted-average fair value ...... $37.47 $43.93 Expected volatility ...... 41.6% 44.2% Dividend yield ...... — — Risk-free rate ...... 1.0% 0.7% Weighted-average expected annual forfeiture ...... 4.1% 4.0% Each of the Company’s non-employee Directors received an annual grant of shares of common stock with a value of $100,000 as part of an annual retainer for serving on the Board of Directors, with the exception of the Chairman of the Board, who received an annual grant of shares of common stock with a value of $150,000. Retainer shares are non-transferable until the first anniversary of the grant, with 25% becoming transferable on each of the first and second anniversary of the grant and 50% becoming transferable on the third anniversary, subject to certain exceptions.

F-40 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of award activity under the Company’s restricted stock plans as of January 2, 2016 and changes therein during the fiscal year then ended are as follows:

Weighted Average Grant Date Fair Shares Value Nonvested stock at January 3, 2015 ...... 1,719,574 $45.39 Granted ...... 570,484 36.87 Vested ...... (112,720) 20.07 Cancelled ...... (253,088) 45.67 Nonvested stock at January 2, 2016 ...... 1,924,250 $44.31 Expected to vest as of January 2, 2016(a) ...... 1,751,883 $44.52

(a) Excludes the potential impact of the performance share multiplier, which will vary from 30% to 200% of the number of MSUs awarded depending on the actual performance of the Company’s stock price over the vesting periods and zero to 200% of the number of LTIP awards granted depending on the Company’s TSR relative to the TSR of the S&P Mid-Cap 400 Index.

The weighted average grant date fair value of restricted shares granted in the years ended January 2, 2016, January 3, 2015 and December 28, 2013 was $36.87, $48.05 and $21.79, respectively. As of January 2, 2016, there was $37.9 million of total unrecognized compensation cost related to nonvested stock awards granted under the restricted stock plans. That expense is expected to be recognized over a weighted average period of 2.0 years. The total fair value of shares vested during the years ended January 2, 2016, January 3, 2015 and December 28, 2013 was $2.3 million, $6.9 million and $1.6 million, respectively.

NOTE 15: PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS The Company maintains a qualified defined contribution plan for its eligible employees. This plan allows deferred arrangements under section 401(k) of the Internal Revenue Code and provides for employer- matching contributions. The plan contains provisions for a discretionary profit sharing component, although such a contribution was not made for 2015, 2014 or 2013. The Company’s aggregate 401(k)/Profit Sharing Plan contribution expense, which is included in SG&A in the accompanying Consolidated Statements of Operations, was $1.9 million, $1.4 million and $1.3 million for the fiscal years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively. The Company has a non-qualified supplemental retirement plan for certain employees whose benefits under the 401(k)/Profit Sharing Plan are expected to be constrained by the operation of certain Internal Revenue Code limitations. The supplemental plan provides a benefit equal to the difference between the contribution that would be made for an employee under the tax-qualified plan absent such limitations and the actual contribution under that plan. The supplemental plan also allows certain employees to defer up to 50% of their base salary and up to 100% of their annual bonus. The Company established an irrevocable ‘‘rabbi’’ trust to which the Company makes periodic contributions to provide a source of funds to assist in meeting its obligations under the supplemental plan. The principal of the trust, and earnings thereon, are to be used exclusively for the participants under the plan, subject to the claims of the Company’s general creditors.

F-41 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 16: EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings (loss) per common share.

Fiscal Years Ended In thousands, except per share data January 2, 2016 January 3, 2015 December 28, 2013 Income (loss) from continuing operations ...... $ 21,708 $ 76,726 $(32,165) (Loss) income from discontinued operations, net of income taxes ...... (4,621) 82,434 105,160 Net income ...... $ 17,087 $159,160 $ 72,995

Basic weighted average shares outstanding ...... 127,634 126,264 121,057 Stock options and nonvested shares(a)(b) ...... 588 755 — Convertible Notes(c) ...... — — — Diluted weighted average shares outstanding ...... 128,222 127,019 121,057

Earnings (loss) per share: Basic Income (loss) from continuing operations ...... $ 0.17 $ 0.61 $ (0.27) (Loss) income from discontinued operations ...... (0.04) 0.65 0.87 Net income ...... $ 0.13 $ 1.26 $ 0.60

Diluted Income (loss) from continuing operations ...... $ 0.17 $ 0.60 $ (0.27) (Loss) income from discontinued operations ...... (0.04) 0.65 0.87 Net income ...... $ 0.13 $ 1.25 $ 0.60

(a) Because the Company incurred a loss from continuing operations for the year ended December 28, 2013, outstanding stock options and nonvested shares are antidilutive. Accordingly, for the year ended December 28, 2013, approximately 5.2 million outstanding stock options and approximately 0.5 million outstanding nonvested shares were excluded from the computation of diluted loss per share.

(b) Excludes approximately 0.5 million nonvested shares for the year ended December 28, 2013, for which the performance criteria were not achieved.

(c) Because the Company incurred a loss from continuing operations for the year ended December 28, 2013, approximately 1.5 million potentially dilutive shares issuable upon conversion of the Convertible Notes were considered antidilutive for such period and were excluded from the computation of diluted loss per share.

NOTE 17: ADDITIONAL FINANCIAL INFORMATION Licensing-Related Transactions In November 2011, in connection with the Company’s sale of its LIZ CLAIBORNE brand and certain rights to its MONET brand to JCPenney, the Company entered into an agreement with JCPenney to develop exclusive brands for JCPenney, which included payment to the Company of a $20.0 million refundable advance. The agreement terminated by its terms without being exercised on February 1, 2013,

F-42 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) and the $20.0 million advance was refunded to JCPenney on February 8, 2013, pursuant to the terms of the agreement. Following the sale of the Liz Claiborne brand name, the Company maintains: (i) an exclusive supplier arrangement to provide JCPenney with LIZ CLAIBORNE and MONET branded jewelry; (ii) a royalty-free license through December 2016 for the LIZ CLAIBORNE NEW YORK brand, which is sold exclusively at QVC through the amended license agreement between the Company and QVC; and (iii) a royalty-free license through July 2020 to use the LIZWEAR brand to design, manufacture and distribute LIZWEAR-branded products to the club store channel.

Other Expense, Net

Other expense, net primarily consisted of (i) equity in losses of the Company’s equity investees of $6.7 million, $2.6 million and $1.2 million for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively; and (ii) foreign currency transaction losses of $4.3 million, $1.6 million and $1.1 million for the years ended January 2, 2016, January 3, 2015 and December 28, 2013, respectively.

Consolidated Statements of Cash Flows Supplementary Disclosures

During the years ended January 2, 2016, January 3, 2015 and December 28, 2013, net income tax (payments) refunds were $(3.1) million, $1.0 million and $2.4 million, respectively. During the years ended January 2, 2016, January 3, 2015 and December 28, 2013, the Company made interest payments of $13.3 million, $34.1 million and $43.6 million, respectively. The Company received interest payments of $4.0 million for the year ended January 3, 2015. As of January 2, 2016, January 3, 2015 and December 28, 2013, the Company accrued capital expenditures totaling $8.1 million, $9.8 million and $13.3 million, respectively. On February 3, 2014, the Company received a three-year $85.0 million note issued by Lucky Brand LLC (see Note 1 — Basis of Presentation and Significant Accounting Policies), which was reflected in Note Receivable on the accompanying Consolidated Balance Sheet. During 2014, the Company made business acquisition payments of $32.3 million related to the reacquisition of the KATE SPADE businesses in Southeast Asia (see Note 2 — Acquisition). During 2013, the Company received net proceeds of $4.0 million from the sale of its noncontrolling interest in Mexx Lifestyle B.V., which is reflected as Net proceeds from disposition on the accompanying Consolidated Statement of Cash Flows. During 2013, holders of $19.9 million aggregate principal amount of the Convertible Notes converted all of such outstanding Convertible Notes into 5,634,179 shares of the Company’s common stock.

NOTE 18: SEGMENT REPORTING The Company operates its kate spade new york and JACK SPADE brands through one operating segment in North America and three operating segments internationally: Japan, Asia (excluding Japan) and Europe. The Company’s Adelington Design Group reportable segment is also an operating segment. The three reportable segments described below represent the Company’s activities for which separate financial information is available and which is utilized on a regular basis by the Company’s CODM to evaluate performance and allocate resources. In identifying the Company’s reportable segments, the Company considers its management structure and the economic characteristics, products, customers, sales growth

F-43 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) potential and long-term profitability of its operating segments. As such, the Company configured its operations into the following three reportable segments: • KATE SPADE North America segment — consists of the Company’s kate spade new york and JACK SPADE brands in North America. • KATE SPADE International segment — consists of the Company’s kate spade new york and JACK SPADE brands in International markets (principally in Japan, Asia (excluding Japan), Europe and Latin America). • Adelington Design Group segment — consists of: (i) exclusive arrangements to supply jewelry for the LIZ CLAIBORNE and MONET brands and (ii) the licensed LIZWEAR and LIZ CLAIBORNE NEW YORK brands. The Company’s Chief Executive Officer has been identified as the CODM. The Company’s measure of segment profitability is Adjusted EBITDA of each reportable segment. Accordingly, the CODM evaluates performance and allocates resources based primarily on Segment Adjusted EBITDA. Segment Adjusted EBITDA excludes: (i) depreciation and amortization; (ii) charges due to streamlining initiatives, brand- exiting activities and acquisition related costs; (iii) losses on asset disposals and impairments; and (iv) the $26.0 million charge incurred in the first quarter of 2015 to terminate contracts with the Company’s former joint venture partner in China. The costs of all corporate departments that serve the respective segment are fully allocated. The Company does not allocate amounts reported below Operating income to its reportable segments, other than adjusted equity income (loss) in equity method investees. The Company’s definition of Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies. The accounting policies of the Company’s reportable segments are the same as those described in Note 1 — Basis of Presentation and Significant Accounting Policies. Sales are reported based on a destination basis. The Company, as licensor, also licenses to third parties the right to produce and market

F-44 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) products bearing certain Company-owned trademarks; the resulting royalty income is included within the results of the associated segment.

Depreciation and Expenditures Amortization Adjuste for Long- (a) (b) Dollars in thousands Net Sales % to Total Expense EBITDA % of Sales Segment Assets Lived Assets Fiscal Year Ended January 2, 2016 KATE SPADE North America ...... $1,031,123 83.0% $29,588 $177,593 17.2% $504,571 $ 49,827 KATE SPADE International ...... 188,151 15.1% 12,164 17,697 9.4% 180,259 19,909 Adelington Design Group ...... 23,446 1.9% 206 4,523 19.3% 13,852 471 Corporate and Other . — — 7,979 — — 281,679 — Totals ...... $1,242,720 100.0% $49,937 $ 70,207

Fiscal Year Ended January 3, 2015 KATE SPADE North America ...... $ 891,766 78.3% $31,905 $143,009 16.0% $467,383 $ 76,707 KATE SPADE International ...... 213,582 18.8% 13,904 810 0.4% 198,677 55,038 Adelington Design Group ...... 33,255 2.9% 887 4,092 12.3% 18,671 476 Corporate and Other . — — 7,742 (940) — 241,607 — Totals ...... $1,138,603 100.0% $54,438 $132,221

Fiscal Year Ended December 28, 2013 KATE SPADE North America ...... $ 597,748 74.4% $23,961 $ 70,250 11.8% $ 58,089 KATE SPADE International ...... 145,404 18.1 8,476 (815) (0.6)% 9,139 Adelington Design Group ...... 60,219 7.5 625 12,008 19.9% 363 Corporate and Other . — — 5,718 (4,334) — — Totals ...... $ 803,371 100.0% $38,780 $ 67,591

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

F-45 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

F-46 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GEOGRAPHIC / CATEGORY DATA

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

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

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

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

NOTE 19: ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss is comprised of the effects of foreign currency translation and gains on cash flow hedging derivatives, as detailed below:

In thousands January 2, 2016 January 3, 2015 Cumulative translation adjustment, net of income taxes of $0 ...... $(30,054) $(32,096) Gains on cash flow hedging derivatives, net of income taxes of $8 and $1,168, respectively ...... 13 2,110 Accumulated other comprehensive loss, net of income taxes ...... $(30,041) $(29,986)

F-47 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents the change in each component of Accumulated other comprehensive loss, net of income taxes:

Cumulative Unrealized Gains on Translation Cash Flow Hedging In thousands Adjustment Derivatives Balance as of December 28, 2013 ...... $(21,862) $ 983 Other comprehensive (loss) income before reclassification ...... (10,234) 1,847 Amounts reclassified from accumulated other comprehensive loss . . . — (720) Balance as of January 3, 2015 ...... (32,096) 2,110 Other comprehensive loss before reclassification ...... (1,966) (907) Amounts reclassified from accumulated other comprehensive loss . . . 4,008 (1,190) Balance as of January 2, 2016 ...... $(30,054) $ 13

NOTE 20: RELATED PARTY TRANSACTIONS Equity Method Investments In June 2011, the Company established KSC with E-Land. The joint venture was a Hong Kong limited liability company and its purpose was to market and distribute small leather goods and other fashion products and accessories in China under the kate spade brand. The Company accounted for its then-40.0% interest in KSC under the equity method of accounting until the Company’s purchase of the remaining 60% interest in KSC and sale of a 50% interest in KSC to Walton Brown in the first quarter of 2015. The Company made capital contributions to KSC of $2.4 million and $5.5 million in 2014 and 2013, respectively. In the first quarter of 2015, the Company and Walton Brown formed two joint ventures focused on growing the Company’s business in China (see Note 1 — Basis of Presentation and Significant Accounting Policies). 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 KSC and KS HMT. The Company accounts for its investments in the joint ventures under the equity method of accounting. During the third quarter of 2015, the Company and Walton Brown each loaned $5.0 million to KSC. As of January 2, 2016 and January 3, 2015, the Company recorded $28.1 million and $9.2 million, respectively, related to its Investments in and advances to unconsolidated subsidiaries, which was included in Other assets on the accompanying Consolidated Balance Sheets.

F-48 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The summarized balance sheet data of the Company’s equity method investees includes KSC for both periods presented and KS HMT only as of January 2, 2016, since the KS HMT joint venture was formed in the first quarter of 2015.

In thousands January 2, 2016 January 3, 2015 Current assets ...... $35,465 $13,462 Other assets ...... 34,282 8,072 Total assets ...... $69,747 $21,534 Current liabilities ...... $26,409 $ 5,511 Other liabilities ...... 11,473 — Partners’ equity ...... 31,865 16,023 Total liabilities and partners’ equity ...... $69,747 $21,534

The summarized statement of operations data of the Company’s equity method investees includes KSC for all periods presented and KS HMT from the date of the formation of the joint venture in the first quarter of 2015.

Fiscal Years Ended In thousands January 2, 2016 January 3, 2015 December 28, 2013 Net Sales ...... $51,631 $16,036 $ 9,627 Gross Profit ...... 31,533 10,772 6,597 Net Loss ...... (13,307) (6,713) (3,527)

Other Kenneth P. Kopelman (a Director of the Company) is a partner in the law firm Kramer, Levin, Naftalis & Frankel LLP, which provided legal services to the Company in 2014 and 2013. The fees for such services were not significant in such periods.

NOTE 21: RECENT ACCOUNTING PRONOUNCEMENTS 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 November 2015, new accounting guidance on the balance sheet classification of deferred taxes was issued, which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. The guidance will require companies to classify all deferred tax assets and liabilities as noncurrent. This guidance is effective for interim and annual periods beginning on or after December 15, 2016. The Company will reclassify such balances as required upon adoption. In July 2015, new accounting guidance on accounting for inventory was issued, which requires entities to measure inventory at the lower of cost and net realizable value. This guidance is effective for interim and annual periods beginning on or after December 15, 2016. The Company is currently evaluating the impact of the adoption of the new accounting guidance on its financial statements.

F-49 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In April 2015, new accounting guidance was issued which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In addition, in August 2015, new accounting guidance was issued to clarify that an entity may elect to present debt issuance costs related to a line-of-credit arrangement as an asset, regardless of whether or not there are any outstanding borrowings on the line-of-credit arrangement. This guidance is effective for interim and annual periods beginning on or after December 15, 2015. As of January 2, 2016 the carrying value of the debt issuance costs related to the Term Loan included in Other assets was $3.9 million. On January 3, 2016, the first day of the Company’s 2016 fiscal year, the Company adopted the guidance and reclassified the carrying value of its debt issuance costs related to the Term Loan from an asset to a direct reduction of the liability. In January 2015, new accounting guidance was issued which removes the concept of extraordinary items from US GAAP. Under the existing guidance, an entity is required to separately disclose extraordinary items, net of tax, in the income statement after income from continuing operations if an event or transaction is of an unusual nature and occurs infrequently. This separate presentation (and corresponding earnings per share impact) will no longer be allowed. This guidance is effective for interim and annual periods beginning on or after December 15, 2015. Early adoption is permitted. The adoption of the new guidance did not affect the Company’s financial position, results of operations or cash flows. 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 guidance on its financial statements.

F-50 Kate Spade & Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 22: UNAUDITED QUARTERLY RESULTS Unaudited quarterly financial information for 2015 and 2014 is set forth in the table below.

March June September December In thousands, except per share 2015 2014 2015 2014 2015 2014 2015 2014 data Net sales ...... $255,316 $223,614 $281,118 $265,998 $277,328 $250,417 $428,958 $398,574 Gross profit ...... 154,727 136,823 171,478 155,910 169,814 157,314 258,088 230,224 (Loss) income from continuing operations ...... (53,559)(b) (38,408)(c) 9,249(d) (13,983)(e) 4,510(f) 2,623(g) 61,508(h) 126,494(i) (Loss) income from discontinued operations, net of income taxes ...... (1,662) 84,578 (708) 9,579 (2,207) (11,753) (44) 30 Net (loss) income ...... $(55,221) $ 46,170 $ 8,541 $ (4,404) $ 2,303 $ (9,130) $ 61,464 $126,524 Basic earnings per share: (Loss) income from continuing operations .... $ (0.42) $ (0.31) $ 0.07 $ (0.11) $ 0.04 $ 0.02 $ 0.48 $ 0.99 (Loss) income from discontinued operations . . . (0.01) 0.68 — 0.08 (0.02) (0.09) — — Net (loss) income ...... $ (0.43) $ 0.37 $ 0.07 $ (0.03) $ 0.02 $ (0.07) $ 0.48 $ 0.99 Diluted earnings per share:(a) (Loss) income from continuing operations .... $ (0.42) $ (0.31) $ 0.07 $ (0.11) $ 0.04 $ 0.02 $ 0.48 $ 0.99 (Loss) income from discontinued operations . . . (0.01) 0.68 — 0.08 (0.02) (0.09) — — Net (loss) income ...... $ (0.43) $ 0.37 $ 0.07 $ (0.03) $ 0.02 $ (0.07) $ 0.48 $ 0.99 Basic weighted average shares outstanding ...... 127,489 124,403 127,663 126,664 127,682 126,971 127,703 127,160 Diluted weighted average shares outstanding(a) ...... 127,489 124,403 128,431 126,664 128,118 127,610 128,267 127,741

(a) Because the Company incurred a loss from continuing operations in the first quarter of 2015 and first two quarters of 2014, outstanding stock options and nonvested shares are antidilutive for such periods. Accordingly, basic and diluted weighted average shares outstanding are equal for such periods.

(b) Included a pretax charge of $26.0 million to terminate contracts with the Company’s former joint venture partner in China and pretax expenses related to streamlining initiatives of $18.9 million.

(c) Included pretax expenses related to streamlining initiatives of $28.9 million.

(d) Included pretax expenses related to streamlining initiatives of $7.1 million.

(e) Included pretax expenses related to streamlining initiatives of $4.9 million.

(f) Included pretax expenses related to streamlining initiatives of $7.0 million.

(g) Included a pretax credit related to streamlining initiatives of $1.1 million

(h) Included pretax expenses related to streamlining initiatives of $2.4 million.

(i) Included pretax expenses related to streamlining initiatives of $7.1 million.

F-51 Kate Spade & Company SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Additions Balance at Charged to Beginning Costs and Charged to Balance at In thousands of Period Expenses Other Accounts Deductions End of Period YEAR ENDED JANUARY 2, 2016 Accounts receivable — allowance for doubtful accounts ...... $ 1,716 $ — $ — $ 979(a) $ 737 Allowance for returns ...... 7,679 101,762 — 101,492 7,949 Allowance for discounts ...... 74 144 — 202 16 Deferred tax valuation allowance ...... 415,173 10,588 — — 425,761

YEAR ENDED JANUARY 3, 2015 Accounts receivable — allowance for doubtful accounts ...... $ 1,800 $ 1,189 $ — $ 1,273(a) $ 1,716 Allowance for returns ...... 7,230 80,453 — 80,004 7,679 Allowance for discounts ...... 32 208 — 166 74 Deferred tax valuation allowance ...... 497,485 — — 82,312 415,173

YEAR ENDED DECEMBER 28, 2013 Accounts receivable — allowance for doubtful accounts ...... $ 1,625 $ 229 $ — $ 54(a) $ 1,800 Allowance for returns ...... 8,501 85,083 — 86,354 7,230 Allowance for discounts ...... 533 371 — 872 32 Deferred tax valuation allowance ...... 545,565 — — 48,080 497,485

(a) Uncollectible accounts written off, less recoveries.

F-52 EXHIBIT 31(a) SECTION 302 CERTIFICATION I, Craig A. Leavitt, certify that: 1. I have reviewed this Annual Report on Form 10-K of Kate Spade & Company (the ‘‘registrant’’); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2016 By: /s/ Craig A. Leavitt Craig A. Leavitt Chief Executive Officer EXHIBIT 31(b) SECTION 302 CERTIFICATION I, George M. Carrara, certify that: 1. I have reviewed this Annual Report on Form 10-K of Kate Spade & Company (the ‘‘registrant’’); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2016 By: /s/ George M. Carrara George M. Carrara President and Chief Operating Officer EXHIBIT 31(c) SECTION 302 CERTIFICATION I, Thomas Linko, certify that: 1. I have reviewed this Annual Report on Form 10-K of Kate Spade & Company (the ‘‘registrant’’); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 1, 2016 By: /s/ Thomas Linko Thomas Linko Chief Financial Officer EXHIBIT 32(a) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Kate Spade & Company (the ‘‘Company’’) on Form 10-K for the period ending January 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Craig A. Leavitt, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Craig A. Leavitt Craig A. Leavitt Chief Executive Officer

Date: March 1, 2016 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-K or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to Kate Spade & Company and will be retained by Kate Spade & Company and furnished to the Securities and Exchange Commission or its staff upon request. EXHIBIT 32(b) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Kate Spade & Company (the ‘‘Company’’) on Form 10-K for the period ending January 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, George M. Carrara, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ George M. Carrara George M. Carrara President and Chief Operating Officer

Date: March 1, 2016 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-K or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to Kate Spade & Company and will be retained by Kate Spade & Company and furnished to the Securities and Exchange Commission or its staff upon request. EXHIBIT 32(c) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Kate Spade & Company (the ‘‘Company’’) on Form 10-K for the period ending January 2, 2016 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Thomas Linko, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas Linko Thomas Linko Chief Financial Officer

Date: March 1, 2016 The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and is not being filed as part of the Form 10-K or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to Kate Spade & Company and will be retained by Kate Spade & Company and furnished to the Securities and Exchange Commission or its staff upon request. PRINCIPAL EXECUTIVES BOARD OF DIRECTORS REGISTRAR & TRANSFER AGENT Computershare Craig A. Leavitt Lawrence S. Benjamin 2, 3 P.O. Box 30170 Chief Executive Oficer Managing Director College Station, TX 77842-3170 Capwell Partners LLC or 211 Quality Circle, Suite 210 George M. Carrara College Station, TX 77845 President Raul J. Fernandez 1, 2 Chief Operating Oficer Chairman of the Board 1 800 522 6645 - U.S. ObjectVideo, Inc. 1 201 680 6578 - Outside the U.S./Canada Deborah Lloyd 1 800 231 5469 - (Hearing Impaired – Chief Creative Oficer Kenneth B. Gilman 1, 2 TDD Phone) Retired Chief Executive Oficer Website: www.computershare.com/investor Thomas Linko Asbury Automotive Group Senior Vice President Send Certiicates for Chief Financial Oficer Nancy J. Karch 1, 3 Transfer and Address Changes to: Chairman Computershare Mary Beech Kate Spade & Company P.O. Box 30170 Executive Vice President Director Emeritus College Station, TX 77842-3170 Chief Marketing Oficer McKinsey & Co. INDEPENDENT REGISTERED Emilia Fabricant Kenneth P. Kopelman 3 PUBLIC ACCOUNTING FIRM Executive Vice President Of Counsel at the New York City law irm of Deloitte & Touche LLP President, North America Kramer, Levin, Naftalis & Frankel LLP 30 Rockefeller Plaza New York, NY 10112 Roy Chan Craig A. Leavitt Senior Vice President Chief Executive Oficer FORM 10-K President, International A copy of the Company’s Annual Deborah Lloyd Report on Form 10-K, as iled with the William Higley Chief Creative Oficer United States Securities and Exchange Senior Vice President Commission (SEC) is available to Human Resources Douglas Mack 3 stockholders without charge upon written Chief Executive Oficer request to: Kate Spade & Company Timothy F. Michno Fanatics, Inc. Investor Relations Department, 5901 Senior Vice President West Side Avenue, North Bergen, General Counsel Jan Singer 2 New Jersey 07047, or by visiting www. Corporate Secretary Former Chief Executive Oficer katespadeandcompany.com. Spanx, Inc. Linda Yanussi Senior Vice President Doreen A. Toben 1, 2 CERTIFICATIONS Global Operations Retired Executive Vice President The Company has iled with the SEC Chief Information Oficer Verizon Communications, Inc. all required certiications of the Chief Executive Oficer and Chief Financial Oficer regarding the quality of its public INVESTOR RELATIONS 1 Member, Audit Committee disclosure for the period ended January 2 Member, Compensation Committee 2, 2016. In addition, the Company’s Chief Priya Trivedi 3 Member, Nominating and Governance Committee Executive Oficer provided the New York Vice President Stock Exchange (NYSE) the annual Finance and Treasurer certiication of the Chief Executive Oficer regarding its Compliance with the NYSE’s corporate governance listing standards.

ANNUAL MEETING The Annual Meeting of Stockholders will be held at 10:00 a.m., local time, on Thursday, May 19, 2016 at 5901 West Side Avenue, North Bergen, New Jersey.

Please recycle this document and help to preserve our environment. 2 Park Avenue New York NY 10016 katespadeandcompany.com ©2016 Kate Spade & Company Exhibit 213

Exhibit 215

Exhibit 216

Exhibit 217

Exhibit 219 Document title: Goldman Sachs college-fashionista survey - Business Insider Capture URL: http://www.businessinsider.com/goldman-sachs-college-fashionista-survey-2015-12 Capture timestamp (UTC): Wed, 27 Apr 2016 21:53:01 GMT Page 2 of 4 Document title: Goldman Sachs college-fashionista survey - Business Insider Capture URL: http://www.businessinsider.com/goldman-sachs-college-fashionista-survey-2015-12 Capture timestamp (UTC): Wed, 27 Apr 2016 21:53:01 GMT Page 3 of 4 Document title: Goldman Sachs college-fashionista survey - Business Insider Capture URL: http://www.businessinsider.com/goldman-sachs-college-fashionista-survey-2015-12 Capture timestamp (UTC): Wed, 27 Apr 2016 21:53:01 GMT Page 4 of 4 Exhibit 220

Exhibit 221 Document title: Google Releases 2014 Fashion 'Year In Search' Results : News : Fashion Times Capture URL: http://www.fashiontimes.com/articles/16831/20141216/google-releases-2014-fashion-year-search-results.htm Capture timestamp (UTC): Wed, 27 Apr 2016 22:00:53 GMT Page 2 of 4 Document title: Google Releases 2014 Fashion 'Year In Search' Results : News : Fashion Times Capture URL: http://www.fashiontimes.com/articles/16831/20141216/google-releases-2014-fashion-year-search-results.htm Capture timestamp (UTC): Wed, 27 Apr 2016 22:00:53 GMT Page 3 of 4 Document title: Google Releases 2014 Fashion 'Year In Search' Results : News : Fashion Times Capture URL: http://www.fashiontimes.com/articles/16831/20141216/google-releases-2014-fashion-year-search-results.htm Capture timestamp (UTC): Wed, 27 Apr 2016 22:00:53 GMT Page 4 of 4 Exhibit 222 Victoria Beckham Is the Most-Searched Fashion Designer of 2013

Mashable.com December 16, 2013

Copyright 2013 Mashable, Inc. Distributed by Newsbank, Inc. All Rights Reserved

Section: FASHION

Length: 740 words

Byline: Bing

Body

Much like the fashion industry itself, this year's search trends for top designers were ever-evolving.

In the U.S., fashion icon and designer Victoria Beckham took the crown as the most-searched fashion designer of 2013, while former Project Runway judge Michael Kors followed in the number two spot - Kors was in the top of the results for the second year in a row (he was number one in 2012).

Ralph Lauren, an American favorite best known for his Polo clothing brand, took third for the most-searched designer of 2013. Staples of the industry, both Chanel and Gucci remained strong, coming in at numbers four and six respectively.

Here's a look at the top 10 most-searched fashion designers, according to BingTrends.com:

Image: Getty/Marc Piasecki/FilmMagic

1. Victoria Beckham - Victoria Beckham has come a long way from being known simply for her role as Posh Spice or David Beckham's glamorous wife. Beckham began her fashion line of dresses, accessories, denim and eyewear in the 2000s, and has since made the full transition from pop star to revered style icon. Beckham graces the cover of the December 2013 issue of Paris Vogue, alongside her husband.

2. Michael Kors - At the end of the show's 10th season, Project Runway judge and world-renowned fashion designer Michael Kors announced that he would be leaving the popular competition reality show. In 2013, Runway replaced him with award- winning designer Zac Posen. Despite being out of the Project Runway spotlight, Kors remains one of the top names in women's sportswear fashion design, landing him one of the top spots on this year's list of most-searched designers.

3. Ralph Lauren - Known for his popular Polo clothing line, Ralph Lauren's fall 2013 collections graced runways around the world. With stylistic nods to Russian-street style and naval-inspired pieces, his fall 2013 collection wowed many of the fashion elite with elegant furs and glamorous accessories.

4. Chanel - The iconic brand celebrated the 100th anniversary of the opening of its first boutique in March. Creative director Karl Lagerfeld paid tribute to the landmark occasion with a short film chronicling the brand's beginnings, starring Keira Knightley as Gabrielle "Coco" Chanel, along with a cast of top model talent. The video, entitled "Once Upon A Time...," runs a little over 18 minutes long and has accrued over 500,000 views.

5. Kimora Lee Simmons - Kimora Lee Simmons' many ventures and strong brand made her the fifth most-searched designer of 2013. Simmons is currently the president and creative director of JustFab.com, a personalized shopping website. Page 2 of 2 Victoria Beckham Is the Most-Searched Fashion Designer of 2013

6. Gucci - Upscale brand Gucci saw some victories in the courtroom this year in online counterfeiting and cybersquatting lawsuits. The brand continues to be one of the most globally recognized influencers in the fashion world.

7. Tory Burch - Tory Burch's preppy-boho designs are frequently spotted on the runways. Earlier this year, Forbes estimated that the designer has a net worth of $1 billion, making her the second youngest self-made female billionaire in the U.S.

Image: Getty/Daniel Zuchnik

8. Kate Spade - In 2013, Kate Spade New York launched a new fragrance, Live Colorfully, marking the 20th anniversary of the brand. The fragrance debuted in April.

9. Steve Madden - Steve Madden's shoes, boots and accessories are common sights on the street-style savvy. Over the course of the past few years, the brand has flourished and the company has formed a number of strategic partnerships. As a designer, Madden famously spent time in prison for illegal stock manipulation practices - transgressions that will be detailed in the highly anticipated movie The Wolf of Wall Street, set to release on Christmas Day.

10. Louis Vuitton - A staple of the high-end fashion world, the Louis Vuitton brand found itself a hot topic of conversation this year after allegedly snubbing controversial and notoriously outspoken rapper Kanye West in November. West called upon his fans to boycott the brand, prompting online buzz about the feud.

So who wore it best? According to the data, First Lady Michelle Obama took first place for this year's most-searched fashion icon in the U.S.

The data above comes from Bing's 2013 search data. Spam and repeat queries have been filtered to build a database that reflects the most compelling search trends of 2013.

Have something to add to this story? Share it in the comments.

Image: Flickr, fashionmingle

Load-Date: December 17, 2013

End of Document Exhibit 223 Like What You See? Kate Spade Video Ad Designed for Instant Shopping

Mashable.com November 8, 2013

Copyright 2013 Mashable, Inc. Distributed by Newsbank, Inc. All Rights Reserved

Section: GOOGLE

Length: 219 words

Byline: Todd Wasserman

Body

Fashion brand Kate Spade is getting around the old dilemma of creating click-through merchandising opportunities on online video in a new way: a carousel of clickable goods runs underneath the video.

The ad unit, which was created using HTML5 on Google's Lightbox ad formats, will run across Google's Display Network. You can view it in full effect here; the version above is a stripped-down version available on YouTube. The ad features a rolling display of clickable items from the video, and clicking on each directs you to the brand's site, where you can make a purchase. See also: Top 10 YouTube Beauty Channels to Follow

The idea is kind of a workaround for clickable video ads. For more than a decade, the ad industry has been trying to figure out how to let consumers click on a video ad or even an item they see receiving product placement on TV. The concept can summed up in the dated shorthand of " Jennifer Aniston's Sweater," meaning a viewer at home could see a top Aniston was sporting on Friends and click to buy it.

This isn't the first time an advertiser has offered a clickable video ad. In 2009, AdMob began running such ads on mobile and TiVo and PayPal teamed up last year to offer the feature over TV.

Have something to add to this story? Share it in the comments.

Image: Cindy Ord/Getty Images

Load-Date: November 8, 2013

End of Document Exhibit 224 The 50 best brands to follow on Twitter

Postmedia Breaking News September 8, 2013 Sunday

Copyright 2013 Postmedia Breaking News All Rights Reserved

Section: BUSINESS INSIDER

Length: 4748 words

Body

Nearly every major brand is on Twitter.

With thousands of major brands on the social network, it can be difficult to drown out the noise and figure out who to follow.

We chose some of the best brands to follow on Twitter.

Some are useful because they offer deals and customer service. Others are just plain entertaining.

Related

5 Charts That Show How Tweets, Pins And Likes Are Driving Retail Sales, Online And Offline( http://www.businessinsider.com/social-commerce-gains-momentum-2013-9 )

Teenager Says She Was Kicked Out Of A Clothing Store For Being Too Fat( http://www.businessinsider.com/teen-got-kicked- out-of-rue-21-for-weight-2013-9 )

Yelp's Local-Mobile Success Shows How Consumers Are Using Mobile To Drive Local Purchases( http://www.businessinsider.com/yelp-and-its-local-mobile-strategy-2013-9 )

Delta Air Lines has more than a dozen employees responding to customers on Twitter

Handle: @deltaassist( https://twitter.com/DeltaAssist )

Why it's worth following: Delta Assist has a team of more than a dozen employees responding to customers via Twitter. If you have a question about a delay, cancellation or a lost bag this beats waiting in a customer service line.

My apologies for the wait. Please follow and DM your confirmation number. I will be happy to check alternate flights for you.-

Delta Assist (@DeltaAssist) June 29, 2013( http://twitter.com/#!/DeltaAssist/status/350974057639985153 )

Victoria's Secret gives followers access to models with Q&A's

Handle: @VictoriasSecret( https://twitter.com/VictoriasSecret )

Why it's worth following: Victoria's Secret tweets news related to the brand, holds question and answer sessions with them via Twitter and notifies followers of deals and Angel Card perks. Page 2 of 12 The 50 best brands to follow on Twitter

Got a question for @LindzEllingson( https://twitter.com/LindzEllingson )? She'll be answering them this Thursday, so tweet yours using #AskAnAngel( http://twitter.com/search?q=%23AskAnAngel )! http://t.co/zgqunADbbj( http://t.co/zgqunADbbj )-

Victoria's Secret (@VictoriasSecret) August 26, 2013( http://twitter.com/#!/VictoriasSecret/status/372140834109390849 )

McDonald's motivates followers with prizes

Handle: @McDonalds( https://twitter.com/McDonalds )

Why it's worth following: The company frequently tweets to promote new products and let followers know about upcoming events like the McDonald's Monopoly game. McDonald's also gives away prizes to encourage followers interaction.

Want to win all four NEW menu items? First 5 to tweet their favorite McD's staples may win. Rules: bit.ly/16bcaHo( http://bit.ly/16bcaHo )-

McDonald's (@McDonalds) August 26, 2013( http://twitter.com/#!/McDonalds/status/372064307258744832 )

Taco Bell updates followers on their sponsored events

Handle: @TacoBell( https://twitter.com/TacoBell )

Why it's worth following: Taco Bell has a very active group of followers, including celebrities, who tweet about the fast food chain and its sponsored events.

I love you @MTV( https://twitter.com/MTV ). I love you @TacoBell( https://twitter.com/TacoBell ). I wish this party could last forever. say.ly/kjq6Afn( http://say.ly/kjq6Afn )-

Kaleb Nation (@KalebNation) August 26, 2013( http://twitter.com/#!/KalebNation/status/371898140724842496 )

Warby Parker encourages followers to showcase their frames for perks

Handle: @WarbyParker( https://twitter.com/WarbyParker )

Why it's worth following: Like many brands, Warby Parker entices followers to interact with it on Twitter through contests. But instead of discounts and deals, a winning photo posted on Twitter could end up in the eyeglass company's catalogue.

Remember to submit your photos for our #whereswarby( http://twitter.com/search?q=%23whereswarby ) and @ArtifactUprsng( https://twitter.com/ArtifactUprsng ) Instagram contest by Wednesday! warby.me/151eBRK( http://warby.me/151eBRK )-

Warby Parker (@WarbyParker) August 26, 2013( http://twitter.com/#!/WarbyParker/status/372015835461586944 )

Levi Strauss & Co. tweets about sales

Handle: @LEVIS( https://twitter.com/LEVIS )

Why it's worth following: Any jeans lover should follow the iconic brand on Twitter. The company frequently tweets about sales and shares photos and videos of its apparel.

Our Denim Event ends TODAY! Get 30% off select denim plus bonus FREE SHIPPING until 8/26. US Online only. oak.ctx.ly/r/anrp( http://oak.ctx.ly/r/anrp )-

Levi's® (@LEVIS) August 26, 2013( http://twitter.com/#!/LEVIS/status/372055997759488000 )

Arby's promotes new products and deals Page 3 of 12 The 50 best brands to follow on Twitter

Handle: @Arbys( https://twitter.com/Arbys )

Why it's worth following: Engaging Arby's on Twitter can get you coupons and keep you in the know when it comes to new menu items - especially their milkshakes.

Are you a #SaltedCaramelShake( http://twitter.com/search?q=%23SaltedCaramelShake ) wordsmith? What medieval Latin words does "caramel" come from? http://t.co/LdBVSUAHGV( http://t.co/LdBVSUAHGV )-

Arby's (@Arbys) August 27, 2013( http://twitter.com/#!/Arbys/status/372389462400978946 )

JCPenney constantly tweets photos of style ideas

Handle: @jcpenney( https://twitter.com/jcpenney )

Why it's worth following: The company Twitter account provides style ideas via Instagram or links to its site. It also replies frequently to customers and has customer service information listed.

What's better: a memorable entrance or an unforgettable exit? #FirstDayLook( http://twitter.com/search?q=%23FirstDayLook ) jcp.is/17hTMzA( http://jcp.is/17hTMzA ) http://t.co/WDLS52LwL3( http://t.co/WDLS52LwL3 )-

(@jcpenney) August 27, 2013( http://twitter.com/#!/jcpenney/status/372451012264480769 )

Gap tweets about new arrivals

Handle: @Gap( https://twitter.com/Gap )

Why it's worth following: Tweets by Gap include updates on new arrivals and campaigns, like 2013's Back to Blue, and events.

New arrivals are here! twitpic.com/dagi68( http://twitpic.com/dagi68 ) RT if you need fall clothes. gap.us/WomenN( http://gap.us/WomenN ) #BacktoBlue( http://twitter.com/search?q=%23BacktoBlue )-

(@Gap) August 26, 2013( http://twitter.com/#!/Gap/status/372087693028888576 )

Oreo has humorous, timely tweets and special offers

Handle: @Oreo( https://twitter.com/Oreo )

Why it's worth following: Oreo has one of the most creative and timely Twitter accounts of any major brand. It also tweets about promotional giveaways.

The heart wants what the heart wants. Too bad the stomach just wants it more. http://t.co/P4hViNORwD( http://t.co/P4hViNORwD )-

Oreo Cookie (@Oreo) August 22, 2013( http://twitter.com/#!/Oreo/status/370667155337273344 )

Dos Equis Beer shares facts about "The Most Interesting Man In The World"

Handle: @DosEquis( https://twitter.com/DosEquis )

Why it's worth following: The company tweets hundreds of witty quips from the brand's "Most Interesting Man In The World" campaign, and holds occasional cocktail contests with vacation prizes.

He has successfully compared apples to oranges.-

Dos Equis (@DosEquis) July 24, 2013( http://twitter.com/#!/DosEquis/status/360160163828740097 ) Page 4 of 12 The 50 best brands to follow on Twitter

Etsy's Twitter is for customer service and showcasing products

Handle: @Etsy( https://twitter.com/Etsy )

Why it's worth following: The company's Twitter feed is a good place to check out items promoted by the site and read short reviews from buyers with pictures and videos. It also is a place to contact Etsy for customer service.

@mglover_22( https://twitter.com/mglover_22 ) Hello! It sounds like you want to contact a seller about a specific item. Here's how to do that: etsy.me/vXUlJM( http://etsy.me/vXUlJM )-

(@Etsy) August 21, 2013( http://twitter.com/#!/Etsy/status/370249172248973312 )

Lululemon Athletica connects followers to blogs, yoga videos and more

Handle: @lululemon( https://twitter.com/lululemon )

Why it's worth following: In addition to new items and photos of apparel in action, Lululemon tweets yoga videos.

Who is yoga for? Everyone. Just try it. We dare you not to fall in love: youtube.com/watch?v=f-sqyF...( http://www.youtube.com/watch?v=f-sqyFArOes )- lululemon athletica (@lululemon) August 23, 2013( http://twitter.com/#!/lululemon/status/370981959016521729 )

Wendy's tweet news, food and contests

Handle: @Wendys( https://twitter.com/Wendys )

Why it's worth following: The Twitter account promotes menu items and Wendy's-related news but also retweets affiliated accounts.

CHALLENGE: Tweet me your weirdest dream for my dream journal. Tag it #GreatLate( http://twitter.com/search?q=%23GreatLate ). Winner gets $500. bit.ly/19NKcZ1( http://bit.ly/19NKcZ1 )-

Baconator (@IAmBaconator) August 23, 2013( http://twitter.com/#!/IAmBaconator/status/370787512945737729 )

Nike gives followers the motivation they need

Handle: @Nike( https://twitter.com/Nike )

Why it's worth following: Unlike most brands, Nike has set out to motivate its followers with tweets - including some images and videos. There is hardly any specific product promotion.

What are you doing today to beat yesterday? #justdoit( http://twitter.com/search?q=%23justdoit )-

(@Nike) August 21, 2013( http://twitter.com/#!/Nike/status/370280611317297152 )

Dunkin' Donuts heavily interacts with followers and holds contests

Handle: @DunkinDonuts( https://twitter.com/DunkinDonuts )

Why it's worth following: The company frequently replies to tweets - both good and bad - and uses Twitter to promote contests.

@Hurl71( https://twitter.com/Hurl71 ) Hi Chris! Sorry to hear about this! Can you give us a call @ 800-859-5339 (M-F 8:30am-5pm EST) so we can help? Thx! ^DDCC-

Dunkin' Donuts (@DunkinDonuts) August 28, 2013( http://twitter.com/#!/DunkinDonuts/status/372740656675831809 ) Page 5 of 12 The 50 best brands to follow on Twitter

IKEA tweets links to its bloggers, design ideas and fields customer service questions

Handle: @DesignByIKEA( https://twitter.com/DesignByIKEA )

Why it's worth following: The home furnishing store has one of the more well-rounded Twitter accounts of major brands. It offers tips for college move-in day, links to design bloggers, sale notifications and customer service.

Last chance! #Save( http://twitter.com/search?q=%23Save ) up to 20% on your #dreamkitchen( http://twitter.com/search?q=%23dreamkitchen ) at your #IKEA( http://twitter.com/search?q=%23IKEA ) store by Sunday, 8/25/13! bddy.me/12v4Lnw( http://bddy.me/12v4Lnw )-

IKEA USA (@DesignByIKEA) August 23, 2013( http://twitter.com/#!/DesignByIKEA/status/370847902429872128 )

Whole Foods Market offers gift cards and dinner advice

Handle: @WholeFoods( https://twitter.com/WholeFoods )

Why it's worth following: Whole Foods Market offers gift cards to followers that participate in surveys and cooking/meal tips.

Help us help you! Answer a few quick questions and you could will a $200 Whole Foods Market gift card: bit.ly/190VMLI( http://bit.ly/190VMLI )-

Whole Foods Market (@WholeFoods) August 28, 2013( http://twitter.com/#!/WholeFoods/status/372788211560742913 )

H&M gives behind-the-scenes looks at their collections

Handle: @hm( https://twitter.com/hm )

Why it's worth following: H&M gives followers a heads up on when collections( https://twitter.com/hm/status/370818432746266625 ) will be available and some behind-the-scenes access to them.

Behind the scenes at the shoot of the new #DavidBeckham( http://twitter.com/search?q=%23DavidBeckham ) for H&M collection! #BeckhamforHM( http://twitter.com/search?q=%23BeckhamforHM ) http://t.co/5cVwXMiHam( http://t.co/5cVwXMiHam )-

H&M (@hm) August 19, 2013( http://twitter.com/#!/hm/status/369443695608619008 )

Kate Spade frequently tweets articles, blogs and photos of the brand

Handle: @katespadeny( https://twitter.com/katespadeny )

Why it's worth following: Kate Spade tweets about campaigns, what's happening at its New York City office and links to articles and blogs. we teamed up for the@cfda/vogue( http://twitter.com/cfda/vogue ) fashion fund for a (very) special designer project. take a peek! katespade.com/on/demandware....( http://www.katespade.com/on/demandware.store/Sites-Shop-Site/en_US/Page- Show?cid=katespade-blog-an-A%2b-for-Altuzarra )- kate spade new york (@katespadeny) August 21, 2013( http://twitter.com/#!/katespadeny/status/370269137060503552 )

Gilt tweets about new items available on the site

Handle: @Gilt( https://twitter.com/Gilt )

Why it's worth following: Gilt's Twitter is a great way to keep track of the site's sales. It also promotes contests. Page 6 of 12 The 50 best brands to follow on Twitter

Only 2 days left to win $300 @Gilt( https://twitter.com/Gilt )! Find out how to enter our #GiltStreetStyle( http://twitter.com/search?q=%23GiltStreetStyle ) contest here: gi.lt/15q6HPe( http://gi.lt/15q6HPe )-

Gilt.com (@Gilt) August 26, 2013( http://twitter.com/#!/Gilt/status/372070943944089600 )

Applebee's tweets new menu items and Lunch Decoy ideas

Handle: @Applebees( https://twitter.com/Applebees )

Why it's worth following: Applebee's tweets about menu items and specials, like its 2 for $20 deal, but the best part about the Twitter may be its affiliation with "Lunch Decoy( http://www.applebees.com/lunch-decoy )" blow-up dolls.

While you're at lunch, I'll put together a presentation that will blow them away. lunchdecoy.com( http://lunchdecoy.com ) #LunchDecoy( http://twitter.com/search?q=%23LunchDecoy ) http://t.co/1jSTTao0Ev( http://t.co/1jSTTao0Ev )-

Lunch Decoy (@LunchDecoy) August 27, 2013( http://twitter.com/#!/LunchDecoy/status/372371580606623745 )

Kendall-Jackson Wines frequently interacts with followers

Handle: @KJWines( https://twitter.com/KJWines )

Why it's worth following: The winery has a meager number of followers relative to the power of the brand, but it frequently interacts with them and tweets news about the business.

@hgchristie( https://twitter.com/hgchristie ) Both, of course! White in the hammock, red with dinner. Or vice versa. Cheers ;)-

Kendall-Jackson (@KJWines) August 28, 2013( http://twitter.com/#!/KJWines/status/372772158113861633 )

Free People shares new items, style ideas and trends

Handle: @FreePeople( https://twitter.com/freepeople )

Why it's worth following: Free People tweets about items, styles and gives sneak peeks at upcoming catalogs. It also tweets beauty tips.

Beauty tip: 4 ways to make your tan last well into fall! freep.pl/oj7X2( http://freep.pl/oj7X2 ) http://t.co/HvajswiDTN( http://t.co/HvajswiDTN )-

Free People (@FreePeople) August 27, 2013( http://twitter.com/#!/FreePeople/status/372383465041195008 )

Subway tweets restaurant-related news and interacts with followers

Handle: @SUBWAY( https://twitter.com/SUBWAY )

Why it's worth following: The sandwich chain shares news about the company, retweets its famous spokesman, Jared Fogle( https://twitter.com/thejaredfogle ), and has a sense of humor on occasion.

Great game plan, works every time. @SUBWAY( https://twitter.com/SUBWAY ) http://t.co/4OTimbOKbG( http://t.co/4OTimbOKbG )-

Cameron Dykstra (@Cam_Dykstra16) August 26, 2013( http://twitter.com/#!/Cam_Dykstra16/status/371837684563456000 )

Express reminds shoppers of sales

Handle: @ExpressLife( https://twitter.com/ExpressLife ) Page 7 of 12 The 50 best brands to follow on Twitter

Why it's worth following: Express frequently has sales, and its Twitter feed will help fans of the brand stay in the know.

Happy (early) Labor Day: 40% off everything thru 9/2. WOMEN: goo.gl/2J4cWm( http://goo.gl/2J4cWm ) MEN: goo.gl/4mp6s6( http://goo.gl/4mp6s6 ) http://t.co/XEXpsNYoAe( http://t.co/XEXpsNYoAe )-

EXPRESS (@ExpressLife) August 28, 2013( http://twitter.com/#!/ExpressLife/status/372720242172375040 )

Starbucks spills new drink news and more

Handle: @Starbucks( https://twitter.com/Starbucks )

Why it's worth following: Starbucks keeps followers up to date on company news, like the expanding availability of its Reserve Blends, and tweets cool photos.

Slurping some citrus. #PlayWithYourFood( http://twitter.com/search?q=%23PlayWithYourFood ) #Iced( http://twitter.com/search?q=%23Iced ) #KatiKati( http://twitter.com/search?q=%23KatiKati ) #EastAfricaBlend( http://twitter.com/search?q=%23EastAfricaBlend ) http://t.co/sLN6UlqFc3( http://t.co/sLN6UlqFc3 )-

Starbucks Coffee (@Starbucks) July 19, 2013( http://twitter.com/#!/Starbucks/status/358289416902545408 )

Charmin has humorous tweets and company news

Handle: @Charmin( https://twitter.com/Charmin )

Why it's worth following: Charmin is an example of a brand tweeting timely, relatable comments in addition to things directly related to the brand.

Do you hear that? That's the internet losing their "sheet" over a surprise reunion.. #VMAs( http://twitter.com/search?q=%23VMAs ) #NSYNC( http://twitter.com/search?q=%23NSYNC )-

Charmin (@Charmin) August 26, 2013( http://twitter.com/#!/Charmin/status/371817128887734272 )

Old Spice's Twitter is silly as its commercials, but more digestible

Handle: @OldSpice( https://twitter.com/OldSpice )

Why it's worth following: The brand's Twitter feed has just the right amount of the silliness and jives well with its popular television campaign.

If you're the worst at something, wash with great-smelling Old Spice bar soap, then quit that thing forever.-

Old Spice (@OldSpice) August 23, 2013( http://twitter.com/#!/OldSpice/status/371032636824633344 )

American Express Tweets news, offers and customer service information

Handle: @AmericanExpress( https://twitter.com/AmericanExpress )

Why it's worth following: American Express has some good offers via Twitter and keeps followers up on company news, like events it sponsors.

My #PassionProject( http://twitter.com/search?q=%23PassionProject ) is______. Submit yours for the opportunity to win $2000 to fuel your passion. See rules: amex.co/1749Gvx( http://amex.co/1749Gvx )-

American Express (@AmericanExpress) August 25, 2013( http://twitter.com/#!/AmericanExpress/status/371656249957683201 ) Page 8 of 12 The 50 best brands to follow on Twitter

JetBlue tweets booking offers and company news

Handle: @JetBlue( https://twitter.com/JetBlue )

Why it's worth following: The JetBlue Twitter account let's followers know about various offers, including chances to win flights and concert tickets, and company news.

Our mobile boarding pass program has expanded to new cities including LGA, EWR, HPN, DCA, LAX & SLC. For info visit bit.ly/JB_Mobile( http://bit.ly/JB_Mobile )-

JetBlue Airways (@JetBlue) August 28, 2013( http://twitter.com/#!/JetBlue/status/372783189564993537 )

Intel keeps followers up to date on the company and shares industry facts

Handle: @intel( https://twitter.com/intel )

Why it's worth following: Intel tweets company news, information, and industry facts, along with computer quips.

The last floppy disk rolled off the presses in 2011 with enough space to only hold half a song. #TBT( http://twitter.com/search?q=%23TBT ) http://t.co/1aI8h7edIX( http://t.co/1aI8h7edIX )-

Intel (@intel) August 29, 2013( http://twitter.com/#!/intel/status/373086398276206592 )

Target has a Twitter for your every need

Handle: @Target( https://twitter.com/Target ), @AskTarget( https://twitter.com/AskTarget ), @TargetStyle( https://twitter.com/TargetStyle ), @TargetCareers( https://twitter.com/TargetCareers )

Why it's worth following: Whether it's company news, customer service questions, style ideas or a job hunt, Target has it covered.

Get an inside look into the new fall collection from @NateBerkus( https://twitter.com/NateBerkus ) via @ABullseyeView( https://twitter.com/ABullseyeView ): bit.ly/NateBerkusSnea...( http://bit.ly/NateBerkusSneakPeek#targetstyle ) http://t.co/TA9FdCo2Pb( http://t.co/TA9FdCo2Pb )-

Target Style (@TargetStyle) August 26, 2013( http://twitter.com/#!/TargetStyle/status/372130518592016385 )

Skittles tweets funny one-liners

Handle: @Skittles( https://twitter.com/Skittles )

Why it's worth following: Skittles occasionally interacts with customers but most of its tweets are goofy one-liners in the same vein as its commercials.

The Rainbow can neither be created nor destroyed, only tasted.-

(@Skittles) August 25, 2013( http://twitter.com/#!/Skittles/status/371724674709073920 )

Disney tweets inspiring quotes and news

Handle: @Disney( https://twitter.com/Disney ), @DisneyMemories( https://twitter.com/DisneyMemories )

Why it's worth following: Disney inspires followers with quotes from its movies and occasional news. Disney Memories is a Twitter feed where fans can share their memories at the parks. Look at this little prince.

? ______, it's a quiet village, every day like the one before. ? http://t.co/R4bzuc0CoD( http://t.co/R4bzuc0CoD )- Page 9 of 12 The 50 best brands to follow on Twitter

Disney Memories (@DisneyMemories) August 28, 2013( http://twitter.com/#!/DisneyMemories/status/372788677790822400 )

Barnes & Noble tweets company and industry news plus links to its blogs

Handle: @BNBuzz( https://twitter.com/BNBuzz )

Why it's worth following: Barnes & Noble tweets company and industry news while sharing product promotions and links to its blog.

This HARRY POTTER boxed set features gorgeous cover art by Kazu Kibuishi @boltcity( https://twitter.com/boltcity ) bit.ly/14GJQPA( http://bit.ly/14GJQPA )-

Barnes & Noble (@BNBuzz) August 29, 2013( http://twitter.com/#!/BNBuzz/status/373101449174986752 )

Petco tweets special offers and photos of animals - who doesn't love that?

Handle: @Petco( https://twitter.com/petco )

Why it's worth following: In addition to special event and offers, Petco shares cute pet photos with followers.

Help me, Obi-wan Kenobi, you're my only hope. @CuteSophiaLoren( https://twitter.com/CuteSophiaLoren ) models our Princess Leia buns.#starwarspets( http://twitter.com/search?q=%23starwarspets ) http://t.co/2Ja3bt6qKQ( http://t.co/2Ja3bt6qKQ )-

(@Petco) August 29, 2013( http://twitter.com/#!/Petco/status/373111573910679552 )

Sears has a Twitter for brand news, style and customer service

Handles: @Sears( https://twitter.com/Sears ), @searscares( https://twitter.com/searscares ) and @searsStyle( https://twitter.com/searsStyle )

Why it's worth following: Sears customer service Twitter account is especially active, and the retailer's other accounts share sale news and style ideas. laddy543 We've received ur DM. Thanks for ur info. The next available case manager will contact u 2 address ur concerns. Thx Trent cc:@Sears( https://twitter.com/Sears )-

Sears Cares (@searscares) March 22, 2013( http://twitter.com/#!/searscares/status/314893365546188803 )

DSW frequently promotes offers

Handle: @DSWShoeLovers( https://twitter.com/DSWShoeLovers )

Why it's worth following: DSW reminds followers of special offers and deals every day on Twitter. Every shoe lover should keep up with them.

LAST DAY! This exclusive #offer( http://twitter.com/search?q=%23offer )'s just for #DSW( http://twitter.com/search?q=%23DSW ) social Shoe Lovers. Send a text to get it: bit.ly/18f4pjq( http://bit.ly/18f4pjq ) http://t.co/JNusa03SEs( http://t.co/JNusa03SEs )-

DSW Shoe Warehouse (@DSWShoeLovers) August 27, 2013( http://twitter.com/#!/DSWShoeLovers/status/372341723873042432 )

Clorox has a creative, humorous Twitter that also tweets company news

Handle: @Clorox( https://twitter.com/Clorox ) Page 10 of 12 The 50 best brands to follow on Twitter

Why it's worth following: The company site claims Anne Murray( http://www.clorox.com/our-story/our-history/ ), the founder's wife, would have been "...right at home on Facebook and Twitter. She knew how to talk with customers in real time." And Clorox does. The company tweets are fun and interactive.

The Bleach Boys #BreakingBadBands( http://twitter.com/search?q=%23BreakingBadBands )-

(@Clorox) August 14, 2013( http://twitter.com/#!/Clorox/status/367762366403846144 )

Kraft tweets its re-imagined ad campaign and snack and recipe ideas

Handle: @kraftfoods( https://twitter.com/kraftfoods )

Why it's worth following: Followers get a good mix of snack and recipe ideas along with snapshots of Kraft's humorous ads.

Your prayers have been answered. Enter to win a steamy cooking lesson w/ the zesty guy. Visit: getmezesty.com( http://www.getmezesty.com ) http://t.co/fsUeAE2C60( http://t.co/fsUeAE2C60 )-

Kraft Foods (@kraftfoods) August 23, 2013( http://twitter.com/#!/kraftfoods/status/370943924707528704 )

Waffle House has funny tweets and frequently interacts with followers

Handle: @WaffleHouse( https://twitter.com/WaffleHouse )

Why it's worth following: The restaurant chain is always interacting with followers and rewteeting their love for the place.

Just drive there. It's worth it "@haydenghyde( https://twitter.com/haydenghyde ): I want @WaffleHouse( https://twitter.com/WaffleHouse ) but the closest one is 4 hours away."-

Waffle House (@WaffleHouse) August 28, 2013( http://twitter.com/#!/WaffleHouse/status/372720070877011968 )

Nordstrom promotes offers and more

Handle: @Nordstrom( https://twitter.com/Nordstrom ) and @nordstrom_rack( https://twitter.com/nordstrom_rack )

Why it's worth following: Nordstrom and its discount sibling Norstrom Rack tweet offers and style ideas.

Bracelets, bag and the perfect #mani( http://twitter.com/search?q=%23mani ) - prep for Monday for under $75. #accessories( http://twitter.com/search?q=%23accessories ) http://t.co/Igs45fqyvr( http://t.co/Igs45fqyvr )-

Nordstrom Rack (@nordstrom_rack) August 25, 2013( http://twitter.com/#!/nordstrom_rack/status/371692303833776129 )

Pillsbury shares food ideas and stories

Handle: @Pillsbury( https://twitter.com/Pillsbury )

Why it's worth following: Along with recipes of the day, Pillsbury tweets ideas for food and mouth-watering photos.

If you missed the #statefair( http://twitter.com/search?q=%23statefair ), you can make Deep Fried Candy Bars from Oh, Bite It at home! bit.ly/1952xfF( http://bit.ly/1952xfF ) http://t.co/CoZgMFdDX5( http://t.co/CoZgMFdDX5 )-

(@Pillsbury) August 30, 2013( http://twitter.com/#!/Pillsbury/status/373437579670331392 )

Ann Taylor has you covered "from desk to date night" with offers

Handle: @AnnTaylor( https://twitter.com/AnnTaylor ) Page 11 of 12 The 50 best brands to follow on Twitter

Why it's worth following: The brand gives followers a mix of offers, news and information about new arrivals.

Enter for a chance $4,000 Ann Taylor gift card plus all of the looks featured in the @birchbox( https://twitter.com/birchbox ) style guide! bit.ly/17Cw9zE( http://bit.ly/17Cw9zE )-

Ann Taylor (@AnnTaylor) August 27, 2013( http://twitter.com/#!/AnnTaylor/status/372403157307248641 )

American Airlines tweets worthwhile deals

Handle: @AmericanAir( https://twitter.com/AmericanAir )

Why it's worth following: American Airlines tweets travel ideas and some great deals on flights.

Find adventure in #Hawaii( http://twitter.com/search?q=%23Hawaii ) with flights starting at $424. Round trip, taxes & fees included. bit.ly/HFSTw829( http://bit.ly/HFSTw829 ) http://t.co/01JbskywJH( http://t.co/01JbskywJH )-

American Airlines (@AmericanAir) August 29, 2013( http://twitter.com/#!/AmericanAir/status/373188656959217664 )

Dell promotes offers on PCs and other devices

Handle: @DellOutlet( https://twitter.com/DellOutlet )

Why it's worth following: The computer technology company tweets tons of competitive deals on a daily basis.

Dell Outlet Home Labor Day Sale. Save 20% to 30% on all Dell Home PCs! Shop Now: del.ly/6011wpEc( http://del.ly/6011wpEc ) (Exp. 9/4 @ 8:59 a.m. CT.)-

Dell Outlet (@DellOutlet) August 30, 2013( http://twitter.com/#!/DellOutlet/status/373437465128099840 )

The App Store shares the latest ones for iOS users

Handle: @AppStore( https://twitter.com/AppStore )

Why it's worth following: There are more than 900,000 apps( http://www.apple.com/pr/library/2013/06/10Apple-Unveils-iOS- 7.html ) and counting - this Twitter shows followers some worth checking out.

If, like us, you love @Minecraft( https://twitter.com/Minecraft ), check out @Terraria_Logic( https://twitter.com/Terraria_Logic ): this week's #EditorsChoice( http://twitter.com/search?q=%23EditorsChoice ). tw.appstore.com/gAg( http://tw.appstore.com/gAg )-

App Store (@AppStore) August 30, 2013( http://twitter.com/#!/AppStore/status/373336796283043840 )

Forever 21 let's followers know when great offers are happening

Handle: @Forever21( https://twitter.com/Forever21 )

Why it's worth following: The fashion retailer offers discount codes to followers.

Take an extra 50% off the marked price of already reduced merchandise with code: LABORDAY #LaborDay( http://twitter.com/search?q=%23LaborDay ) bit.ly/ZYyEaR( http://bit.ly/ZYyEaR )-

Forever 21 (@Forever21) August 30, 2013( http://twitter.com/#!/Forever21/status/373509313979244544 )

Follow J. Crew for new items, articles and customer service

Handle: @jcrew( https://twitter.com/jcrew ), @jcrew_help( https://twitter.com/jcrew_help ) Page 12 of 12 The 50 best brands to follow on Twitter

Why it's worth following: The retailer tweets articles about its designers and pictures from its Instagram. And Sarah from J. Crew helps shoppers resolve style woes at the @jcrew_help handle.

LITERALLY, @jcrew( https://twitter.com/jcrew ) has the best customer service representatives (speediness and professionalism) HANDS DOWN.-

Marjorie West (@_marjorieanne) August 30, 2013( http://twitter.com/#!/_marjorieanne/status/373443242752106498 )

And here's a list of all the brands to follow on Twitter

Twitter/@Mike_Thrasher( https://twitter.com/Mike_Thrasher/lists/the-50-best-brands )

( https://twitter.com/Mike_Thrasher/lists/the-50-best-brands )

Load-Date: September 8, 2013

End of Document Exhibit 225

Exhibit 226 How Social Media Helped Kate Spade Become a Global Brand

฀ ฀ VIDEOS ฀ SOCIAL MEDIA ฀ MORE ฀ ฀ ฀ ฀ ฀ ฀

Marketing FOLLOW MASHABLE > ฀ Like 1.7m ฀ Follow 3.7m ฀ Follow 7.1m How Social Media Helped Kate Spade Become a Global Brand

314 1526 71 10.7k ฀ Share Tweet Share SHARES ฀ ฀ WHAT'S THIS?

BY LAUREN INDVIK 2011-11-29 13:59:59 UTC

If our play-by-play coverage is any testament, Kate Spade New York ranks among the strongest brands in the online marketing space. From Twitter and Tumblr to Instagram and online video, we've been consistently impressed with

http://mashable.com/2011/11/29/kate-spade-ceo-craig-leavitt-interview/[2/7/2017 10:19:01 AM] How Social Media Helped Kate Spade Become a Global Brand

the quality and strength of voice the fashion and lifestyle label has brought to each new platform.

We're not alone: Luxury research and advisory firm L2 ranked Kate Spade second in its third annual Digital IQ Index in the fashion category, just behind Burberry.

Four years ago, the label's future was less certain. Founders Kate and Andy Spade left the company in mid-2007, less than a year after it was acquired by Liz Claiborne for $124 million. Deborah Lloyd, formerly of Banana Republic and Burberry, was brought on as president and chief creative officer shortly thereafter, and Craig Leavitt, now CEO of Kate Spade, joined the company as co-president and chief operating officer in 2008.

Since then, the label has expanded aggressively into new product categories and markets, introducing a ready-to-wear line in 2009 and establishing flagships in half-a-dozen new countries. But the big story — at least for those of us at Mashable — involves Kate Spade's gains in digital media and ecommerce, the latter of which is approaching triple-digit growth this year, Leavitt tells us.

Q&A With Craig Leavitt, CEO, Kate Spade

What was Kate Spade like when you came on board in 2008?

What I found was really a niche brand with an amazing heritage and amazing DNA ... [that] had fallen asleep a little. The good news was that there wasn't really a tarnishing of brand or any bad feelings, it had just fallen off everyone's radar. For us it was about taking that rich heritage and turning a niche brand into something with a

http://mashable.com/2011/11/29/kate-spade-ceo-craig-leavitt-interview/[2/7/2017 10:19:01 AM] How Social Media Helped Kate Spade Become a Global Brand

broader consumer base and appeal, something that was relevant to the market today.

Can you tell me about the five-year plan you developed at the time?

The first thing we did was assemble a new management team with myself and Deborah [Lloyd], and for six months we looked at where we wanted the company to be five to 10 years down the road. What we planned to build was a global multichannel lifestyle brand embraced by consumers and markets in all the fashion capitals around the world, a brand that spanned multiple categories and reached [the consumer] in many different moments of her life. When I say multichannel, I mean that we believe in reaching out to [the consumer] in all channels of distribution, whether it's brick-and-mortar or online; they're all important points. Plus we wanted to modernize the product offering and build on the DNA and the heritage of the brand.

Has that planned been altered in any way due to unforeseen economic conditions, or advancements in digital media and ecommerce?

Just as we were really getting ready to launch that plan, the global recession hit. We had to decide whether to pull back and take a more safe approach, or aggressively approach the strategy [we had laid out]. We decided we needed to stick with our strategy. We didn't have a big rollback of prices or change our distribution strategy, and believe me, we came out of it stronger, better and faster than our competitors because we stuck through.

How has Kate Spade expanded internationally in that period? You established stores in London and Sao Paulo recently, and you have 89 boutiques in Asia alone.

We have really diversified in becoming a truly global brand. Next year we'll be in 16 or 17 markets around the world. The great news is that as we've entered new markets, we've found that consumers understand the voice of our brand and they've embraced us. Even in shrinking economies we've had strong comp[arable sales] increases, and we continue to open new stores and in new markets ... many in southeast Asia. A few months ago we initiated a joint venture to enter China. Last year we also opened a direct subsidiary in South America and established a flagship in Sao Paolo that has been very successful. We opened a flagship in London, too. In the first and second quarters [of next year] we'll open several stores in the Middle East.

http://mashable.com/2011/11/29/kate-spade-ceo-craig-leavitt-interview/[2/7/2017 10:19:01 AM] How Social Media Helped Kate Spade Become a Global Brand

You're clearly expanding your retail foothold in many markets. Are you expanding your ecommerce business in those new markets as well?

We are. We have a relaunched site in Japan which has been very successful, and as we move into new markets and build brand equity with bricks and mortar, the ecommerce will follow. Right now we're studying the right approach in China, so that we have a consistent global experience for the consumer that also addresses the nuances of the market.

At what rate is your ecommerce business expanding? What percentage of your sales now occur online?

We don't release those details, but I can tell you that online is our fastest growing channel of distribution. We announced during our earnings call a few weeks ago that our overall comp[arable] sales growth has increased by 74% year-over-year. Ecommerce is growing even faster; it's almost triple-digit growth.

You released a redesign of katespade.com in March. What were the goals of the makeover?

The shortest answer is that we really wanted to engage with our girl. Of course commerce is important, but it's not only about commerce. Engagement drives commerce. The more engaged a girl is with the brand, the more valuable she is to us.

http://mashable.com/2011/11/29/kate-spade-ceo-craig-leavitt-interview/[2/7/2017 10:19:01 AM] How Social Media Helped Kate Spade Become a Global Brand

Have you seen a measurable improvement in sales on katespade.com since redesigning?

Absolutely. She's spending more time on the site, and as I indicated earlier, our sales have really skyrocketed since then.

You've also sampled some new ecommerce models, including flash sales through sites like Gilt.com and Sneakpeeq. What drew you to those platforms in particular?

We want to find new ways to reach the consumer. Experimentation is important in general, but it's particularly important in this space. Sites like Gilt are seen as arbiters of taste, and their customers are really, really engaged. We want to connect with them there. It's all part of the multichannel approach.

What does your current investment in social media look like?

Social media is an integral part of how we look at our marketing and communications and consumer outreach, it's part of our thinking every single day. In terms of investment, it's in human resources. We have young people who live and breathe social media and are immersed in it every minute of every day. We allow them to lead and trust them in this space.

How have you developed the voice for Kate Spade on “It's critical for brands to always social channels? be leaders, to always take risks and experiment." We are really fortunate that we had already developed an authentic voice and persona for our brand. The Kate Spade girl aspires to lead an interesting life — to engage in the arts and literature and travel and adventure. We talk about those things on social media because that's who she is, and she wants to hear about what her peers are doing. It feels very very natural for us.

With so many social networks to choose from, how do you decide where to invest your time?

I guess it's really about the number of people we're reaching in the end. We want to reach as many people as possible. We're closing in on 400,000 Facebook fans and 150,000 Twitter followers — those are meaningful numbers for us as a brand, [and they determine] how we invest our time and our human resources across those different media. It's also about enabling a real-time conversation, talking about where [the Kate Spade girl] is now and where she

http://mashable.com/2011/11/29/kate-spade-ceo-craig-leavitt-interview/[2/7/2017 10:19:01 AM] How Social Media Helped Kate Spade Become a Global Brand

goes next.

What sort of return on your investment have you seen? And how do you measure it? Is it about sales or engagement?

It's more of the latter. Primarily we're looking to grow our consumer base and our followers, and ensuring that they remain engaged with us, which is the most important part. That said, we are looking at how to drive more direct revenue. We've offered special sales and previews on items to Facebook fans in the past, and we'll look to do more of that in the future.

It sounds like you expect Facebook will become a significant sales channel for you.

We absolutely think that the Facebook platform is going to be important to us from a revenue perspective. We have a strong and very engaged fan base, and we expect [sales through Facebook] will be the fastest growing part of our business as we start to set some measurable goals for ourselves. We still believe that our direct email database is going to remain the most valuable, however. They are our most loyal fans if you will, because they have voted with their wallets as well.

What advice would you give other brands — fashion or otherwise — in this space going forward?

I guess it's not so different from what I would say in general. It's critical for brands to always be leaders, to always take risks and experiment. There's this notion that a lot of brands have of not wanting to be first on a particular street or in a particular media space. That has to change, because the brands that are not being leaders in social media are being left behind very quickly. I also think that [social media] is a unique space, and you have got to make sure the people who are most connected, the ones who access it every day, are empowered to be leaders in this environment. Often they are the youngest members of a team.

TOPICS: BUSINESS, E-COMMERCE, FASHION, KATE SPADE, MARKETING, SOCIAL CEO SERIES, SOCIAL MEDIA, SOCIAL MEDIA MARKETING

http://mashable.com/2011/11/29/kate-spade-ceo-craig-leavitt-interview/[2/7/2017 10:19:01 AM] How Social Media Helped Kate Spade Become a Global Brand

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KATE SPADE & CO. STORIES Sasha Obama Was the Vision of Inaugural Poise in Kate Spade New York

Posted on January 22, 2013, 1:13 pm , by Editor & under Kate Spade.

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While she was just a little girl at her father’s first Inauguration, over the past four years, eleven-year-old Sasha Obama has clearly adopted a style that follows and complements her mother Michelle’s elegant, contemporary sense of fashion. Sasha was the picture of youthful, tailored poise in a kate Q&A: Kyle Andrew Of

http://thehighlow.com/2013/01/sasha-obama-was-the-vision-of-inaugural-poise-in-kate-spade-new-york/[2/7/2017 10:17:18 AM] Sasha Obama Was the Vision of Inaugural Poise in Kate Spade New York | The High Low

spade new york jacket and dress during President Obama’s Kate Spade New York second Inauguration yesterday. On Strong, Seamless Both girls were colorful visions for the occasion (older sister Social Media Malia donned lavender J. Crew) and their overall sense of fashion and composure was picked up, and praised, by no less than . Of course, all eyes first went to Michelle Obama, in a Thom Browne coat and dress, but it seems safe to say that the sartorial choices of the First Daughters are now on par in importance with their fashionable mother’s. For our part, we particularly loved Sasha’s colorful kate spade new york look — it’s just so incredible to watch a Kate Spade New York little girl grow up into an independently stylish young lady. Leads The Way With After yesterday’s great showing, we can’t wait to see what else Compelling Social Sasha dons during the next four years. Media Disclosure: kate spade new york is owned by Fifth & Pacific Companies, Inc., the sponsor of this site.

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http://thehighlow.com/2013/01/sasha-obama-was-the-vision-of-inaugural-poise-in-kate-spade-new-york/[2/7/2017 10:17:18 AM] Sasha Obama Was the Vision of Inaugural Poise in Kate Spade New York | The High Low

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http://thehighlow.com/2013/01/sasha-obama-was-the-vision-of-inaugural-poise-in-kate-spade-new-york/[2/7/2017 10:17:18 AM] Exhibit 228 Document title: The Everyday Elegance of Kate Spade Handbags Capture URL: http://urbanette.com/kate-spade-handbag/ Capture timestamp (UTC): Wed, 27 Apr 2016 22:01:36 GMT Page 2 of 4 Document title: The Everyday Elegance of Kate Spade Handbags Capture URL: http://urbanette.com/kate-spade-handbag/ Capture timestamp (UTC): Wed, 27 Apr 2016 22:01:36 GMT Page 3 of 4 Document title: The Everyday Elegance of Kate Spade Handbags Capture URL: http://urbanette.com/kate-spade-handbag/ Capture timestamp (UTC): Wed, 27 Apr 2016 22:01:36 GMT Page 4 of 4