Kate Spade, in 2016, operated in three reportable segments: Kate Spade North America, Kate Spade International, and Adelington Design Group. Late in 2016, Coach acquired Kate Spade. One of the required segmental disclosures is a reconciliation of the segment profit or loss to net income.

Required:

EBITDA or Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is normally required to be a non- GAAP number subject to the SEC’s non- GAAP disclosures. Why is Kate Spade allowed to use EBITDA without using the Non- GAAP label?

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In Thousands Reportable Segments Adjusted EBITDA: KATE SPADE North America KATE SPADE International Adelington Design Group Other Total Reportable Segments Adjusted EBITDA Depreciation and amortization, net Charges due to streamlining initiatives (d), brand-exiting activities, acquisition related costs, impairment of intangible asset and loss on asset disposals and impairments, net Joint venture contract termination fee Share-based compensation Adjusted equity loss included in Reportable Segments Adjusted EBITDA 12/31/2016 $226,385 27,889 5,014 259,288 (45,782) (9,204) (27,139) 6,450 1/2/2016 $177,593 17,697 4,523 199,813 (46,311) (40,399) (26,000) (25,577) 4,872 1/3/2015 $143,009 810 4,092 (940) 146,971 (48,441) (30,371) (37,270) 2,583