Kate Spade Japan operated the Kate Spade and Jack Spade businesses in Japan, and Kate Spade will continue to operate such businesses in Japan though its Japanese subsidiary.
The purchase price for the Kate Spade Japan Buyout, including debt repayment, related transaction fees and use of Kate Spade Japan's cash on hand, was $47.6 million.
Kate Spade is also required, during the fourth quarter, to make a post-closing asset adjustment payment to Sanei in conjunction with the Kate Spade Japan Buyout, and Kate Spade does not expect any such post-closing payment to be material.
For Kate Spade Japan's fiscal year ended August 31, 2012, Kate Spade Japan's net sales were approximately $88 million, an increase from the prior fiscal year of 20% on local currency basis, with an adjusted operating margin (operating margin adjusted to exclude the impact of unusual charges recorded in 2012) in the high single digits and adjusted EBITDA margin (adjusted EBITDA defined as adjusted operating margin excluding depreciation and amortization), in the low double digits, calculated at an exchange rate of ¥78.83 to US$1.00.
Kate Spade Japan distributes its products mainly through 53 points of sale including department store concessions and e-commerce. These direct to consumer channels made up over 90% of total net sales for the twelve months ending August 31, 2012.
The Company intends to realize synergies from the Kate Spade Japan Buyout by leveraging its global retail expertise with Kate Spade Japan's continued growth and its strategic marketing and sales positions in the rest of Asia.
The Company does not expect the Kate Spade Japan Buyout to have a material impact on the Company's adjusted EBITDA for 2012.
Fifth & Pacific Companies Inc
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